Out-Law News 2 min. read
24 Nov 2015, 4:21 pm
DCCI said it has signed a memorandum of understanding (MOU) with the French export credit agency COFACE and Dubai’s National General Insurance Company (NGI) to cooperate in supporting DCCI members in African trade and exports.
The MOU was signed during the two-day Africa Global Business Forum in Dubai, which ended on 18 November.
DCCI said its members exporting to Africa "will now have access to NGI trade credit insurance products and COFACE will work to provide various value-added services that aim to assist companies entering or expanding their businesses".
DCCI president Hamad Buamim told the forum there is "strong investment potential" in Africa for Dubai-based companies. He said the MOU underlined DCCI’s "vital role as a catalyst for trade and the leading entity in terms of access to African and other emerging markets".
Buamim said that as Dubai "has quickly become a hub for global trade, it is now more imperative than ever that the DCCI... continues to look for opportunities for Dubai-based companies and encourage companies abroad to expand into the Dubai market".
Buamim said: "One example is the small and medium-sized enterprise (SME) business community of Dubai and their counterparts in Africa, who will be helped in tapping into under-utilised SME trade finance funds available with many United Arab Emirates (UAE) banks."
UAE economy minister Sultan Bin Saeed Al Mansouri told the forum that "we realise the future of business is located most significantly in the continent of Africa... in various sectors, especially in agriculture, infrastructure, mining, trade, logistics services, tourism and financial services".
NGI’s chief executive Abdul Zahra Abdullah Ali told the forum: "As one of the leading composite insurers in the UAE, we’re well-placed to offer support to members interested in expanding into the African continent. We’re excited by the ambition the chamber has shown, and hope to play our part in encouraging trade from companies into Africa."
DCCI chairman Majid Saif Al Ghurair said 21% of new members that joined the chamber between January and October this year were African companies, "which indicate[s] Dubai’s attractiveness to international businesses".
According to a DCCI study conducted in collaboration with the Economist Intelligence Unit and released during the forum, Gulf firms provided $2.7bn in foreign direct investment (FDI) into sub-Saharan Africa in the first half of 2015, and a total of $9.3bn from 2005 to 2014.
The study said Nigeria, South Africa, Kenya and Uganda "have attracted the largest number of Gulf investors, between 10-25 firms each". Financial services, retail, tourism and logistics "represent the most favoured sectors by Gulf investors", the study said.
"East Africa is the most appealing region for non-commodity investment from the Gulf," the study said. "South Africa notwithstanding, the East Africa region is proving the main draw for Gulf investors, with manufacturing in Ethiopia, leisure, retail and tourism in Mozambique and Kenya. Gulf investors have multiple potential modes of FDI entry: co-investment with private equity funds, purchase of private equity businesses, and direct buyouts or minority share acquisition."
The US-based Center for Strategic & International Studies (CSIS) said last year (28-page / 3.87 MB PDF) that capital is "flowing in Africa at record levels". "FDI rose from $10bn in 2000 to nearly $80bn in 2010 and is expected to increase to $150bn by 2015. Returns on investment in Africa are currently among the highest in the world," it said.
According to CSIS, public-private partnerships are rising and African governments "are getting more serious about building incentives for private investors to participate in infrastructure projects". The telecommunications sector "has been most successful to date, attracting the lion’s share of FDI, but partnerships in transportation and power infrastructure, traditionally considered more risky, have been increasing in recent years as well", it said.
