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How Emirates and East Africa are forging special economic bonds

L-R: Minister Ruth Nankabirwa, Prime Minister Robinah Nabbanja with an UAE delegate  during the signing of  the Uganda and UAE solar power MOU

L-R: Minister Ruth Nankabirwa, Prime Minister Robinah Nabbanja with an UAE delegate during the signing of the Uganda and UAE solar power MOU

The Indian Ocean, bordered by major demographic and economic powers and traversed by significant commercial routes, is assuming increasing strategic importance, becoming an arena where global powers vie, and fierce economic warfare is waged.

In this arena, the United Arab Emirates has managed to carve out a prominent role in East Africa’s economy over the past few decades. Charles de Blondin writes how East Africa is being viewed as a critical region.

On February 13, Uganda and the United Arab Emirates signed a memorandum of understanding (MoU) aimed at enhancing their cooperation in governance and development during the 2024 World Governments Summit in Dubai. Such rapprochement has become highly strategic for the two geographical areas involved, reviving historical trade routes.

This economic resurgence has drawn the attention of global powers, heavily invested since decolonization, such as China, the United States, and Europe, as well as new entrants such as India or the United Arab Emirates.

Dubai: Economic Hub for East Africa

Dubai plays a crucial role in the Gulf monarchy’s strategy in East Africa. It serves as a gateway to the African market for large international corporations and as a platform for East African companies seeking international expansion.

Increasingly focused on the Indian Ocean, East Africa is turning its attention to Dubai, which acts as a showcase and a springboard to Middle Eastern and Asian markets. The city-state has emerged victorious against its competitors. Casablanca? Too distant and too Francophone. Johannesburg? Too dangerous. Lagos? Too inhospitable. This has paved the way for Dubai’s ascent.

Indian businessmen established in East Africa were among the first to pave the way, followed by their counterparts from Kenya, Uganda and Tanzania. Meanwhile, many multinational corporations have set up shop in Dubai to target African markets, enticed by the dynamism of economies in Rwanda, Kenya or Uganda.

The list is long, and continues to grow: Samsung, Thales, Mitsubishi, Airbus, Accor, Porsche... In total, more than 19,000 African companies are registered with the Dubai Chamber of Commerce. Dubai’s advantageous tax status reinforces its appeal.

The introduction in July 2023 of a new 9% tax rate on annual corporate profits for onshore companies is not expected to fundamentally alter this situation. Finally, Dubai is also playing its cards in the air.

With Emirates and its subsidiary Fly Dubai leading the way, the metropolis becomes the preferred starting point to Africa, welcoming over three million passengers annually for Emirates and nearly 500,000 for Fly Dubai. East African airlines are also not left behind. For example, Kenya Airways transports just over 100,000 passengers each year, while Uganda Airlines closely follow with about 50,000 passengers.

Uganda and Kenya: Gateways for Emirati Investments

The increasing visibility of East African economic actors in the UAE is reciprocated by the growing economic interests of the Gulf monarchy in the region. The Dubai Chamber of Commerce has representation offices in Mozambique and Kenya. Last November, this institution organized a significant trade mission that took it to Rwanda and Kenya.

In the race for Emirati investments in East Africa, several countries are positioning themselves as key transit points, thereby stimulating sustained economic growth between the two regions. Thus, the UAE federation is currently the 4th largest trading partner of Kenya and the 2nd of Uganda: the two regional locomotives.

Kampala stands out in this regard. Since January 2024, the country has been in talks with an investment company led by a member of Dubai’s royal family, Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, with the aim of establishing an oil refinery. This Emirati investment project could reach a considerable sum of $4 billion. Uganda aims to begin commercializing its crude oil as early as 2025, exploiting deposits located in the Albertine rift basin.

Economic cooperation between the Gulf and East Africa is also intensifying in the port sector, with Emirati companies DP World and Abu Dhabi Ports increasing their acquisitions in the region. The particular interest of the Gulf monarchy focuses on Mombasa, Kenya, the largest port in East Africa.

The modernization and expansion of this strategic port are supported by Abu Dhabi. Mombasa, thus becoming a leading logistics hub on the continent, is destined to become the main entry and exit point for several major regional markets, including Uganda, Rwanda, the Democratic Republic of the Congo, and South Sudan.

Following the deadlock in negotiations on free trade agreements between the East African Community (EAC) and the European Union, as well as tensions between the Biden administration and Uganda resulting in Kampala’s exclusion from the African Growth and Opportunity Act (AGOA); the region is actively turning to new trading partners.

Among these, the United Arab Emirates are at the forefront of the four countries with which negotiations are most advanced. The multipolar world is giving birth to a new South-South axis.

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