A 'GCC-Africa Corridor' makes logistical sense

The 13th WTO Ministerial Conference in Abu Dhabi is a timely reminder, if any were needed, that trade and investment go hand in hand. Viewing them separately ignores the geopolitical importance of long-term partnerships and the critical role of predictability and stability in international commerce. The flow of investment from the six Gulf states into the 54 countries that make up the African continent is emblematic of the benefits that a rules-based trading system can unlock. Trade and investment can create a virtuous cycle. Reliable trading links create opportunities for growth and entrepreneurship, which attract investment flows. These strengthen local capacity, scale successful industries and upgrade infrastructure, which in turn increase export competitiveness and lower the cost of critical inputs imported from abroad. The lynchpin of this cycle, however, is the confidence of investors, supply chain managers and the business community, which is why the WTO rules and the upcoming Ministerial Conference are critical to Africa’s investment future. It is fortuitous therefore that MC13 is being hosted by the UAE, a champion of developing countries and a strong supporter of Africa. While traditional ties between the GCC and North Africa have been strong due to cultural and linguistic affinities, the focus is shifting towards the Sahel region, presenting new avenues for collaboration. The GCC’s interest in Africa’s growth is also fuelled by the continent’s immense economic potential. Africa encompasses 60 per cent of the world’s uncultivated arable land, 60 per cent of the best solar resources globally, hosts six of the world’s 10 fastest-growing economies, and possesses a significant percentage of the world’s critical minerals. It is also the youngest continent, with 70 per cent of the population being under 30, and as such represents the world’s largest consumer growth market. With a proper foundation of stability, including through a strong international rules-based system, the potential for trade-driven growth and investment is immense. Three sectors poised to benefit significantly are energy, food and transport. The urgency of investing in energy transition cannot be overstated. Gulf states are establishing investment platforms and forming partnerships to accelerate clean energy investments in Africa. The UAE, for instance, announced a $4.5 billion investment in clean energy in Africa during a landmark climate summit in Kenya last September. Food security is a critical area where GCC countries have a long-term vested interest. With these states currently importing about 85 per cent of their food, securing food supplies is a top priority. This has led to increased investments in the agricultural supply chain in Africa, ultimately leading to an increase in exports from the continent. As the conference host, the UAE has every intention of encouraging members to focus closely on food security issues, especially given recent disruptions and their resulting impact on prices. In terms of transport infrastructure, GCC corporates have been investing in assets that align with their economic plans. For example, Qatar Airways invested $1.3 billion in 2020 to acquire 49 per cent of RwandAir and a 60 per cent stake in the new Bugesera International Airport near Kigali, its planned pan-African hub. As host, the UAE has made trade infrastructure and trade technology a key focus of MC13, including through the TradeTech Forum happening in parallel with the conference. I have seen first-hand how the array of potential from vibrant African economies on the Gulf’s doorstep presents opportunities that not only support the economic diversification plans of each Gulf country, but also provides opportunities for African countries to build their economies, unlock industry and jobs, and develop a long-term, sustainable export corridors with key trading partners. Africa’s significant economic potential – including its vast uncultivated arable land, solar resources, fast-growing economies and critical minerals – presents a substantial opportunity for Gulf countries to unlock. However, the primary challenge lies in finance, with a funding gap exceeding $200 billion. The reduction in Chinese investment from $60 billion to $40 billion has widened this gap, offering Gulf countries an opportunity to expand their presence and exert soft-power influence in trade corridors that matter. As African nations need substantial inbound investment, the Middle East possesses ample capital and a sophisticated finance market that can effectively cater to the needs of African sovereign and private entities. Not many know that the collective assets under management of the top 10 sovereign wealth funds in the Gulf stand at nearly $4 trillion, surpassing the gross domestic product of the UK. Last year, Gulf countries funded more than $53 billion of projects in Africa, surpassing the US investment of $10 billion during the same period. However, the financing gap remains substantial. We are witnessing the beginning of a new era, with the GCC occupying a front-row seat in Africa’s journey towards sustainable development. A “GCC-Africa Corridor” makes sense from a logistical perspective. Closer ties benefit both regions, and the increased trade and investment flows highlight the potential of this partnership. The MC13 conference, hosted by the UAE and chaired by the Minister of State for Foreign Trade, Dr Thani Al Zeyoudi, is the perfect place to further the partnership between Africa and the GCC, and strengthen the multilateral trading system that provides the foundation of stability that the partnership is built on.