Dubai’s African expansion carries major risks

Significance

DP World, the leading state-owned port operator and logistics company of the United Arab Emirates (UAE), is aggressively expanding its foothold across Africa. As DP World continues to scale its African operations, it seeks to plug into the continent’s long-term growth trajectory and create synergies with China’s Belt and Road Initiative (BRI). However, with Middle East tensions deepening, DP World also faces growing political risks to its investments.

Impacts

• DP World is in a good position to profit in particular around the Horn of Africa, in light of the Ethiopia-Eritrea peace deal.
• Its strategy could stimulate long-term development along the Berbera Corridor, Dakar-Bamako axis and Kigali-Mombasa-Dar-es-Salaam axis.
• DP World’s growing presence in many African countries is likely to go hand in hand with greater UAE political and cultural influence.
• Investments will largely serve the interests of African governments, with most economic gains likely to be captured by a narrow elite.
• Growing competition between Middle Eastern and global rivals could increase existing domestic tensions and competition across Africa.