Oil giant Saudi Arabia has started eying Africa like never before. The Kingdom hosted a Saudi-Arab-African economic conference in Riyadh in November last year. At the gathering, the monarchy committed more than $500 million to projects and investments in Africa through the $700-billion Saudi Public Investment Fund. Nigeria, Ethiopia, Mozambique, Senegal and Chad are to benefit from financing and energy-related agreements. The oil-rich kingdom sees its investments in Africa as just the tip of the iceberg. As the Saudi minister of investment, Khalid Al-Falih, put it: It’s a “scratch on the surface”, as quoted by The Africa Report. Virtually all the leaders of Africa attended that conference, including the presidents of Djibouti, Egypt, Ethiopia, Gabon, Kenya, Mauritania, Niger, Nigeria, Rwanda, Seychelles, Sudan, Zambia and Zimbabwe. Also present was African Union (AU) Commission Chairperson Moussa Faki Mahamat and Comoran President Azali Assoumani, who is the AU chairperson. For almost all the leaders of the continent to have attended the summit indicates how seriously Africa is taking the romance with the monarchy.
What is Saudi Arabia bringing to the table?
The Saudi kingdom is strategising to diversify its economy. It sees overreliance on oil and hydrocarbon resources as economically monotonic, thus, its foray into Africa – a continent with vast investment opportunities in diverse sectors. As part of its target, the kingdom aims to increase its non-oil share of GDP from 16% to 50% by 2030. It is targeting to sink $25 billion into African investments, secure $10 billion from exports, and finance development projects worth $10 billion on the continent within the next 10 years. Also, the kingdom has allocated a $ 1 billion fund for water projects to be set up by 2033. It has also planned security programmes and cleaner energy projects meant to impact at least 750 million Africans.
Last year, a Saudi Press Agency release published on May 2, said that the Saudi minister of industry and mineral resources, Bandar bin Ibrahim AlKhorayef, announced 50 investment opportunities in Africa worth more than SAR96bn ($25.6bn) in the machinery and equipment sector, as part of the monarchy’s National Industry Strategy (NIS), through which it aims to build a more flexible industrial economy through non-oil exports, and aimed at diversifying the country’s industrial base.
Apart from the expected benefits of these huge Saudi investments in Africa, the continent also stands to enjoy some debt relief, as Saudi Crown Prince Mohammed bin Salman, said at the Riyadh summit: “The kingdom is keen to support innovative solutions to address African debt, as it sought during its presidency of the G20 in 2020 to launch initiatives to suspend debt service payments during the pandemic for low-income countries, and the Common Framework for Debt Treatment initiative in many African countries”. Already, the kingdom has settled on South Africa for meat imports. “The Saudi Arabia market presents enormous growth opportunities for South African companies looking to expand their businesses in the Gulf region as shown by local companies that are slowly establishing a presence in that region,” South Africa’s co-chair of the South African–Saudi Arabia Business Council, Stavros Nicolaou, said. Last year, for example, South Africa’s exports to Saudi Arabia rose to R7.3bn ($387m) from R6.6bn in 2022. Between 2012 and 2022, Saudi Arabia sunk $25.6 billion into Africa in foreign direct investment.
Also, Africa can gain some insights and knowledge from Saudi Arabia, about how to manage her oil and gas potentials well and properly to reverse the natural resource curse.
Why Africa?
Africa has vast natural resources – copper, cobalt, oil, gas, gold, bauxite, lithium, manganese, timber, graphite, and several more. Africa accounts for 70% of the global reserves of platinum, 52% of cobalt and 48% of manganese. The Democratic Republic of Congo alone accounts for 70% global supplies of cobalt. However, China accounts for a high percentage of refining of the strategic minerals: cobalt (73%), nickel (68%), lithium (59%) and copper (40%). Also, Africa has the largest sources of solar resource potential in the world, as the globe transitions to renewables. The renewable energy revolution will depend on these critical metals for the manufacturing of wind turbines, solar panels, battery energy storage systems and electric vehicles. There will be so much money to make, as the size of the electric vehicles market is estimated to rise from $7 trillion currently to $57 trillion by 2050, with projections showing a 500% increase in demand for cobalt, graphite and lithium in the next two years. The continent has huge untapped investment potential. It is home to over 1.4 billion people. That is a huge market to ignore. And Africa seems to be where the action is at now. The US, Europe, China and Russia are all scrambling for a foothold on the continent, so, why not an oil giant like Saudi Arabia? Africa is in dire need of development and Saudi Arabia has the wealth to make that happen. The kingdom is less likely to meet anti-Saudi sentiments and political animosity toward it as pertains in the US and Europe.
