CAPE TOWN // Chinese investment into Africa gets much of the press, but the Arabian Gulf states are quietly making inroads in strategic sectors.
In September one of Abu Dhabi’s largest companies, Trojan General Contracting, signed a US$16 billion package of infrastructure projects in West Africa. Trojan is part of the Royal Group owned by Sheikh Tahnoon bin Zayed Al Nahyan, and will build roads, bridges and other much-needed infrastructure in the region.
The pledge was made at the inaugural West Africa Investment Forum, during which a total of $21.5bn was set aside for African projects by three UAE and Omani parties.
Meanwhile, Abu Dhabi’s Mubadala Development and Dubai Aluminium (Dubal) are developing a US$5bn investment that will include a bauxite mine, alumina refinery and port in Guinea, also in West Africa.
Guinea is the world’s top supplier of bauxite, the raw material used in aluminium production and alumina is partially refined bauxite. Aluminium is also one of the UAE’s “state champions” – key production sectors that enjoy state support and are intended to lessen dependence on oil revenues. Under the agreement, bauxite will be ready for export by 2017 and the refinery will be operational by 2022.
Another Abu Dhabi company that is making a showing is the energy and water provider Taqa, which operates a 220-megawatt simple-cycle gas power plant in Ghana.
The Takoradi plant, 220 kilometres west of Accra, required $330 million in project finance for the expansion. Ghana is desperately short on generation capacity and the plant is vital to keeping power outages to a minimum.
Energy in particular is a fast-growing area of investment, given how little Africa generates at the moment. As countries industrialise, so their need for power grows. The biggest industrial country on the continent, South Africa, is currently enduring regular blackouts as power generation falls below demand.
Consequently the country has invited investment in renewables and other forms of generation. Saudi Arabia’s Acwa Power is one of several dozen winning renewable bids, and is to build a 100MW solar power plant.
Renewable energy would be a good fit for Arabian Gulf companies such as Abu Dhabi’s Masdar, which is among firms that are specialising in alternative forms of energy.
Africa has some of the best sites on the planet for renewables. Alternative energy can also be developed on a small scale, allowing investors and countries to find a good fit while keeping capital investment to a minimum.
“Africa is ripe for investment, a fact that is being acted upon by Abu Dhabi companies with increasing regularity,” say Hurley Doddy and Vincent Le Guennou, the co-chief executives of Emerging Capital Partners, a private equity firm with seven offices in Africa.
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