We are entering the age of enhanced connectivity between the Middle East & Africa. The GCC countries have invested over $100 billion as FDI in Africa over the last decade - a staggering figure if one considers it is comparable to Kenya’s GDP.
As financial advisors committed to the region, we have recently engaged in unprecedented deal activity. Post-Covid 2019, landmark transactions reshaping the corporate landscape have come to the fore.
Infinity Power acquired Lekela - a transaction backed by Masdar, AFC and EBRD - thus creating Africa’s largest pure-play renewable power company. DP World partnered with British Investment International on ports and logistics, thus charting a stronger course for African commerce.
And QIA endorsed Airtel Money Africa, a mobile money operator paving the way for financial inclusion in a vastly underserved banking market.
Such headlines capture our attention and beg the question as to whether the intensifying traffic on the ‘MEA’ corridor is of a circumstantial or permanent nature. Truth be told, the forces underlying the observed trends have been in play for some time.
On the one hand, Africa with its attractive GDP growth, enormous demographic dividend (1 in 4 people by 2050) and under-penetration across infrastructure, healthcare, education, telecom and banking. On the other, the Middle East with its abundance of capital, increasingly sophisticated economies firmly grounded in their willingness to diversify their source of wealth, sustainably secure food supply and expand their soft power.
The relationship seems more deeply-rooted than previously. The nations on both sides of this equation share common ground as they strive for:
- Greater political influence; especially in a world where geopolitical cards are being reshuffled and the Global South seizes an opportunity to further affirm its relevance.
- Prosperity for their people; with the thirst and vigour singular to the streets of Lagos, Cairo, Dubai and Riyadh.
In fact, the growing cooperation between ME and Africa is palpable, with multi-faceted investments varying from pure capital provision to operational presence on-the-ground.
* As the driving force behind ‘ME Inc.’, Sovereign Wealth Funds are leading the way investing directly in Africa’s burgeoning start-up ecosystem. In the vein of Chimera’s investment in Egyptian super app MNT Halan - and indirectly through their sponsorship of Africa’s funding community; particularly ADIA who acts as Limited Partner to regional private equity funds. Egypt has been the auspicious beneficiary of this investment wave with players alike Saudi’s Public Investment Fund buying minority stakes in state-owned companies
* In a North-to-South movement, indigenous ME corporates historically present carry on deepening their rooting. There was e&’s stake increase in Vodafone asserts its presence in places like South Africa, Kenya, Tanzania through Vodacom, complementing its existing footprint in francophone Africa via Maroc Telecom. In similar fashion, AMEA, a renewable business powered by the Al Nowais family, invited Softbank into its capital earlier this year with a view to fuelling its Africa growth
* From a South-to-North perspective, fast-growing African companies such as Moove (prominent fintech), Helios Towers and Airtel Africa have been enticed to install their headquarters in the region. Interestingly, Emirates, Etihad, and Qatar Airways fly into over 30 cities, offering the best available connectivity into the continent. Talks of acquisitions in the region and future listings in Abu Dhabi, Dubai or Riyadh (besides the more traditional routes of London, Paris, Amsterdam, New York) denote exciting prospects for ambitious entrepreneurs eager to put Africa on the map
* In a more lateral fashion, we are also observing the emergence of truly ‘pan-MEA’ champions. For instance, UAE-based Yellow Door Energy has received funding from Actis, a leading global investor in sustainable infrastructure, to scale up and become the distributed solar sustainability leader.
Africa will continue to be fertile ground for bubbly start-ups and a lively middle-class. Its potential will amplify once the much needed structural and policy reforms under way eventually materialise.
Middle Eastern investors will be selective and focus on large, highly strategic transactions. Infrastructure will take centre stage – be it hard infrastructure like transport, power, telecoms or soft infrastructure like banking, tech and fintech.
For those of us who have been bringing inspiring African stories to the global scene and tapping into investors’ interest for the last frontier market, the inbound interest from the Arabian Peninsula is only scratching the surface and we are enthusiastic about what lies ahead.