Gulf states channel billions into Africa as China revamps financial model
China has remodelled its African investment strategy, focusing on selective projects, co-financed deals, and debt restructuring, as Gulf states ramp up investments through sovereign-led funding, infrastructure expansion, and diversified acquisitions.
Gulf sovereign wealth and private capital are moving swiftly to plug a growing gap in Africa's development scene, as Beijing eases back from its once-dominant role as the continent's chief financier.
from 2012 to 2022, Gulf Cooperation Council nations splashed more than $100 billion into African markets, with the United Arab Emirates shelling out a hefty $59.4 billion, Saudi Arabia pumping in $25.6 billion, and Qatar trailing with $7.2 billion, according to December 2024's Afreximbank report.
That momentum surged in 2023, when Gulf entities announced 73 new foreign direct investment projects worth more than $ 53 billion, further flexing their financial muscle to entrench their footprint in Africa.
Tellingly, in 2022, the UAE invested $50 billion in Africa, overtaking China and the US as its largest investor, according to EY.
'China isn't retreating, but it's recalibrating,' said Hezron Otieno, a Nairobi-based investment adviser who works with East African sovereign wealth funds. 'They're letting their private sector lead, while Gulf states are filling the sovereign financing vacuum.'
Gulf-led deal-making spans sectors ranging from renewable energy and ports to agribusiness and digital infrastructure such as data centres.
Riyadh, Doha and Abu Dhabi have escalated dealmaking in infrastructure, agriculture and logistics hubs across sub-Saharan Africa, seizing the moment as Chinese state-backed lending cools.
Abu Dhabi's developmental holding ADQ and Saudi Arabia's PIF have ramped up agriculture-linked investments from Sudan to Senegal, while the Qatar Investment Authority has been active in energy logistics, warehousing, and fintech plays in cities such as Nairobi and Accra.
But some experts urge perspective. 'Gulf countries began their external investment journey in their near abroad, then they expanded a little further under the banner of 'food security' — and now we are witnessing the concentric circles go further,' said investment analyst Aly-Khan Satchu.
'But the point is, these investments — while serious for the recipient countries — are just chump change in the scheme of things for Gulf countries.'
Satchu suggests that unless African nations accelerate economic growth, the continent, representing only 3% of the global economy, will see Gulf countries remain below neutral in their African investments.
Still, the Gulf's charm offensive is set to grow as involved countries seek to diversify their economies from oil.
This surge comes as Beijing quietly retools its African playbook, moving away from the debt-fuelled infrastructure blitz that once etched China's presence onto the skylines of dozens of African capitals. Instead, China is making a cautious shift toward local value chains, green industrialisation and privately-led ventures.
For instance, China earns revenue from the Nairobi Expressway through a public-private partnership under the Build-Operate-Transfer model.
The turnpike was financed and constructed by the China Road and Bridge Corporation, which operates the expressway through its subsidiary, Moja Expressway Company.
China's policy lenders — Exim Bank and China Development Bank — are retreating from direct sovereign exposure after a bruising stretch of debt restructurings from Zambia to Ethiopia. Instead, panda bonds and commercial investments are now the preferred tools.
'China is moving away from a mineral extraction-for-export model towards investment in industry, local value chains, and processing capacities,' Oxford Economics opined in a research briefing last November.
That shift aligns with the country's intensifying push toward a green transition — and Africa's critical stockpile of minerals has become central to this reconfiguration.
'Still bearing the scars of recent debt restructurings, China is looking to limit its direct exposure to African government balance sheets while still expanding its influence,' Oxford Economics added.
Several African nations, including Nigeria and Kenya, are preparing yuan-denominated bond issuances targeted at Chinese investors — part of a broader pivot that allows Beijing to maintain economic ties without loading national balance sheets.
Meanwhile, Gulf players are stepping in with a more muscular approach. In March, the Saudi Agricultural and Livestock Investment Company secured long-term leases in Mozambique and Tanzania. In Egypt, Saudi investments in wheat production exceeded $1.2 billion. The UAE has also pledged $1.5 billion for agricultural technologies and irrigation in Morocco.
In Zambia, the UAE's International Holding Company took a 51% stake in Mopani Copper Mines for $1.1 billion.
DP World, a key Emirati logistics player, signed a 30-year contract to upgrade Tanzania's Dar es Salaam port and has now invested $3 billion in African port infrastructure in 2023. Qatar's recent deals include a 25% stake in South African carrier Airlink and a 23% stake in Egypt's North El-Dabaa oil block.
While investments are largely commercial, they also have a diplomatic heft.
Both Gulf and Chinese actors are using capital deployment to secure critical supply chains, hedge political influence, and lock in strategic partnerships ahead of shifting global alignments.
The recalibration is already visible on the ground. In the Democratic Republic of the Congo, Chinese battery firms are pursuing joint ventures with local processors rather than simply shipping cobalt abroad. In Zambia, solar and electric vehicle component facilities are quietly being set up with Chinese equity but without sovereign guarantees.
That focus dovetails with China's green transition, which has accelerated demand for lithium, graphite, rare earths and other critical inputs that Africa holds in abundance. But instead of financing road networks and stadia, the new investments favour beneficiation plants and energy corridors.
Meanwhile, Gulf funds, less scarred by debt defaults, are happy to bankroll large-scale sovereign projects. In Kenya, the UAE recently inked a deal to develop a free economic zone near Mombasa, tied to a broader plan for regional grain and oil distribution.
In Nigeria, entities backed by Qatar's investment authority are in talks over a stake in Dangote's oil refining and distribution arm, leveraging petro-finance to solidify West African energy access. The details surrounding the deal remain scanty.
That divergence in approach is setting up a new capital dynamic where Chinese money is becoming smarter, quieter, more risk-sensitive. Gulf capital is becoming louder, faster, more state-driven.
— Bird story agency
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