INTERVIEW: Why Dubai firms have joined race for Kenya investments

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Companies

Hamad Buamim, the president and CEO of Dubai Chamber of Commerce and Industry. PHOTO | COURTESY
Hamad Buamim, the president and CEO of Dubai Chamber of Commerce and Industry. PHOTO | COURTESY 

Kenya has in recent years become the preferred gateway for investors to the Eastern African markets. Nairobi has indeed stood out as the commercial hub from where Asian, European and Middle East firms service the region that is seen to have high economic growth potential.

The Dubai Chamber of Commerce and Industry (DCCI) has recently opened an office in Nairobi to help facilitate such deals as well as help Kenyan firms looking to do business in the Gulf. Ahead of the Chamber’s Global Business Forum Africa 2017 that was held in Dubai this week, the Business Daily spoke with the DCCI president and CEO Hamad Buamim about a wide rang of issues, including how Middle East investors view opportunities in eastern Africa and Kenya’s prospects as a hub and point of entry to the region. Below are excerpts.

Kenya has just had a lengthy and turbulent electoral period that is actually not over yet. Are you concerned about the country’s political risk profile and potential long-term effects on investor sentiments?

I understand now that the election is one of the major issues, but we believe that it is only a temporary thing and that the situation will be stable in the short term. I think a number of countries in Africa are maturing, and I see Kenya as one of them.

The fact that the courts made their decision on the election shows that there is confidence in the Judiciary and the rule of law. We hope that after going through the election the country will be able to put this short period behind it and build more confidence going forward. We do not see it as a challenge.

The chamber has recently opened an office in Nairobi. What have you done so far in providing business linkage between the two countries?

Nairobi office is our latest in Africa. To be honest it takes time to see the results in these relationships but for Dubai and Kenya we already have well-established trade and investments links.

A number of our businessmen have invested in real estate and hospitality sectors in Mombasa and Nairobi. More recently, we inaugurated Carrefour, which is owned by Majid Al Futtaim, who are hiring thousands of Kenyans in the business.

We worked hard to get a licence for the Dubai Islamic Bank, so we can now see good results in building a relationship with Kenya. We hope to support more of that through the existing office.

What are the most promising economic sectors in Africa that your business community is looking at going forward?

We see infrastructure still as a big area, and it is one of the areas that is growing well. Agriculture is also attractive. The Gulf countries import more than $50 billion worth of food every year, almost 10 per cent of our imports, led by Saudi Arabia and the UAE. Abraaj Capital has recently invested $3 billion in Africa mainly in healthcare and agriculture, while the UAE as a whole invested $11 billion in Africa last year.

We are also focusing on the digital economy in a place like Kenya where the telecommunications sector is providing local solutions to human challenges. Investors from the UAE do not mind putting in money into something that can grow very fast. Financial services as well. Dubai Islamic Bank recently established a presence in Kenya. It is one of the high-spending areas for Africa. When we started, commodities were considered a very important area for investment but today it is much less so. Africa is beyond commodities and is instead about consumers, with a growing middle class.

What is your approach when investing in these sectors?

Five years ago Dubai started working with Kenya on the tea sector, since we import a lot of tea to Dubai where there is a lot of mixing, packaging. Today we are the third-largest re-exporter of tea in the world, most of it sourced from Kenya.

The difference between what Europeans have been doing in the sector and our approach is that we believe a lot of manufacturing can take place in Africa, and then here we do just the last part of selling and marketing. We are putting up warehouses and African producers can come and rent them, and continue to own their product up to the last part of the chain.

We are looking to do this with coffee from Ethiopia and flowers from Kenya. We hope to change the situation where the Europeans take 80 per cent of the profits, leaving very little for growers.

What challenges have your investors faced when investing in Africa?

We communicate a lot with investors who are established in this part of the world, mostly international funds. They say one of the challenges with Africa is that while there is a lot of opportunities, there is limited information, or the opportunities are too small to invest in.

How has trade between Dubai and Africa evolved, and which countries are your main areas of focus?

When we started looking at Africa some 10 years ago, the share of Dubai trade with Africa was in the region of $10 billion, today it has grown to $34 billion. It used to be three per cent of Dubai’s total trade, and has grown to 10 per cent today.

We have witnessed a lot of growth not just in traditional trading partners such as Egypt, but also in countries such as Ghana, Ethiopia, Tanzania, South Africa and Nigeria. As Dubai Chambers we have established a presence in Ethiopia, Mozambique, Kenya and Ghana.

We are looking at South Africa as well. We connect businesses from both sides, supporting out local businesses to go to these markets and at the same time helping those from these markets to come to Dubai. Today we have 17,500 African companies registered with the Chamber, representing more than 40 per cent growth in the past two years.

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