By Marek GrzybowskiThe Red Sea is often described as a dangerous waterway for maritime businesses. This is not entirely true. The Red Sea region is not necessarily a region of threats and conflicts. It is also a business space, which the governments of the Arabian Peninsula and Turkey are exploiting brilliantly. In East Africa, ports and logistics centers are being expanded, roads and railways are being built, and refineries and other production facilities have been constructed. Agricultural and industrial production, including arms production, is being developed. In many places, critical infrastructure is being developed, with the potential to be used for military purposes, including navies.
An analysis of the involvement of the Gulf states in East Africa shows that the Arab states and Turkey have clearly recognized the needs of neighboring African states and are committed to the region’s economic development. Their investment is primarily focused on critical infrastructure, ports, and the security sector, changing the shape of investment and the political situation in the region, according to the latest report by the Africa Center for Strategic Studies.
The investment needs of countries in East Africa are practically limitless. European countries still maintain significant investment activity in Africa, but they have long since lost their position as the region’s sole players. Today, companies representing the United Arab Emirates, the Kingdom of Saudi Arabia, and Turkey play the main role in the region’s economic development. Enterprises supported by the governments of Qatar and Kuwait have also joined the investment process. Significant capital flows from these countries, primarily invested in the development of critical infrastructure. A significant portion of loans is also allocated to the purchase of weapons for the armies of East African countries.
“Investment in East Africa has amounted to approximately $75 billion in recent years,” analysts from the Africa Center for Strategic Studies have calculated. In this way, countries located in the Red Sea, Persian Gulf, and Turkey are strengthening their economic and military ties. To facilitate economic exchange, a significant portion of funds is directed towards the development of seaports and land-based access infrastructure. Investment activities by Arab countries and Turkey are crucial for the development and improved functioning of critical infrastructure, as well as for the policy and modernization of the security system in East Africa. This region is home to approximately 415 million people.
Source: Africa Center for Strategic Studies
Experts emphasize that there are “glaring political and economic differences” between the neighboring regions. The median per capita income of the Gulf states is 22 times higher than the average in East Africa. Investors are not discouraged by the fact that the East African region is highly politically unstable.
Most of the 12 countries in the region are riven by conflict, often armed. These conflicts are often fueled by external involvement, reflecting the rivalry between the Gulf states. For example, in Sudan, Arab states finance opposing sides in the armed conflict.
Inwestycje ZEA w Afryce Wschodniej, Źródło: Africa Center for Strategic Studies
UAE Invests in Ports and Land
The United Arab Emirates (UAE) is the largest financially engaged country in East Africa’s development and military. UAE companies and institutions are estimated to be implementing projects worth approximately $47 billion across the Red Sea. This represents approximately 60% of the global investment flow from the Persian Gulf region to East Africa. This activity has made the UAE the fourth-largest investor in Africa, after the European Union, China, and the United States.
Port infrastructure is a key element of the Emirates’ strategy to position its interests in East Africa. Port development is closely linked to the expansion of DP World, which is also active in London. We wrote about this here.
Through DP World’s investment activities, the UAE has secured port development agreements in at least six countries. DP World will expand its services in Djibouti, Eritrea, Rwanda, Somalia, Somaliland, and Tanzania. Talks are also underway to open a port in Sudan.
The United Arab Emirates is dependent on agricultural imports. As much as 85% of its agricultural and food products are imported from abroad, primarily by sea. It was decided that food security, a strategic priority, would be ensured by developing agriculture in African countries. The United Arab Emirates has become one of the largest foreign buyers of land in Africa. In East Africa, significant investments in agricultural land have been made in Sudan. Riyadh has so far allocated $10.2 billion to land purchases from its neighbor across the Red Sea.
Investments by Arab Countries and Turkey in East Africa, Source: Africa Center for Strategic Studies
The UAE also stands out for its broad capital involvement in the region. Companies from the country are active investors in all 12 African countries in the region and in all six leading sectors – infrastructure, energy, mining, port development, agriculture, and security. The UAE is involved in each of these sectors in Somalia, Somaliland, Sudan, and Tanzania, emphasize researchers from the Africa Center for Strategic Studies.
UAE companies are by far the leading investor among entities operating in Sudan. The UAE has financed $22 billion in investments in non-security projects. This represents approximately 90% of the investments made by Gulf states in Sudan.
Saudi Arabia is implementing projects worth $15.6 billion. In East Africa, the focus has been primarily on investments in the energy sector, infrastructure development, and agricultural modernization. Saudi Arabia’s involvement in the security and military sectors is solely in support of the governments of Sudan and Djibouti.
Djibouti (with a population of 1.1 million) is the main beneficiary of Saudi Arabia’s capital investment in Africa. It is strategically located on the Bab al-Mandab Strait. Investments worth $13 billion have been invested in the country. Other Arab states have launched investments worth a total of $1 billion. Most of Saudi Arabia’s investment capital flowed into Djibouti from the Persian Gulf states.
As a result, approximately 90% of the funds invested from the Persian Gulf states are Saudi capital. This is believed to be a policy of Riyadh, which intends to use Djibouti to develop economic ties in East Africa. Djibouti, a small country, also stands out for having the highest per capita investment level in East Africa.
Djibouti’s Strategic Location, Source: Djibouti International Free Trade Zone
The largest funding was allocated to the construction of the Djibouti Damerjog International Park refinery. This investment cost $12.7 billion. The refinery was built by Aiyal Petroleum and Energy Company and is one of the largest refineries in East Africa.
Saudi Arabia is supporting the development of critical infrastructure in Djibouti. Saudi Logistics City was established here, covering 120,000 square meters. On June 4, 2024, the Federation of Saudi Chambers signed an agreement with the Djibouti Ports and Free Zones Authority to establish a Saudi Logistics Center in the Djibouti Free Trade Zone. The agreement includes a 92-year lease. Saudi Arabia is also negotiating the establishment of a military base in Djibouti (also with a 92-year lease).
Turkey – Sets its sights on Tanzania
Turkey has focused its attention on most of the countries in East Africa. Researchers from the Africa Center for Strategic Studies have located and invested in nine of the 12 countries. The involvement of Turkish companies in the economies of countries west of the Red Sea has been noticed on the Arabian Peninsula and in Africa.
In Somalia, Turkey’s economic activity is notable for its ownership role, obtaining significant stakes in the projects in which it invests.
Turkey is very actively leveraging its military experience and well-developed arms industry. The involvement of arms companies in African countries is clearly visible. Ankara stands out significantly for its involvement in the defense sector. This activity is visible in as many as eight East African countries, say analysts from the Africa Center for Strategic Studies, citing Somalia as an example: “This includes troop deployments, training, supporting military bases, assisting in the construction of the Somali Navy, and providing equipment.”
Turkey has become a leader in the African market for the supply of unmanned aerial vehicles (UAVs). Ankara supplies five of the 12 East African countries: Djibouti, Ethiopia, Kenya, Somalia, and Sudan. Negotiations are also underway for Turkey to establish an artillery and drone assembly plant in Uganda.
Turkish Investments in East Africa, Source: Africa Center for Strategic Studies
Experts note that “Turkey has invested $4.5 billion in infrastructure projects in East Africa. Half of the countries in the region receive Turkish financial or technical support for projects such as road and railway construction. Tanzania and Ethiopia were the largest partners in these projects, each securing nearly $2 billion in Turkish infrastructure investments.”
Tanzania, Ethiopia, Somalia, and Sudan are the main economies in which Turkish entities have been involved. An analysis of the capital invested suggests that Turkey is strongly focused on Tanzania. Turkey is also active in providing military support to East African countries. Ankara has engaged in the development of military capabilities in eight of the nine countries where it conducts investment projects.
Qatar and Kuwait
The Qatari government, in turn, has become heavily involved in Rwanda. Qatar Airways has allocated $1.3 billion for the construction of Bugesera International Airport. It is located 40 kilometers south of Kigali International Airport. Qatar Airways will hold a 60% stake in the airport and is in negotiations to acquire a 49% stake in RwandAir.
Furthermore, Qatar has a diversified investment portfolio in eight of the 12 countries in East Africa. Investments are focused on infrastructure and agriculture. Qatar’s investments support improved water management, road development, hospital construction, and even municipal housing. Qatar has also invested in an agricultural project and acquired 40,000 hectares of land in Kenya’s Tana River Delta. The Tana River is a major water source in the region, and the delta is considered a vast area for agricultural development.
Kuwait, in turn, is investing in seven East African countries, primarily in infrastructure, port development, and agricultural projects. In July of this year, the Kuwait Fund for Arab Economic Development (KFAED) signed two memoranda of understanding (MoUs) with the United Kingdom’s Foreign, Commonwealth, and Development Office (FCDO) to provide joint humanitarian assistance to people affected by the conflict in Sudan and Somalia.
KFAED announced that both parties will jointly provide a humanitarian grant totaling $10 million – $5 million from each party – to support the United Nations Children’s Fund (UNICEF) in Sudan. This grant will help children and vulnerable populations access basic services such as healthcare, food, water, and protection.
The $5 million grant ($2.5 million from each party) will fund a joint project supporting the work of the International Committee of the Red Cross (ICRC) in Somalia. As you can see, business activity is intertwined with humanitarian efforts. However, it’s important to note the strategic priorities of Arab countries and Turkey. Investments in African economies, their infrastructure, and seaports combine economic and military objectives. From this perspective, economic cooperation in the Red Sea region also takes on a military dimension.