News: What the United Arab Emirates can teach resource-rich countries in Africa


By now, many observers are familiar with the broad outlines of the United Arab Emirates (UAE) economic story: a relatively small country rising above its region as a stand-out economic performer.

By almost every major index — including the World Economic Forum Competitiveness Index, the World Bank’s Doing Business Index, and the Global Innovation Index — the UAE stands at or near the top of its region.

Dubai, the UAE’s most populous city, is now an international trade and business hub, with an economy organized around four pillars: trade, transport, tourism, and technology. Abu Dhabi, the capital city, is home to the vast majority of the UAE’s oil wealth. Abu Dhabi’s oil is the reason the UAE holds some $1 trillion in assets and reserves through two of its major sovereign wealth funds, the Abu Dhabi Investment Authority (ADIA) and Mubadala. For comparison, the continent of Africa’s total GDP is only about one-third of $1 trillion. Dubai, on the other hand, has sparse oil supplies, and oil accounts for about only 1% of Dubai’s GDP (although oil once contributed to 50% of Dubai’s GDP).

The UAE’s long-term economic strategy — with its four-pillar approach —could serve as a model in some ways for African economies, including at the city, regional, and national level. The scope of this analysis is on possible economic lessons, not political ones; importantly, countries in Africa should keep seeking accountable governance, in addition to growing their economies.

Given the rich endowments in natural resources but limited economic diversification of numerous African countries, what might African countries learn about stimulating economic growth and diversification from the UAE, and particularly Dubai? This is particularly relevant given the adoption of the African Continental Free Trade Area (AfCFTA).

The UAE’s special economic zones offer examples of successful measures to boost trade, manufacturing, and development.

The Jebel Ali Free Zone Authority (JAFZA) is an economic colossus that accounts for $93 billion in annual trade and nearly one-quarter of Dubai’s GDP. It is the classic free trade zone model, with a twist: It is directly attached to the Jebel Ali Port, which gives it easy access to one of the most active shipping networks in the world.

Thousands of companies use the zone as their base for logistics warehousing and/or light manufacturing. For example, the Tea Center within the Dubai Multi Commodities Center (based in the zone) handles over 53 million kilograms of tea per year. Abu Dhabi’s Khalifa Port is likewise a major hub.

By Landry Signé


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