DP World and AD Ports: The Emirati Logistics Firms Driving UAE’s Investments in Africa
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DP World and AD Ports: The Emirati Logistics Firms Driving UAE’s Investments in Africa
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By Martin Nkonge
May, 2024
The United Arab Emirates (UAE) has become a pivotal player in Africa's economic landscape. UAE’s investments in the continent range from infrastructural projects to logistics and telecommunications. Gulf states have committed up to $100 billion in terms of investments in Africa over the past decade. The UAE stands out as the leading investor, with African investments representing 10.5% of its total trade volume and a total investment package of $59.4 billion.
At the forefront of UAE’s engagement with Africa are two Emirati logistics firms, DP World and Abu Dhabi Ports Group. DP World, with operations in Africa dating back to 2006, has wide coverage across the continent, focusing on capacity expansion and the creation of special economic zones. In contrast, AD Ports Group's recent ventures reveal a more targeted approach, with agreements and investments that align with specific sectors, such as tourism. Both firms' investments in African ports are indicative of similar strategic approaches but are different in terms of scale and reach. Besides individual financial goals, they also act as geopolitical channels for UAE's broader engagement strategy in Africa, owing to their Emirati ownership and the strategic importance of Africa’s ports operations.
DP World’s investment strategy in Africa hinges on long term development plans targeting infrastructure development and port management. A case in point is DP World's most recent $250 million deal for a 30-year concession at Tanzania's Dar es Salaam port to increase the port's revenue and reduce vessel clearance times. This deal is indicative of DP World's modus operandi in Africa, characterized by long-term commitments to enhance port efficiency and capacity.
One of DP World’s approaches to investments in the continent is through establishing special economic zones, such as the Berbera Economic Zone in Somaliland. For the host countries, these zones serve as engines for regional development, but for DP World, they are strategic gateways for the company to achieve greater influence in connectivity and trade. For instance, with the Berbera Economic Zone in Somaliland, DP World connects to the Ethiopian market with major import commodities including cotton, sugar, and rice.
DP World's approach also reflects a broad strategy defined by extensity and volume as opposed to a concentrated approach in select regions. DP World is not merely an expansion of port operations but a deliberate effort to establish a dominant foothold on the African continent. The famed logistics company is now managing 18 cargo handling offices and aims to establish an additional 18 locations by the close of 2024. Currently, DP World has presence in several countries including Algeria, Egypt, Djibouti, Somaliland, Rwanda, Mozambique, Angola, Senegal, and the Democratic Republic of the Congo. This strategy is likely to afford DP World (and the UAE by extension) considerable leverage over regional trade dynamics and policy-making, thereby extending its geopolitical influence in Africa.
On the other hand, AD Ports’ approach can be characterized by intensity as opposed to extensity. In Egypt and the Red Sea area, for instance, AD Ports plans to develop multiple ports including the development of cruise terminals in Hurghada and Sharm El Sheikh, highlighting a commitment to tourism-related maritime activities. More engagements in the Red Sea region include the development of Al Arish port and West Port Said Port under a 15-year agreement, a Memorandum of Understanding for East Port Said to enhance logistics and establish an economic zone, and a Head of Terms for the development of three terminals at Sokhna. Compare this to DP World which has only a single concession agreement in Egypt at Sokhna Port in the South Suez area, which has been in operation since 2009. AD World’s concentrated approach demonstrates targeted investments in specific sectors and regions, prioritizing selective engagement over widespread presence, as opposed to DP World.
That said, both DP World and AD Ports firms have similar approaches when it comes to port concessions and long term engagement. For instance, more recently in April, AD Ports Group secured a 20-year concession to operate and upgrade Angola's Luanda multipurpose port terminal, with investments potentially reaching $379 million.
Together, the activities of DP World and AD Ports Group illustrate a multifaceted strategy by the UAE to become a key economic partner to Africa. Members of the Emirati royal family operate around 12 ports across Africa through state-owned companies, mainly through DP World and AD Ports. DP World's broad reach across several African countries enables the UAE to influence regional development and trade policies. AD Ports Group's more focused investments, on the other hand, allow the UAE to position itself as an indispensable partner in these regions. Decoupling the UAE from regional trade dynamics will be difficult due to the strategic importance of port operations across Africa. This approach is not just about economic returns for individual companies, in this case DP World and AD Ports, but also about establishing a long-term presence that will provide strategic leverage on a continent that is becoming increasingly important to global supply chains.
Martin is an Analyst at Botho Emerging Markets Group