Private equity funds, purchase of private equity businesses, direct buyouts or minority share acquisitions represent the most significant modes of Foreign Direct Investment (FDI) entry for Gulf investors interested in Sub-Saharan Africa.

So says a study, produced by the Dubai Chamber of Commerce & Industry in collaboration with The Economist Intelligence Unit, which analyzed Gulf investment into Africa.

The report says that investors from the gulf region mostly either co-invest with Private Equity funds, purchase private equity businesses, and participates in direct buyouts.

It also says that excluding South Africa, stocks and shares remain of limited interest to Gulf investors.

The study finds that malls and hypermarkets are emerging in a handful of countries.

According to it, 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. Manufacturing in Ethiopia, leisure, retail and tourism in Mozambique and Kenya, and education in Uganda were also popular with Gulf investors.

A number of factors that make gulf investment into these sectors particularly attractive: Demographic trends, growing consumer markets, economic stability and an improving business environment, as well as a resilience that has allowed it to withstand global recession and the current commodity price slump.

The study drew attention to the role Gulf airlines have played in opening Africa to international tourists, with Gulf investors owning around 20 hotels and resorts in Sub-Saharan Africa.

Points highlighted by the report:

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  • Gulf firms provided US$2.7bn in foreign direct investment into Sub-Saharan Africa in the first half of 2015,  and a total of US$9.3bn from 2005-2014
  • Nigeria, South Africa, Kenya and Uganda have attracted the largest number of Gulf investors—between 10-25 firms each
  • Financial services, retail, tourism and logistics represent the most favored sectors by Gulf investors
  • Gulf investors own 20 hotels and resorts in Sub-Saharan Africa
  • Sub-Saharan Africa’s population will host a third of humanity by the end of the century
  • National Bank of Abu Dhabi, National Bank of Qatar amongst the most notable investors in financial services sector; MAF Group and Landmark in retail
  • Rani Investments and Kingdom Holdings of Saudi Arabia, as well as Kuwait’s IFA group are the most notable investors in tourism sector
  • DP World, Kuwait’s Agility, and Aramex are the most active in the logistics sector; Julphar, Abraaj, Kuwait’s Al Bader group in manufacturing.

 

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