Rush for the Gulf: Strategies for Europe to Compete in Africa's Market

The European Union (EU) faces a significant challenge as the Gulf countries, led by the United Arab Emirates (UAE) and Qatar, expand their economic and political foothold in Africa. This expansion poses a risk for the EU, as it may cede both economic and political ground to these new players if it does not move faster and align its engagement with African priorities.

The EU's comparative advantage lies in its technical know-how and access to its single market. This advantage can be leveraged to absorb African production, especially as access to American and Chinese markets tightens and Gulf demand remains limited. However, the EU can become more competitive by overcoming slowness and risk aversion.

The UAE is already one of Africa's most dynamic external investors. The Comprehensive Economic Partnership Agreement (CEPA) with Angola is a part of its ambition to secure privileged access to Angola's ports, logistics corridors, and energy assets. The Gulf, including Qatar and the UAE, have so far largely stopped fostering industrial production or local value addition in their African investments.

Gulf actors may find it difficult to replicate the EU's efforts in encouraging African industrialization. The Gulf can, however, fill important gaps in infrastructure, energy, and finance in Africa. Qatar, for instance, is venturing into state-building roles with potentially high political returns, such as backing the creation of a national development bank in Zambia.

Key sectors for this partnership include agriculture and agro-processing, light manufacturing, renewable energy, and skills training. European countries, such as Germany, are collaborating with Gulf states and Africa on industrial development projects in these sectors. Germany is involved through platforms like KfW Development Bank and trade promotion organizations, facilitating projects to meet Africa's unmet industrial production and local value addition needs.

African governments and business leaders have expressed an urgent demand for the EU to encourage African industrialization. The EU can work with African countries to build integrated industrial ecosystems that encourage African industrialization. It can also partner with Gulf and African actors to link infrastructure projects to industrial development, regional value chains, and skills creation.

Qatari Sheikh Mansoor Al Thani pledged over $100bn in investments during a tour of several African countries. The UAE has signed CEPA with several African countries, including Angola, Central African Republic, Congo Brazzaville, Kenya, and Mauritius. The CEPA signed by the UAE's president, Sheikh Mohamed bin Zayed Al Nahyan, with Angola, is a testament to this growing partnership.

In conclusion, the Gulf's growing presence in Africa presents both opportunities and challenges for the EU. The EU must move faster, scale up smarter, and align its engagement with African priorities to maintain its economic and political influence in the continent. Collaboration with Gulf and African actors can help the EU achieve this goal, particularly in sectors such as agriculture, manufacturing, renewable energy, and skills training.