The Dubai Chamber of Commerce (DCC) says Kenya is among the top four countries in sub-Saharan Africa (SSA) that attracted the largest number of investors from the Gulf in the first half of the year.
Nigeria, South Africa and Uganda are the other countries favoured by foreign direct investment (FDI) from the Gulf region. Such investments range from setting up of green field projects to private equity companies taking up stakes in existing firms.
"Nigeria, South Africa, Kenya and Uganda have attracted the largest number of Gulf investors — between 10 and 25 firms each," said the DCC.
The chamber made the conclusion on the basis of new research. The study further revealed that east African countries had the highest appeal in non-commodity investment from the Gulf.
Commodity exports include those which derive significant income from exports of crude oil and minerals.
"The study also found that East Africa was the most appealing region for non-commodity investment from the Gulf, with retail and hypermarkets, automotives, commercial banking and tourism considered key sectors," said DCC.
It further noted that leisure, retail and tourism in Kenya and Mozambique, manufacturing in Ethiopia, and education in Uganda were also popular with Gulf investors. The investors already own 20 hotels and resorts in SSA.
The chamber report showed the Gulf provided Sh277 billion ($2.7 billion) in FDI to Sub-Saharan Africa in the first half of this year, and Sh953 billion ($9.3 billion) in the 10 years between 2005 and last year.
The most significant modes of FDI entry for Gulf investors interested in Sub-Saharan Africa are co-investment with private equity funds, purchase of private equity businesses and direct buyouts or minority share acquisition.
The study also highlighted private equity investment options, where Abraaj continues to lead the way having closed its third Africa-focused fund with Sh102 billion ($1 billion) in subscribed capital in April 2015.
Also cited is QNB's purchase of a 23 per cent stake in Ecobank of Togo and the Investment Corporation of Dubai's $300 million investment in Dangote Cement of Nigeria. Abraaj, and Ecobank already have investments in Kenya while Dangote Cement is planning a factory in Kitui.
The report showed that demographic trends, growing consumer markets, economic stability and an improving business environment, as well as a resilience are among key factors attracting investors to the SSA.
It predicted an SSA gross domestic product (GDP) growth of 5.3 per cent between 2017 and 2020. By the end of the century, Africa will host 3.9 billion people, it added.
girungu@ke.nationmedia.com
Source: Kenya among top destinations for Gulf bloc investors
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