Investment flows between SSA and the Middle increasing

Middle Eastern countries are investing in SSA on an increasing scale, with infrastructure and finance sectors featuring. In 2014, Dubai's Chamber of Commerce estimated that Gulf entities have provided at least USD 30bn of African infrastructure funding over the last decade. Although this also includes North Africa, and much historic investment was focused in Northern Africa (around 60% of flows), there appears to have been a greater focus on SSA in recent years, with particular attention to countries like Djibouti and Senegal. 

SSA countries have been major recipients of concessional loans from the Kuwait Fund for Arab Economic Development (KFAED). Investment has been focused in countries with large Muslim populations, such as Senegal, Kenya, Tanzania, Mali and Niger. By April 2014 KFAED had supplied USD 1.7bn (KD 482.6bn) in funding to West Africa countries; one of the biggest recipients was Senegal (KD 95.4m), notes Standard Chartered. 

East and Southern Africa also received an additional c USD 1.5bn, with the majority invested in infrastructure. Sovereign wealth funds (SWFs) will likely still look increasingly to SSA given the large stock of accumulated savings they hold. Some of the economies with the largest SWFs, such as the UAE, Kuwait, Qatar and Saudi Arabia, have continued to see increases in the size of their SWFs despite a period of weaker oil prices. Given the longer-term investment horizon of Middle Eastern SWFs, SSA will likely continue to be an attractive investment destination given positive growth momentum in the medium term, favourable population dynamics, and vast investment needs.