From multinational HQs to selling secondhand vans, the Gulf state is racing to profit from the continent’s renaissance.
McDonald Chapola keeps Africa on the move. Every morning he heads to Kilimanjaro Motors to buy and sell matatus — the minibus taxis that scuttle around the continent’s potholed streets. “I buy a second-hand Toyota HiAce imported from Japan for $5,000 and sell it for $10,000. A matatu driver can make that back in six months,” he says.
The morning sun is so strong that Chapola, 32, could cook breakfast on the hot metal he is buying. But he is not in his home city of Lilongwe in Malawi — he is 3,000 miles away in the Ras Al Khor industrial district of Dubai. “Dubai is the best place to do business in Africa.”
He’s not joking. Dubai-based African traders in the Ras Al Khor markets buy and sell cars worth £2bn each year, earning the area the nickname “Africar”.
Dubai’s £2bn-a-year car trade with Africa includes matatu taxis (Getty)
Dubai is ‘20 years ahead’ of other Africa logistics hubs
Dubai remains the natural jumping-off point for Africa among global logistics companies looking to increase business across the rapidly growing continent.
The emirate’s highly developed infrastructure makes it a natural base from which to do business in Africa, said Paul Bayer, the senior director of emerging markets for UPS.
“When you see the amount of lift coming out of Dubai with Emirates and others going into Africa, and you see the tremendous capabilities infrastructure-wise, it’s no surprise that Dubai is such a hub,” he said.
While the continent’s logistics capacities are gradually increasing, Dubai is likely to remain the key centre in the short term.
“We’re seeing in Africa the slow rise of the likes of South African Airways, Kenya Airways, Ethiopian Airways and others,” he noted.
“But it takes a lot of time and investment, and Dubai is 20 years ahead right now, so in the short term it will continue to play that key role.”
Mr Bayer was speaking on the sidelines of the Middle East and Africa Business Outlook Conference, held yesterday in Dubai.
Dubai’s total trade with Africa grew to Dh89 billion for the nine months to the end of September, the latest available Dubai Customs figures, placing the continent third in the emirate’s trading regions behind Asia and Europe.
Non-oil trade between the emirate and Africa has increased by more than 700 per cent over the past decade.
There has never been a better time for logistics companies to invest in Africa, according to the Aramex chief executive Hussein Hachem.
“African economies are strongly developing, with GDP growing two to three percentage points faster than global GDP, according to estimates,” said Mr Hachem.
“Investment in infrastructure is consequently supporting increased intra-African trade and greater activity across Africa-Asian trade corridors.
“Africa’s middle classes are also rising in numbers, which is continuing to drive domestic consumption and further increase the demand for imported goods.”
In particular, the development and growth of African regional trade blocks including the East African Community and the South African Development Community will provide significant economic growth and opportunities for logistics players, Mr Bayer noted.
“As these groups grow and develop, and labour and goods can increasingly transfer between countries, that just raises everyone. That’s what we’re starting to see, as well as the steady growth of African exports, and with that come big opportunities.”