What was at stake in this edition of the Global Business Forum?
For its 5th edition, the Dubai Global Business Forum 2019 explored the United Arab Emirates’ role for the coming decades in a context of tremendous power shifts in the “Global South”, and the growing opportunities between the Gulf and Africa.
Here are a few takeaways from this international forum aimed at improving business confidence, promoting economic reforms and regional integration, and connecting continents and customers.
The stakes are high: foreign direct investment from the United Arab Emirates into Sub-saharan Africa has been estimated at US$649m between 2015 and 2019, led by consumer goods, logistics and energy firms. This figure is increasing, with non-oil trade between Africa and the UAE between 2011 and the end of this year reaching for instance 250 billion, as the emirate continues to build its economic ties with the continent to further diversify its economy. With a longer time horizon in mind, the Gulf Cooperation Council countries are also pushing for more investments in logistics, infrastructure, retail, tourism and finance all over the continent.
Over the last four editions, the Dubai forum has welcomed 20 heads of state and 95 ministers and government officials from Africa, as well as 6300 business leaders and decision makers from 65 countries and became a key space for debates and to promote an agenda of policy improvements, financial harmonisation and transport integration, to help both local and foreign companies build regional footprints.
Corporations are indeed fueling African business expansions, through direct stakes and VC funds. Prominent global players include Tencent for instance and Mastercard, as well as African corporations such as MTN, proving that blue chip brands still believe in Africa’s growth story. Offering more successful scale-ups in Africa, the speakers argued over the two days of the Forum, will encourage more investors to seize on the opportunities of the continent, at a time when sanctions on Iran and the situation in Qatar is limiting options in the Middle East. At the same time, Africa is roaring: 19 African countries experienced growth over 5% in 2018, with Kenya, Tanzania, Rwanda and Ghana growing at 6%, a stronger pace than China.
For GCC countries, East Africa is also becoming a hub for manufacturing. Ethiopia for instance, following the recent political changes in the region, is leading the pack with its population of 100 million inhabitants and emerging as an industrial and manufacturing power house. Adding to this, the fast-growing population and urbanisation, the rising middle class, and the emergence of the private sector, the time is ripe for ambitious southern strategies externally, and for continental integration internally.
Continental integration: a key to unlock Africa’s potential
Though recent examples of protectionism, like Nigeria’s decision to close all its borders to protect domestic rice producers, are clouding the horizon, panafrican integration is already a reality on the continent.
Among the most ambitious moves in this direction is the African Continental Free Trade Agreement (AFCTA), committed to removing tariffs on 90% of goods, progressively liberalising trade in services, and addressing non-tariffs barriers. With the ACFTA, 54 countries are merging into a single market of 1,3 billion people with a combined GDP of 3,4 trillion, and eliminating import duties between African countries alone would increase regional trade by a third. The Single African Air Transport Market is also expected to strengthen air links, driving tourism and business travel.
Some policies are also easing operational challenges: the most noteworthy are those enabling international money transfers and payments. Combined, these allow African small and medium-sized enterprises (SMEs) to expand operations across markets.
Additionally, proposals from West Africa Monetary Zone to create a common currency, the Eco, by 2020, could improve monetary stability and eliminate exchange-rate volatility.
Also contributing to the broader Africa-Middle East-Asia conversation is the rise of the New Silk Road, and the build up to Expo 2020, where African nations will amount for ⅓ of all participating countries.
Already, new players from the GCC are investing heavily in strengthening capabilities across the continent. DP World, for instance, the ports behemoth, currently develops and operates container terminals in Berbera, Somaliland, Maputo, Mozambique, Dakar, Senegal, and a logistics centre in Rwanda and is seeking to expand to more strategic transit areas throughout the Sub-Saharan Africa region, to facilitate exports from domestic businesses to surrounding areas.
Major work is also done behind the scenes to improve access to technologies, physical infrastructure, energy security and the more broadly the regulatory landscape.
Yet, strong barriers remain high on the path of African businesses towards international relevance.
The last barriers on the way to the last frontier
George Weah, new President of Liberia, mentioned these farmers unable to take their products to the markets because the roads are just not good enough, or the economist Carlos Lopes, these trucks stopped in average 24 times on their way from Lagos to Dakar.
Right now, it is easier for an African customer to trade with a company based in the US or Europe then it is for an African customer or Africa-based merchant to trade next door.
As a natural consequence, regulation and the pace of reforms were the buzzwords of this 2019 edition, just like the Silk Road was the buzzword of 2017: for all panelists, the barriers to growth, the necessary improvement of the business climate, are considered key to reduce the cost associated to risk and uncertainty for international investors, with business intelligence and due diligence seen as prerequisites to any investment on the continent, however great or small.
Innovative and eager to expand, businesses on the continent are often constrained by limited access to new markets and growth finance: improving depth, speed, cost and variety of financial tools was mentioned in Dubai as central to African development, with the promise of economic growth closely tied to the ability of home-grown businesses to scale up.
The past editions of the Global Business Forum also demonstrated it ultimately lies on policymakers to reduce uncertainties to allow African economies to scale up, and to establish an environment that enables businesses to thrive.
Stars seem aligned in this regard, as a new guard enters public service with the idea of leveraging digital technology and cooperating with entrepreneurs to transform their countries and their economies.
If Africa doesn’t want to “become the perfect hub for other people’s products”, the continent has to foster cross-border collaboration and bolster entrepreneurial ecosystems.