Owusu on Africa: Casting the net wide – the half-a-billion-dollar Saudi investment in Africa

By Fidel Amakye Owusu

Days ago, I wrote that West Asian states in the Gulf could gain a strategic advantage in the current great power struggle in Africa.

My argument was that the proximity of the Arabian Peninsula to the continent combined with the near-neutral approach to the East-West great power struggle would make the Gulf states more comfortable partners to African states.

This will be enabled by the huge oil cash reserves of these states. Recent gains from global oil prices put these states in a comfortable position to invest in Africa – significantly.

And so what?

Last week, the Reuters news agency reported that Saudi Arabia is cutting deals worth US$500 million across Africa. This is being bankrolled by the Saudi Fund for Development. Interestingly, the fund, meant to support developing countries was established in 1974.

This was the year after the Yom Kippur war and its concomitant rise in oil prices that increased the coffers of the Organization of the Petroleum Exporting Countries (OPEC) member states.

Riyadh is serious in Africa. This notwithstanding, notable risks are present in many of the countries that are going to receive these investments.

What is interesting, however, is how wide Saudi Arabia seeks to spread half a billion dollars. The deals are meant to reach all regions on the continent. In West Africa, Senegal and Nigeria are going to have some investment in their respective energy sectors.

Chad, in Central Africa, is also going to be a beneficiary of Riyadh’s investment offensive. With a robust oil sector, the country is not a bad destination – albeit with issues of insecurity.

In the Horn of Africa, the Gulf State just like the neighboring United Arab Emirates has shown interest in Ethiopia. Consequently, the country is set to see some boost in its energy sector. Despite security challenges, Ethiopia remains a promising destination for investment.

Riyadh did not ignore Southern Africa in the latest move. Mozambique, with vast gas and oil potential, has signed a US$158 million financing agreement with the Fund. This is going into health and energy infrastructure.

The Saudi Minister of Finance also announced that it is in talks with Ghana’s external debtors to help it out of the economic abyss the country finds itself.

Riyadh is serious in Africa. This notwithstanding, notable risks are present in many of the countries that are going to receive these investments. Chad, Mozambique, Ethiopia and Nigeria have internal insecurity issues that need monitoring and support to fight or mitigate.

Any investment must, therefore, pay attention to these risks as they could potentially undo the benefit to these economies and the ordinary people who may benefit from it.

Fidel Amakye Owusu is an International Relations and Security Analyst. He is an Associate at the Conflict Research Consortium for Africa and has previously hosted an International Affairs program with the Ghana Broadcasting Corporation (GBC). He is passionate about Diplomacy and realizing Africa’s global potential and how the continent should be viewed as part of the global collective.