Aid turns to trade as UAE plans Ethiopia investments

• Non-oil trade worth $1.4bn in 2022
• More than 12 MOUs signed in official visit
• UAE has invested $2.9bn in Ethiopia

The UAE is planning to increase its investments in Ethiopia as the economic relationship between the two countries evolves from aid to trade.

More than a dozen memoranda of understanding were signed between public and private entities in Addis Ababa during an official visit to Ethiopia by UAE President Sheikh Mohamed bin Zayed al Nahyan last week.

The deals, witnessed by Sheikh Mohamed and Ethiopia’s Prime Minister Abiy Ahmed, aim to build on non-oil bilateral trade that was worth $1.4 billion in 2022.

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Dr Thani bin Ahmed al Zeyoudi, UAE minister of state for foreign trade, said that the UAE’s leadership has directed officials to strengthen relations with African nations, especially Ethiopia.

Ethiopia is the second-largest country in Africa by population, and is home to more than 120 million people. It is a major market for the UAE’s non-oil exports and re-exports, al Zeyoudi said.

The UAE has so far invested $2.9 billion in Ethiopia, mainly in sectors including chemicals, food and beverages, aluminium and pharmaceuticals, he said.

He added that other sectors, such as ports, logistics, storage, warehouses and real estate also showed potential.

The UAE’s non-oil exports to Ethiopia expanded by 4.5 percent year on year in 2022 to reach $210.3 million, exceeding the pre-pandemic level of 2019 by 8.5 percent, while re-exports to Ethiopia grew by 8.6 percent to $553.3 million.

Trade and investment growth has emerged on the back of years of aid provided by the UAE to Ethiopia totalling more than $5 billion, of which development aid accounted for 89 percent.

Wam

Today, more than 120 Emirati companies operate in the Ethiopian market. These include Julphar, DP World, Masdar, Emirates Steel Arkan and real estate developer Eagle Hills, which launched a 4,000-home project in the country’s capital in 2018.

Humaid Mohammed bin Salem, secretary-general of the Federation of UAE Chambers of Commerce and Industry, said the launch of a representative office of the Dubai Chamber has also contributed to building a network between public and private sectors in Ethiopia.

Al Zeyoudi added that the UAE can help Ethiopian exports to reach new markets through its global network of trade partners, while Ethiopia can act as an entry point for Emirati exports and re-exports to East Africa.

Latest figures cited by UAE news agency Wam show non-oil bilateral trade grew by 180 percent over the past decade, and totalled $9.3 billion between 2013 and 2022.

Ethiopia’s top imports from the UAE included mineral oils, raw gold, pulses, pre-fabricated buildings and iron and steel structures and parts. Top re-exports were cars, jewellery, medical vaccines and communication devices and equipment.

The UAE’s top three imports from Ethiopia in 2022 were raw gold, meat and coffee. 

According to Middle East Briefing, part of the Dezan Shira & Associates foreign investment practice, the UAE has become one of Ethiopia’s top trading partners and is one of its four main export destinations.

Middle East Briefing said 200,000 Ethiopians live and work in the UAE, adding that the signing of an investment promotion agreement is an “important step” in developing the bilateral relationship.

An array of projects

Abu Dhabi-based telecoms company Etisalat (rebranded as e&) last month confirmed that it is considering buying a stake in Ethio, a state-controlled operator in Ethiopia.

DP World has also pledged to invest $1 billion to 2031 in developing the Ethiopian side of a road linking Ethiopia to its Berbera port in Somaliland into one of the major trade and logistics corridors of the country’s international trade routes.

Under a deal signed in 2021, DP World and its partners plan to develop the supply chain infrastructure along the corridor including dry ports, silos, warehouses, container yards, cool and cold chain depots, freight forwarding and clearing activities. 

Abu Dhabi Ports is also looking at opportunities in the East African nation and signed a memorandum of understanding with Ethiopia Investment Holdings during the visit last week.

Mohammed Salem Al Rashidi, UAE ambassador to Ethiopia, said that the number of UAE investment projects in Ethiopia is estimated at more than 110.

He said that Ethiopia is a “key investment partner” for the UAE in East Africa, adding there is growing interest to invest in sectors related to food security, agriculture, livestock and logistics.

Last week, a joint statement between the UAE and Ethiopia was also signed on climate action as well as a roadmap between Masdar and the Ministry of Finance of Ethiopia.

Masdar is planning to build a 500MW solar power project in Ethiopia, which has total installed power generating capacity of about 5,000MW, with 91 percent of it coming from hydroelectric power.