UAE becomes Africa?s biggest investor amid rights concerns
The United Arab Emirates has become the largest backer of new business projects in Africa, raising hopes of a rush of much-needed money for green energy, but also concerns that the investments could compromise the rights of workers and environmental protections.
Between 2019 and 2023, Emirati companies announced $110bn (?88bn) of projects, $72bn of them in renewable energy, according to FT Locations, a data company owned by the Financial Times.
The pledges were more than double the value of those made by companies from the UK, France or China, which pulled back from big-ticket infrastructure investment projects in Africa after many failed to deliver expected returns. African leaders were also disappointed with climate finance pledges by western governments. At the Cop29 climate conference, for example, wealthy countries promised $300bn annually, whereas developing countries had demanded $1.3 tn.
Although African leaders have welcomed the increased interest from the Emiratis, some activists and analysts have expressed fears that the UAE?s poor record on labour rights for migrant workers, continued support for hydrocarbons and failure to address environmental issues will characterise its investments in Africa.
?African countries are in dire need of this money [for] their own energy transitions. And they plug huge holes, the Emirati investors, that the west failed to,? said Ahmed Aboudouh, an associate fellow at the Chatham House thinktank. ?But at the same time they come in with less attention to labour rights, to environmental standards.?
The UAE has long been a political player in north Africa and the Horn of Africa, where it has been accused of fuelling conflicts in Libya and Sudan. Now, its leadership is trying to diversify its economy away from oil and gas, including to green energy and ?critical minerals? such as copper that are needed for electric cars and batteries.
Dubai?s port and airline companies were early movers to Africa. Dubai?s Emirates airline has flights to 20 African countries. DP World, controlled by Dubai?s royal family, has been present in the region since 2006. It manages six ports, with plans to build two more. Abu Dhabi Ports has managed Kamsar port in Guinea since 2013, and recently won concessions in Egypt, the Republic of Congo and Angola.
?Angola is, at the moment, the only country where both DP World and Abu Dhabi Ports have a presence,? said Maddalena Procopio, a senior policy fellow at the European Council on Foreign Relations. She said the UAE was not shifting away from east Africa. ?This has to do with a growing interest from the UAE in expanding connectivity towards the Americas, in particular Latin America.?
UAE companies also have investments in agriculture and telecoms. Since 2022, the Dubai royal Sheikh Ahmed Dalmook al-Maktoum has struck deals to sell carbon credits from forests covering a fifth of Zimbabwe, 10% of Liberia, 10% of Zambia and 8% of Tanzania.
Emirati investments have also shaken up the mining industry. International Resource Holdings, part of a conglomerate controlled by the Abu Dhabi national security adviser Sheikh Tahnoon bin Zayed, paid $1.1bn to Zambia?s state mining company, ZCCM, for a 51% stake in Mopani Copper Mines.
The deal was a surprise to most observers. ZCCM took over the debt-laden mine from Glencore in 2021 and had been searching for a new investor. Throughout 2023, the shortlist was widely reported to be down to two companies: China?s Zijin Mining and South Africa?s Sibanye Stillwater.
That was until IRH was unveiled as the preferred bidder. The company of Sheikh Tahnoon ? often labelled the second most-powerful Emirati after Abu Dhabi?s ruler, Sheikh Mohammed bin Zayed Al Nahyan, ? had no track record. But Zambian officials and advisers said IRH had hired world-class mining expertise and that its pledge to invest in the mine while preserving jobs made it the best choice.
Many Emirati announcements may never fully materialise or are at an early stage. For example, the 2023 announcement of a $34bn ?green hydrogen? project in Mauritania was a Memorandum of Understanding, not a contract.
Some pledges have hit hurdles. In January 2023, the renewable energy company Masdar announced $2bn for 2GW of solar power in Zambia. However, financial problems at the state-owned energy company ZESCO have delayed the investments, said Jito Kayumba, a special assistant to Zambia?s president.
Meanwhile, the amount of illegally smuggled gold to Dubai from Africa has grown, according to researchers. The NGO Swissaid found a difference of 2,569 tonnes between official exports from African countries to the emirate and its imports from Africa from 2012 to 2022, worth $115.3bn.
?African countries need all the financing and trade they can get,? said Ken Opalo, an associate professor at Georgetown University. ?However, there is also the opportunity for the attention to breed criminality ? like we are seeing in the gold sector.?
