The Red Sea--a new area of prosperity.

Author:Lopes, Carlos
Position:PERSPECTIVE
 
FREE EXCERPT

Trade between the African and Arab countries bordering the Red Sea has been negligible until now. However, there has been a recent upsurge of activity and a great deal more can be done to promote links.

The countries of East Africa and the Gulf, bordering the 2,200km length of the Red Sea, share close geographical, historical, cultural, and political links.

Religion is obviously part of that cement, as is the arid nature of their territories. Geostrategic interests and demographic dynamics should have brought the two sides of the sea even closer. Yet, it is easy to overlook such links when assessing economic prospects.

Long-term forecasts for the region's share of global trade remain flat. Trade forecast between the Middle East and Africa for 2050 is 10%, compared with today's 9%.

According to the Dubai Chamber of Commerce, the total FDI into sub-Saharan Africa was merely $93bn from 2005 to 2014,10 times less than the amount for North Africa. These lacklustre intra-regional trade flows mask an untapped opportunity. Today, the Red Sea, the shortest shipping lane between Asia and Europe, crossed by an average 47 ships a day, does not emerge as a catalyst for the development of the people who live on its shores.

The Red Sea serves intense flows of dry commodities and manufactured goods, whereas agricultural products, essential for the food-insecure Gulf, could have been given priority.

Investments from the well-endowed Gulf sovereign funds are placed far away, neglecting neighbours that could offer economic complementarity, a migrant workforce and more reliable security prospects if their societies could just be richer.

Recent developments, however, point to a shifting tide. It started with King Abdullah's announcement of a planned $500bn megacity on western Saudi Arabia's coast. A mirror smaller city in the Egyptian Southern Sinai would also be funded by Saudi Arabia for $10bn.

Qatar, on the other hand, has struck a deal with Sudan to develop a port at Suakin, just off the coast. Djibouti, a key conduit between the Red Sea and the Gulf of Aden, has rapidly expanded its shipping infrastructure to 1.6m tons. UAE plans to expand Somaliland's Berbera and Kenya's Lamu ports.

Fierce rivalry for influence

These logistical developments are accompanied by a fierce rivalry for military influence. Along these coasts, as illustrated by Yemen's civil war, the role of Africa has become more prominent.

Djibouti, with the largest diversity of foreign bases...

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