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.
According to last December’s Afreximbank report, between 2012 and 2022, GCC nations invested over $100 billion in African markets, with the UAE spending a hefty $59.4 billion, Saudi Arabia spending $25.6 billion, and Qatar spending $7.2 billion.
That momentum surged in 2023 when Gulf entities announced 73 new FDI 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 Ernst & Young.
“China isn’t retreating, but it’s recalibrating,” opined Hezron Otieno, a Nairobi-based investment advisor 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, like 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 like 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, whilst 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. It is 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 (PPP) under the Build-Operate-Transfer (BOT) model. The turnpike was financed and constructed by the China Road and Bridge Corporation (CRBC), which operates the expressway through its subsidiary, Moja Expressway Company.
China’s policy lenders—Exim Bank and China Development Bank—retreated 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 (SALIC) 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 will invest $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 primarily commercial, they also have diplomatic heft. Gulf and Chinese actors deploy capital 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 Congo, Chinese battery firms pursue joint ventures with local processors rather than just shipping cobalt abroad. Solar and EV component facilities in Zambia 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 are less scarred by debt defaults and 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 regional grain and oil distribution plan.
In Nigeria, Qatar’s QIA-backed entities are in talks over a stake in Dangote’s oil refining and distribution arm. They are leveraging petro-finance to solidify West African energy access. So far, however, the details surrounding the deal remain scant.
That divergence in approach is setting up a new capital dynamic. Chinese money is becoming smarter, quieter, and more risk-sensitive, while Gulf capital is becoming louder, faster, and more state-driven.
Credit: Seth Onyango, Bird Story Agency
