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Saudi Arabia, UAE Top Gulf Investments in Horn of Africa

The Russian-Ukrainian crisis highlighted the strategic importance of the Horn of Africa region. (Asharq Al-Awsat)
The Russian-Ukrainian crisis highlighted the strategic importance of the Horn of Africa region. (Asharq Al-Awsat)
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Saudi Arabia, UAE Top Gulf Investments in Horn of Africa

The Russian-Ukrainian crisis highlighted the strategic importance of the Horn of Africa region. (Asharq Al-Awsat)
The Russian-Ukrainian crisis highlighted the strategic importance of the Horn of Africa region. (Asharq Al-Awsat)

A recent study pointed to the growth of Gulf investments in the countries of the Horn of Africa, especially in Ethiopia, Sudan, Somalia and Djibouti.

Africa has become an increasingly vital partner for the Gulf states. Investment flows from the Arab Gulf to sub-Saharan Africa amounted to about $3.9 billion between 2005 and 2015, according to recent statistics based on completed projects.

The Russian-Ukrainian crisis highlighted the strategic importance of the Horn of Africa region in terms of its strategic location overlooking the oceans, global trade routes and straits heading from the Gulf states to Europe and the United States.

A recent study issued by the King Faisal Center for Research and Islamic Studies on foreign investment in African countries showed that Gulf companies invested more than $1.2 billion in the sub-Saharan African region, from January 2016 to July 2021, with 88 percent of projects coming from the UAE and Saudi Arabia, followed by Qatar and Kuwait.

The study noted that the region enjoyed attractive investment potential, as 44 percent of its agricultural area is still unexploited, in addition to its great livestock and oil wealth.

Saudi Arabia invests about two million hectares in a number of African countries, while a large proportion of the Kingdom’s agricultural projects are concentrated in eastern Africa.

Djibouti, which is located on the Bab al-Mandab strait, has become a logistical hub for agricultural trade movement between Saudi Arabia and East Africa.

Saudi investments in Sudan have also increased, according to the study. The value of joint projects over the last two decades amounted to $35.7 billion, including ongoing projects that are estimated at $15 billion.

In Ethiopia, around 305 Saudi investors obtained licenses in a period of ten years, to implement 141 projects in the field of agricultural and livestock production and 64 other projects in the industrial sector.

According to the study, the UAE is the fourth largest global investor in Africa, after China, Europe and the United States, respectively, and the top Gulf investor in the continent, with investments reaching $25 billion between 2014 and 2018.

Those projects cover airlines, construction and investment funds.

The Abu Dhabi Fund for Development was at the forefront of investment and financing activity in Africa, as it financed more than 66 projects in 28 African states, with a value of $16.6 billion in 2018. The Fund also allocated $50 million to Emirati companies wishing to invest in Chad.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.