Saudi Arabia has committed hundreds of millions of dollars in loans and investments to African countries, as Riyadh seeks to expand its political influence on the continent and take advantage of the commercial opportunities that are available in Africa.
Speaking at the Saudi-Arab-African Economic Conference in Riyadh yesterday, a forum which has brought together leaders from 50 nations in the Middle East and Africa with the aim of strengthening ties between the Kingdom and the African Union (AU), Saudi Arabian finance minister Mohammed Al-Jadaan emphasised the diplomatic and economic importance the government has placed on Africa.
“We have established partnerships with Africa to expand in several sectors and the Kingdom supports more than 400 projects in the African continent,” he said. “The Kingdom is keen to consolidate its relations with the African continent, which is one of the most important axes for the future of the global economy.”
Al-Jadaan went on to note that African markets are also “one of the priorities of the Public Investment Fund,” the Kingdom’s $700bn sovereign wealth fund. Saudi investment minister Khalid Al-Falih added later that the PIF will soon make some “game changing” investments in Africa.
The government itself has also taken steps to increase its economic ties with Africa. Al-Jadaan announced that the Saudi Fund for Development (SFD) will sign agreements worth 2bn Saudi riyals ($533m) with African countries, with support being targeted at countries in debt distress, such as Ghana.
The SFD also announced the signing of a memorandum of understanding (MOU) with the Africa Finance Corporation (AFC). The two organisations will jointly develop and co-finance sustainable development projects in Africa, in a bid to close the continent’s infrastructure gap. Almost 60% of SFD’s financing for developing countries is in Africa already, having financed over 400 projects in 47 countries worth $10.7bn.
William Phelps, who works in Riyadh for Lagos-based venture capital fund Adaverse, tells African Business that investments in Africa are a crucial part of Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy away from oil and expand its political power globally.
“Considered in view of Saudi Arabia’s Vision 2030, it’s unsurprising to see the Kingdom turn to Africa for sustained partnership, investment, and economic collaboration. Saudi is increasingly becoming a global superpower, enhanced by world-leading expertise in key industries and a long-term development plan that will see domestic industries flourish in the next decade,” Phelps says.
“Applying this experience to the economies and resource bases of Africa presents a great opportunity for Saudi and Africa alike, as the former is able to support its local growth through the development of the latter,” he adds. “With a strong scope for mutual return on investment, Saudi investment in the continent is a great indicator of the Kingdom’s shift away from its conventional industries towards a new, more diverse portfolio of specialisation.”
Africa is increasingly becoming the subject of high levels of competition between world powers, with the US, Europe, China, India, Russia, and now Saudi Arabia all looking to make political and economic inroads. Leaders are keen to take advantage of the opportunities available on a continent which includes some of the world’s fastest growing markets and natural resources critical to the future economy.
While the extent to which Saudi-Africa ties will develop remains to be seen, it is evident that Riyadh is putting considerable sums behind a relationship it clearly expects to become of ever-higher economic and political importance in the years to come.
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