Traditionally, investments from the Arabian Gulf into Africa have focused on North Africa, owing partly to closer cultural ties and the Gulf’s focus on western markets. This scenario is slowly changing and so too are the pan-African investment strategies of Gulf investors.
According to the Economist Intelligence Unit, FDI inflows from the Gulf to sub-Saharan Africa topped US$9.3 billion between 2005 and 2015, with Kenya, Uganda, South Africa and Nigeria attracting the largest number of Gulf investors. Investors are becoming increasingly cognizant that market volatility, partly owing to limited liquidity, requires a longer-term investment approach. Private co-equity investments, the acquisition of private equity-owned assets as well as direct buyouts and the acquisition of minority stakes in companies, are the most significant modes of market entry in sub-Saharan Africa.