- Title: SENEGAL: Arab entrepreneurs seek new riches south of Sahara
- Date: 12th March 2008
- Summary: VARIOUS OF COMPUTER GENERATED IMAGE OF BUILDINGS IN FREE TRADE ZONE WHICH "DUBAI WORLD" IS PLANNING TO BUILD IN SENEGAL
- Embargoed: 27th March 2008 12:00
- Keywords:
- Location: Senegal
- Country: Senegal
- Topics: International Relations,Economic News
- Reuters ID: LVA28DL0VPV20WW3442Z101QE0RJ
- Story Text: Arab investors, flush with revenue from record oil prices, see golden opportunities in Africa. From waterfront resorts in Cape Town to phone networks in Democratic Republic of Congo, they are pouring in billions of dollars.
Centuries before European colonialists carved up Africa, Arab traders marvelled at the profits to be reaped in the fabled lands south of the Sahara.
"In the country of Ghana, gold grows in the sand as carrots do and is plucked at sunrise," wrote Ibn al-Faqih, a 9th-century Arab chronicler.
Arab investors, flush with revenue from record oil prices, once again see golden opportunities in Africa. From waterfront resorts in Cape Town to phone networks in Democratic Republic of Congo, they are pouring in billions of dollars.
Service stations across Africa once run by Mobil are now run by OiLibya, a Libyan company bought out the U.S. oil major's African distribution network last year.
But the investment has strings attached. Libyan leader Muammar Gaddafi threatened in January to divert five billion U.S. Dollars (USD) in state investment to the Mediterranean if Africa turned its back on his plans for a continental government
"Africa in itself in my opinion has great opportunities for growth. The opportunities you see in Africa you can't see anywhere else in the world. But you have to be in Africa to do it," said Sultan Ahmed bin Sulayem, head of the Dubai World conglomerate, after signing a 800 million USD deal this year for a free trade zone in Senegal.
In a symbolic shift, Dubai World wrestled a 455 million USD contract to expand Dakar port from France's Bollore, a conglomerate which has flourished under the opaque network known as "Francafrique" linking Paris and its former colonies.
But the new wave of Arab investment is by big companies from the Middle East and North Africa, well equipped to challenge European rivals that thrived in sheltered post-colonial markets.
Senegal's President Abdoulaye Wade has already capitalised on Islamic religious ties to attract investment, easing his country's reliance on Western donors. Saudi loans have rebuilt the roads of the capital Dakar, Iran plans an oil refinery and car plant, and Kuwaiti investors are building luxury hotels.
"We have already started this process, particularly here in Senegal, with investments from Dubai and investments from Kuwait, for example, which are directing their attention to projects here, very important projects.
I could also give you the example of Iran, which hasn't realised projects here yet, but which has four or five big projects to realise in Senegal. But I would like for this to happen not only in Senegal, because all of Africa offers big investment opportunities," said Wade.
Decades of corruption and conflict in Africa have deterred many investors from anything but the easy profits of oil and minerals. But the continent is now enjoying its strongest growth since independence and more than a billion consumers are thirsting for goods and services.
Africa has become the arena for the world's emerging economic powers to flex their muscles. The West has fretted as a phalanx of Chinese and Indian firms sealed multi-billion-dollar trade and investment deals. Now Arab firms are joining them.
Senegal, a former French colony on Africa's western tip, hosts a summit of the 57-nation Organisation of the Islamic Conference this week aimed at boosting ties in the world's Muslim community, which brings together Arab and African states.
Wade would like to see this summit help develop a strong economic partnership between the countries taking part at the conference.
"We have to think of our development in terms of solidarity. For example, regarding the reinforcement of our commerce, we buy so many things from other countries when we could easily find them in the countries from the Islamic Community, which is strange, and it's because of the lack of information and lack of political will. If we want to become stronger, we have to know first of all what is available in the other countries that we could buy instead of buying the same products elsewhere. It's a normal process. The Europeans do it, so why not us," Wade said from his presidential palace ahead of the Islamic Conference Senegal is hosting.
Foreign direct investment in Africa doubled between 2004 and 2006 to a record 36 billion USD. Half of the 18 billion USD for mergers and acquisitions came from developing Asian countries, but Arab investors have been increasing their share, focusing mainly on services, from telecoms to banking and transport.
While Europe suffers an economic slowdown and the United States teeters on the edge of recession with the dollar at record lows, sub-Saharan Africa's economy will power ahead by 6.5 percent this year, according to the International Monetary Fund (IMF).
Arab companies have already shown they are more risk- tolerant than their European counterparts. When British phone giant Vodafone slowed its expansion into Africa after acquiring South Africa's Vodacom, Arabs stepped in.
Since 2005, Kuwait's Zain has spent over 10 billion USD to quickly become Africa's third-largest mobile phone company with operations in 15 countries, attracted by penetration rates of just 30 percent in Africa.
Dakar residents welcome the new influx of capital into Senegal.
"The president said that there is administrative slowness in Europe compared to investment from Arab countries, and to a certain extent Asian countries. This allows countries like Senegal to receive new clients and increase our financial structure," said Dakar resident Moustapha Diouf.
Until Portuguese caravels sailed down Africa's west coast in the 15th century, Arabs were virtually the only influence on sub-Saharan Africa for some 700 years as their camel trains crossed the desert to bring back gold and slaves.
The 7th-century Muslim conquest of North Africa formed a lasting bond between Africa and the Middle East, but cultural and racial tensions persist and have flared into conflict.
In Sudan's Darfur region, more than 200,000 people have been killed in ethnic fighting between Black and Arab Africans, while Arab-dominated Mauritania has only just begun to repatriate thousands of black refugees expelled 18 years ago. Slavery still persists there and in parts of the arid Sahel belt.
The head of the 53-nation African Union Jean Ping said recently that Arab investment to alleviate poverty throughout the continent was the best means of easing tensions between Arabs and black Africans in Sudan and the Horn of Africa.
But many are sceptical, citing differences between Africa's moderate Islam and the more doctrinal Middle Eastern versions. - Copyright Holder: FILE REUTERS (CAN SELL)
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