Somalia and Ethiopia are set to restore full diplomatic relations after a visit by Somalia's President Hassan Sheikh Mohamud to Addis Ababa, as efforts intensify to heal a year-long rift that threatened further instability in the Horn of Africa.
Mr Mohamud and Ethiopian Prime Minister Abiy Ahmed “agreed to restore and enhance their bilateral relations through full diplomatic relations in their respective capitals”, they said in a joint statement on X.
Land-locked Ethiopia's desire for access to the sea had deepened long-standing grievances between the two neighbours. Somalia was outraged when Ethiopia signed a deal one year ago with its breakaway region of Somaliland, reportedly to recognise its independence in exchange for a port and military base on the Red Sea. Ethiopia's ambassador in Mogadishu was expelled in April last year and the countries broke off diplomatic ties.
The row was defused by a peace deal last month, mediated by Turkey and signed by both leaders. During Mr Mohamud's visit to the Ethiopian capital Addis Ababa on Saturday they reiterated their commitment to the deal and its “spirit of friendship and solidarity”. They also discussed deepening trade and security co-operation against “extremist militant groups”.
Many questions remain unresolved. Although Turkish President Recep Tayyip Erdogan said last month's deal would eventually give Ethiopia some type of sea access, it is not clear what form this would take. The fate of Ethiopia's deal with Somaliland is also uncertain.
Hours before Saturday's presidential visit, Somalia's Foreign Minister Ahmed Moalim Fiqi met his Egyptian and Eritrean counterparts. The three countries have found common ground in opposing Ethiopia's ambitions and made a veiled reference to their rival.
“The Red Sea and its security is subject only to the will of the countries on its coast, and it is absolutely unacceptable for any country not bordering the Red Sea to have a presence, whether military, naval or otherwise,” said Egypt's Foreign Minister Badr Abdelatty.
Egypt, Eritrea and Somalia forged a new regional alliance in October at a summit in the Eritrean capital Asmara, and the foreign ministers said on Saturday that more would follow.
Shared concerns about Ethiopia have also pushed Egypt and Somalia into closer military ties. Egyptian troops have joined the African Union Support and Stabilisation Mission in Somalia, an updated international coalition to fight Somali extremists that is scheduled to be launched this month.
Cairo has been embroiled in a long dispute with Addis Ababa over the latter's construction of a dam on the Blue Nile, by far the river's largest tributary. Downstream Egypt and Sudan say the nearly-complete dam threatens their share of the river's water, with Cairo insisting it poses an existential threat to its 107 million people.
Mr Abdelatty also discussed with the two ministers the civil war in Sudan, a 20-month-old conflict in which Egypt and Ethiopia are on opposing ends.
Mr Abdelatty said his country, Eritrea and Somalia would be providing training to the Sudanese Armed Forces in its fight against the paramilitary Rapid Support Forces, whose actions he described as “terrorism”.
Since the start of the new year, Egypt's Foreign Ministry has intensified its diplomatic engagement in several African countries, with Mr Abdelatty conducting a series of phone calls with counterparts from Guinea-Bissau, Congo, Kenya, Cameroon, Chad and Djibouti.
Mr Abdelatty reaffirmed Egypt's willingness to engage in economic projects with Horn of Africa nations and its commitment to maintaining the “integrity and unity” of the region.
Analysts say the increased engagement is a bid by Egypt to enhance its regional influence and address concerns related to the Grand Ethiopian Renaissance Dam. Egypt has sought to sign a binding deal with Ethiopia over the operation of the dam, a demand which has been rejected by Ethiopia.
– With agencies
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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