African economies need to grow beyond commodities, says Buamim
The Dubai Chamber was established by a decree issued by the late Ruler of Dubai, Sheikh Rashid bin Saeed Al Maktoum in 1965. The chamber started its activities with 450 members and a 12-member board of directors. The number of members has since increased to over 150,000, from all economic sectors. There are 24 board members. The chamber has created 27 business groups that are divided by industry, and 43 business councils that are classified by country.
Services of the Dubai Chamber include issuing of Certificates of Origin and ATACarnets; legal services; arbitration and mediation; organising trade fairs and economic forums; organising training programmes for entrepreneurs; serving business groups and councils; credit rating services; contract drafting; business matching services; providing access to updated research and numerous reports. In 2012, in partnership with the International Chamber of Commerce (ICC). In fact, the Dubai Chamber launched the first ICC Regional Banking Commission Middle East and North Africa (MENA), a chapter of ICC’s rule-making body for the banking industry.
In 2012, in partnership with ICC, the chamber launched the first ICC Regional Banking Commission Middle East and North Africa (MENA), a chapter of ICC’s rule-making body for the banking industry.
Later, the chamber launched the International business network, to help global businesses set up in Dubai. It is the first organisation of its kind in the Middle East to offer international membership.
Dubai Chamber has the head office in Deira and another branch in Jebel Ali Free Zone Authority (JAFZA). Representative offices are located in Dubai Airport Free Zone (DAFZA) and the Land Transport Customs Building in Al Aweer.
To what extent has the chamber been interfacing with African business community?
Currently, there are over 12,000 African companies registered with the Dubai Chamber and operate in the Dubai, Dubai non-oil trade with Africa reach AED 118 billion in 2014 growing from AED 84.4 billion in 2011 registering around 40 per cent. Dubai chamber is one of few chambers in the world that has representative offices in foreign markets. It currently has two offices in Africa (Ethiopia and Ghana) and aiming to open two new by the end of quarter 1, 2016 in Mozambique and Kenya. The chamber is studying as well the possibility of opening more offices in Uganda and Angola.
There are 115 South African companies registered with Dubai chamber and operate in Dubai. There are 30 Ugandan companies registered with Dubai chamber and operate in Dubai, there are 242 Kenyan companies registered with Dubai chamber and operate in Dubai, there are 304 Nigerian companies registered with Dubai chamber and operate in Dubai, there are 27 Ghanaian companies registered with Dubai chamber and operate in Dubai, there are also 1683 Egyptian companies registered with Dubai chamber and operate in Dubai. Dubai non-oil trade with South Africa grew from AED 5.5 billion in 2010 to AED 9.6 billion in 2014 registering 74. 5 per cent growth.Dubai non-oil trade with South Africa registered AED 1.8 billion in quarter 1, 2015, South Africa is ranked 30th on Dubai’s list of trading partners worldwide. Dubai non-oil trade with Uganda grew from AED 585 million in 2013 to AED 616 million in 2014 registering 5.3 per cent, Dubai’s non oil trade with Uganda registered AED 171 million in Quarter 1, 2015 and Uganda is ranked 112TH on Dubai’s list of trading partners worldwide.
Dubai non-oil trade with Kenya grew from AED 3.1 billion in 2010 to AED 4 billion in 2014 registering 29 per cent growth, Dubai’s non oil trade with Kenya registered AED 931 billion in Quarter 1, 2015 and Kenya is ranked 49TH on Dubai’s list of trading partners worldwide
Dubai non-oil trade with Nigeria grew from AED 2.8 billion in 2010 to AED 5.5 billion in 2014 registering 96.6 per cent growth, Dubai’s non oil trade with Nigeria registered AED 1.5 billion in Quarter 1, 2015 and Nigeria is ranked 46th on Dubai’s list of trading partners worldwide
Dubai non-oil trade with Ghana grew from AED 3.0 billion in 2010 to AED 6.0 billion in 2014 registering 100 per cent growth, Dubai’s non oil trade with Ghana registered AED 1.3 billion in Quarter 1, 2015 and Ghana is ranked 44th on Dubai’s list of trading partners worldwide
Dubai non-oil trade with Egypt grew from AED 7.2 billion in 2010 to AED 16.0 billion in 2014 registering 112 per cent, Dubai’s non oil trade with Egypt registered AED 3.7 billion in Quarter 1, 2015 and Uganda is ranked 23rd on Dubai’s list of trading partners worldwide.
The chamber is organising the Africa 2015 Global Business Forum with the aim of getting new drivers and fostering partnerships with the continent’s investors. What really informed this initiative, against the current trend in the regional economy in particular and the global economy in general?
The forum became very important in the light of the fact that the past five years have transformed both perceptions and realities in Africa. Businesses are flourishing, from telecommunictions and banking to agriculture and mining, attracted by the rising middle class and the continent’s natural resources. Despite all the challenges, the continent has become a beacon of hope in a difficult world. Indeed, Africa has the potential to be the world’s major driver of growth for the coming decades. It will have two billion people by 2050 and, if growth remains at the current level, the total economy would be around the size of America’s currently.
But there was the concern about the actualisation of this projection as high commodity prices were behind much of the fast-paced growth – just as in previous African booms. Now that prices for oil, iron and copper have plummeted, how do the next five years look? Will recent gas and oil discoveries make up for lower prices? Will the new financial flows that have emerged in recent years – from private equity and home-grown pension funds to direct investment – be sufficient to drive the rest of the economy, creating a sustainable base for high long-term growth? Or could the low commodity price world suck the dynamism out of Africa?
That’s why the third Africa Global Business Forum is bringing government, business and finance leaders from across Africa and around the world to Dubai to explore how they can work together to sustain the momentum and ensure Africa becomes a long-term engine of global growth. AGBF 2015 will be as inspiring and insightful as the previous years’ hugely successful events, which featured the attendance of Heads of State, Heads of Government and Ministers from across the continent, as well as many other high level government delegates from a total of 33 different African nations.
In three years, AGBF now ranks amongst the top global events on Africa tackling the key challenges to business, whilst providing the platform for growth and solutions. The objective of AGBF is to encourage international revenue flows into Africa by engaging leading decision-makers on the global investment scene. The Forum will involve prominent African stakeholders to engage in dialog at the highest level of implementation, advising on key strategic directives related to Africa’s economic outlook. Our aim for 2015 was to channel that energy and dialogue into serious business development, turning the Dubai Forum into the place that tomorrow’s big deals are conceived and nurtured.
Essentially, in our strategic partnership with Africa, we plan to critically discuss the issue of growing the economies beyond the commodities, due to volatility of prices and the discomforting distortion
of economic agenda.
The chamber recently embarked on a study of Islamic economic system with Economist Intelligence Unit (EIU).Can you give a brief insight into its report and how relevant is it to economies in Africa?
The study was undertaken because Islamic finance, halal food and tourism are attractive investment sectors in the UAE. Essentially,
Islamic economy and investment in the African market are the chamber’s top priorities and the new study will contribute to the achievement of these objectives
Our efforts are consistent with the efforts of Dubai in the consolidation of the emirate’s status as the capital of Islamic economy, hence the need to provide information and creating opportunities for successful investments
The report brings forth some interesting insights and information on the current status and potential for Islamic finance and economy in Southern and East Africa
Strong economic growth of the African continent, driven by rising per capita income boosts demand for diverse halal products. Already,
Tanzania, Zanzibar and South Africa are leading the trend towards the adoption of halal tourism market requirements in the African continent. Sub-Saharan Africa expenditure on halal food in 2013 was about $114 billion. The trend has been shifting towards prepared meals, canned, frozen foods and instant foods.
Global Muslim spending on travel is expected to reach $238 billion by 2019. Africa has a small share of the halal market, representing five per cent of the global market travel.
Highlights of a Dubai Chamber of Commerce and Industry study revealed the presence of large investment opportunities in the untapped sectors of Islamic economy in the African continent, especially in the field of Islamic finance, halal food and tourism, in Africa’s south and east markets offering lucrative investment options for UAE investors in the various areas of the promising Islamic economy sector.
However, the highlights pointed to the growing demand in Kenya, Ethiopia and South Africa markets for Islamic finance products and banking instruments in asset management and takaful sectors.
It further revealed that the African region needs somewhere near $98 billion a year to fund its infrastructure needs and Sukuk lends itself well to Africa’s infrastructure gap.
Overall, this study provides a comprehensive overview of the current status and potential for Islamic finance and economy in Southern and East Africa and brings forth some interesting insights and information.
The study pointed that Sub-Saharan Africa regional spend on halal food was about $114 billon in 2013 based on Thomson Reuters data. Emphasis has been mainly on halal meats and meat products, but over the past few years, the trend has been shifting to the introduction of halal franchises, prepared meals, canned, frozen and instant foods.
In spite of its small Muslim population, South Africa has emerged as one of the five largest producers of halal products worldwide largely due to its access to the rest of the Continent and the presence of highly advanced halal certification programmes (60% of all products in SA’s retailers are certified halal) worth approximately ZAR1billion ($71.7 million), according to MATRADE (Malaysia External Trade Development Corporation).
South African supermarkets including South Africa hopes to increase the value of halal exports by $31 billion by 2020 and reinforce its position as gateway to the Continent’s halal food and beverage market.
Halal travel in Africa offers significant growth potential for the tourism industry. Muslim tourists globally represent a major niche market—a market that has a young demographic, is growing in affluence, and is increasingly asserting its unique needs on the travel, tourism and hospitality market.
Tanzania, Zanzibar and South Africa are currently the most popular destinations, and are best equipped for the halal market, but destinations in Africa are still considered for the more intrepid traveller. Poor marketing strategies are symptomatic of the undeveloped market.
The study lists the priorities for Muslim tourists which it said are centred on the availability of halal food, a family friendly environment and accommodating religious practices and gender related nuances such as private pools.
Global Muslim spending on travel is expected to reach $238bn by 2019. Africa has a small share of the halal market, representing only five per cent (Europe 51 per cent), according to DinarStandard research signalling room for growth. There has been a 40 per cent increase in tours to Africa year on year.
The study stated that the success of the halal tourism in Africa depends on the high population density, high rates of growth, and geographical proximity of GCC states, as well as the need for Islamic finance to fund infrastructure projects. The study came up with several recommendations, most notably the need to develop a mechanism and standard for Islamic services covering all relevant financial and hospitality services, according to the approved international standards, while establishing ties with institutions and centres of Islamic finance in Malaysia, Dubai and London, and the establishment of an independent monitoring board to oversee the application of Islamic standards.
The highlights of the study will be fully published during the Africa Global Business Forum in Dubai next month.
How would you describe the chamber’s global expansion strategy?
Our global expansion strategy is to enhance the competitiveness of our members in emerging markets of the world, while highlighting Dubai as the middle ground from where Asian companies can make entry into Africa, and to call upon African companies to set up base in Dubai and to benefit from the lucrative investment opportunities presented by the emirate’s vibrant economic sectors, including trade, tourism logistics and financial services. To this effect, we have set up two representative offices in Ethiopia and Ghana and are soon to open another two in Mozambique and Kenya.
I must stress that Africa is the destination for future investments and the Islamic economic sector in the continent is still in the growth phase. Therefore, we invite UAE companies to work in this area to make Dubai the Capital of Islamic economy as we reach out to African economies.
But the chamber appears silent on Nigeria, which is the continent’s biggest market and economy in your business expansion programme. Why?
I need to explain that while the highlights of our expansion programme focuses on Central and Southern Africa, the opportunities in the west of the continent, especially in Nigeria, will be reviewed during the Africa Global Business Forum in November. That might have informed the establishment of representative office in Ghana. Already, initial contacts have been established with some investors in Nigeria.
For instance, the Dangote Group in Nigeria has signed two deals with us in Dubai, which will significantly promote investment ties between the West African country with Dubai. Also, the Abuja Chamber of Commerce and Industry has been interfacing with us and several strategic talks have been held between us.
We are very optimistic of establishing stronger ties with the present government in Nigeria and the country’s private sector operators, to ensure that our reach-out programme in Africa assumes a wider dimension in the nearest future.