Banks and financial institutions in the Arabian Gulf states are literally overflowing with dollars and Arab investors are spreading their investments to Africa, particularly to North Africa and sub-Saharan Africa such as Nigeria and South Africa, as the Arabs are in search of countries with high returns on investments as places to invest. Consequently, in the last few years there have been many joint ventures, mergers and acquisitions in Africa, backed by Arab capital surpluses and loans.
Only recently newspaper reports had it that Arab investors, mainly from Saudi Arabia and Qatar, were very much interested in winning the concession of Nigerian major airports such as Lagos, Abuja, Port Harcourt and Kano airports, which have been listed for concessioning by the Federal Government. Also interested were Turkish investors. In all, the investors were from Islamic states, thus sending shivers down the spines of officials in charge of the concessioning in Abuja as to the probability of the Arabs getting the concession. In fact, the Arab investors were said to have sent in their bids as signs of their seriousness.
The fact is that Middle East countries, particularly United Arab Emirates, Kuwait and Qatar are awash with many venture capital companies. They have outgrown their local markets and are now looking elsewhere, particularly in Africa to expand their businesses.
The rapid growth of economies in the Middle East is also providing Arab investors unique opportunities to expand elsewhere, particularly to African markets and reduce their exposure at home. They are particularly interested in telecommunications and property businesses and they are cutting deals and making waves in these two key areas. Other areas of interest to Arab investors in Africa are hotels, supermarket chains, airlines, transport logistics and commercial and investment
banks.
Three things are propelling the interest of Arab investors, who are eyeing Sub-Saharan Africa. First, according to forecasts, the region has been recording the highest GDP growth rate of 4.8 per cent between 2014 and 2018. Second is that this strong GDP growth is also coming with a rise of the Middle Class, population growth, the dominance of youth, rapid urbanisation, and third, is that the region is experiencing fast adoption of digital technologies. An increase in the Middle Class is considered as evidence of high pay and upward mobile young executives who are likely to patronise restaurants and use android phones.
The Arab investors are literally creating African brands or international brands across Africa. Do you know that Celtel, the Netherlands-based mobile phone operator was bought by Kuwait’s Mobile Telecommunications Company (MTC) for $3.4bn? According to Celtel, “building a pan-African brand lies at the core of our corporate strategy, Africa’s borders are colonial, they do not reflect economic or linguistic relations, so there is a lot of inter-country traffic, and that is where the opportunities lie.”
They have observed that many countries in Africa still maintain the routing of their international calls via the home countries of their colonial masters and Celtel provides opportunities to break such colonial tendencies at cheaper rates.
Do you also know that MTN is a Kuwaiti-owned mobile provider that began operations in South Africa in 1994? Over time it expanded across Africa and beyond. MTN paid a whopping $5.5 billion for Lebanon’s Investcom, thus making MTN the largest mobile phone operator in the Middle East and Africa region today.
But, as an upbeat Egyptian Trade and Industry Minister, Rachid Mohammed Rachid said, “The time is ripe for Arab countries to integrate their economies with Africa.” There are a lot of affinities in the cultures of both regions and the Arabs had been trading with Africans even before the Europeans came to colonise Africa. Consequently, their current rush to establish businesses in Africa is not misplaced.
That is not all. The Arab investors are also interested in the aviation sector in Nigeria. Nigeria, with 180 million population also has the largest economy in Africa and the Arabs know that Nigeria has a vibrant aviation sector. They are therefore interested in acquiring some of the ailing local airlines in Nigeria. In fact, discussions are going on between some of the Arab investors and some local airline owners. We shall await the result of their
discussions.
The issue of Arab investors keenly interested in winning the concessioning of the airports in Nigeria reminds me of one American professor in Finance who used to tell us in our Finance class that “money will find its way to where it is most needed.” In this case, the Arab investors are here, just as they are in many other African countries now with their dollars, looking for investments to put the dollars.
Religion is not written on dollars, neither is it written on any currency. So, why are we worried? We need the Arab investors just as they need us. We need to generate more jobs with their money. If we reject the Arab investors, others elsewhere will welcome them but their rejection here will leave a sour note in their mouths and when next we knock on their doors to come and invest here, they will refuse us. A word, the elders say, is enough for the wise.
