Opinion: why Saudi Arabia is looking across the Red Sea towards Africa

      Published on Friday, 3 January , 2020      278 Views     
Opinion: why Saudi Arabia is looking across the Red Sea towards Africa

  • Life

Dating back to the 16th century, the Middle East and Africa have enjoyed strong economic and political relations driven by trade across the Indian Ocean.

Undoubtedly, these historic ties have shaped the present, as of 2017, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia were the second- and fifth-largest investing countries in Africa, respectively.

Despite the steady growth of investments by the Middle East in Africa, trade between Saudi Arabia and the region remains low.

However, the current economic and regulatory environment in African countries and the KSA are favorable to amplifying linkages between the two regions.

As a regional leader, Saudi Arabia should seize this moment to deepen its investments on the continent and catalyze its neighbors to do the same.

Similarly, this is an opportune time for the public and private sectors of African countries to strategically identify and tap into the economic opportunities that KSA’s Vision 2030 presents.

Increasing the level of trade and investment between Saudi Arabia and the African continent does not only serve to strengthen political ties, but also makes sound business sense. With a market size of 1.2 billion people and a combined GDP of over $2.2 trillion that is projected to reach $2.6 trillion by 2020, Africa is home to five of the ten fastest-growing economies in the world.

Current initiatives by China through FOCAC, Japan through TICAD, and Russia through the AfreximBank summit and the Sochi Russia-Africa summit point to a renewed and growing interest by global superpowers to deepen their engagement with Africa. Increased engagement between African countries and other markets can be attributed to regulatory reforms within individual countries, as well as the recent signing of the African Continental Free Trade Agreement (AfCFTA).

The AfCFTA aims to create a single continental market valued at $3 trillion. This marks a new era of increased trade within Africa, with fifty-one African countries having signed this landmark agreement. AfCFTA provides African countries with a vehicle to work in a much more coordinated manner across their various interests and comparative advantages, while also offering countries like Saudi Arabia a single entry point to engage in economic activity on the continent.

Saudi Arabia has already shown the intent to take advantage of this window of opportunity. In the just-concluded Future investments Initiative (FII), the Saudi Fund for Development committed to investing in Kenya’s Big Four Agenda.
Additionally, KSA plans to launch the first Saudi-Africa summit, bringing together key business executives, political leaders, and policymakers from both regions. If the FII is anything to go by, this seminal event will provide an opportunity to reset relations between both regions, as well as identify new opportunities for collaboration.

To meet the ambitious targets outlined in its Vision 2030 agenda and move to a post-oil economy, KSA must tap into emerging markets, including those in Africa. The success of the Saudi-Africa summit could play a key role in boosting and securing KSA’s long-term interests on the continent, while also providing new trade and investment opportunities for African countries themselves.

To forge sustainable partnerships between Saudi Arabia and African markets, more permanent and accessible channels, such as inter-governmental business councils, are needed. One key function of these business councils would be to bridge existing knowledge gaps by providing reliable insights into the business requirements in both regions.

For instance, African food exporters would benefit from knowing the Halal requirements that must be met to trade with Saudi Arabia and other Middle Eastern food importers. There are existing examples of the successes of inter-governmental business councils on the continent.

Turkey has 45 business councils in Africa, which inform Turkish companies on local tenders and support them in the bidding process. In 2016, Dubai’s Chamber of Commerce and Industry (DCCI) opened its fourth African office in Nairobi, enlisting 211 Kenyan companies in its first year.

The DCCI’s representative offices’ success in creating reciprocal linkages between the UAE and African countries sets a clear example for Saudi Arabia to learn from, as they not only help Dubai businesses navigate investment opportunities on the continent, but also provide a base and platform for African companies seeking access to the Dubai market.

The past decade has seen significant shifts in global relations, characterized by the emergence of new players and the formation of non-traditional alliances. Increasingly, emerging economies are renewing old relationships to boost economic partnerships and foster collaboration for strategic projects. With slower growth expected in some developed economies and a looming recession in others, investors are rightfully redirecting their focus to emerging markets.

Historic ties coupled with the unprecedented level of economic growth and business reforms in Africa offer an increasingly conducive and lucrative environment for Middle Eastern firms and investors.

The timing is perfect for Saudi Arabia and its African counterparts to leverage their respective synergies and complementarities and bolster shared prosperity.

Category Life | 2020/01/03 latest update at 5:06 PM
Source : Arabian Business | Photocredit : Google
Comments Add comment

Gulf Media

Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.

Sponsored Publications

Uber Eats expands to Makkah, Madinah
Saudi Arabia Saudi Arabia news

Uber Eats expands to Makkah, Madinah

Delivery service Uber Eats has expanded into two additional Saudi cities, launching in both Makkah and Madinah. In…

First case of coronavirus confirmed in Egypt

US arranging meeting between Netanyahu and Saudi crown prince

London’s community of wealthy Middle East property buyers continues to grow

Saudi Arabia pledges full support to Greek Cypriot administration King

Saudi Arabia pledges full support to Greek Cypriot administration

Saudi Arabian Foreign Minister Prince Faisal bin Farhan al-Saud expressed full support for the Greek Cypriot administration amid…

Saudi Cabinet voices support for the territorial sovereignty of Cyprus Government

Saudi Cabinet voices support for the territorial sovereignty of Cyprus

Saudi Arabia has voiced its support for Cyprus’ territorial sovereignty amid growing tensions following the discovery of oil…

How G20 presidency is likely to deliver Saudi economic boost Government

How G20 presidency is likely to deliver Saudi economic boost

Saudi Arabia becoming the first Arab nation to take over the G20 presidency is likely to deliver a…

Saudi Arabia offers ‘full support’ to Cyprus amid Eastern Mediterranean tensions Government

Saudi Arabia offers ‘full support’ to Cyprus amid Eastern Mediterranean tensions

Saudi Arabia’s King Salman received on Sunday the Cypriot Foreign Minister Nikos Christodoulides. They discussed bilateral relations between…


Popular in GULF TV

Saudi Crown Prince Wife|Why Not with him In the Foreign Tour’s


Saudi Crown Prince Wife Princess Sara bint Mashoor, Why Not with him In the Foreign Tour’s. Prince Mohammed…

Latest videos in GULF TV





Science & Technology