How UAE is expanding its footprint in East Africa a deal at a time

Almost discreetly, the United Arab Emirates (UAE) has significantly expanded its presence and influence in East Africa through a combination of economic investments, financial partnerships, military cooperation, and strategic infrastructure projects. This multifaceted approach highlights the UAE’s, and more specifically its leader Mohammed bin Zayed, ambition to enhance its geopolitical presence, secure its commercial interests, and contribute to regional stability and development.

The latest example of the UAE’s expanding influence is its partnership with the National Bank of Ethiopia. The UAE Central Bank and the National Bank of Ethiopia have established a bilateral currency swap agreement aimed at enhancing financial and commercial cooperation between the two countries.

Currency swap a rescue act by UAE

This agreement, with a limit set at a nominal value of up to $817 million facilitates the provision of liquidity in local currencies, enabling effective settlement of cross-border transactions. By promoting the use of local currencies and interlinking payment and messaging systems, the pact also fosters cooperation in financial technology and central bank digital currencies.

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This comes after Ethiopia failed to strike a bailout package deal with the International Monetary Fund (IMF), which insisted on the country drawing an implementable plan to restructure its economy, particularly its tax system. Facing economic crisis for quite some time, Ethiopia — which became a member of BRICS, the grouping of emerging economies Brazil, Russia, India, China and South Africa this January — needed foreign exchange to sustain its imports.

With a deal with the IMF not working out, Ethiopia looked up to the UAE, which agreed for a currency swap agreement that is expected to pave the way for more joint business opportunities in the financial and banking sectors, bolstering trade and investment prospects between the two countries. It represents a significant step towards deepening bilateral relations and promoting sustainable development in the region.

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Strategic investments in infrastructure

But Ethiopia is not an isolated case. The UAE has also made substantial investments in infrastructure projects across East Africa, particularly in the development of key ports and trade logistics. DP World, a major Dubai-based logistics company, has played a crucial role in developing the Berbera port in Somaliland, the self-declared country in the Horn of Africa.

This port is strategically important for maritime trade routes, providing a gateway for landlocked Ethiopia to access international markets. Despite strong opposition from Egypt, the UAE backed an agreement that granted port access at Berbera to Ethiopia, highlighting its commitment to strengthening ties with Ethiopia.

In Tanzania, DP World secured a bid to upgrade and operate parts of the Dar es Salaam port, further embedding the UAE’s influence in regional trade logistics. These investments not only enhance trade efficiency but also strengthen the UAE’s strategic presence in the region.

Military cooperation and security

The UAE’s military engagement in Africa has also grown significantly, particularly in the Horn of Africa. This engagement follows a three-pronged strategy: countering terrorism and piracy, securing economic investments through stability-oriented military cooperation, and enhancing influence by supporting non-state armed actors in conflict zones like Libya, Sudan, and Ethiopia.

In Somalia, the UAE has provided extensive training, equipment, and financial support to local security forces, including the Puntland Maritime Police Force and Somaliland’s military. The UAE has also been involved in training the Ethiopian Republican Guard and supporting counter-terrorism initiatives in Chad, Mauritania, and Mali. These efforts are aimed at enhancing the defence capabilities of these countries, promoting regional stability, and securing the UAE’s economic interests.

Strategic maritime interests

The UAE’s interest in East Africa is also driven by strategic maritime considerations. The Red Sea, a critical corridor for global trade, lies at the heart of the UAE’s cross-regional geostrategy. By developing ports and securing maritime routes, the UAE aims to enhance its control over key sea lanes and bolster its military projection capabilities. This includes establishing military outposts and temporary bases in countries like Eritrea, Somalia, and Chad.

The UAE’s strategic maritime interests are further highlighted by its involvement in securing the Bab al-Mandab strait, a vital choke point for global shipping. The UAE’s presence in the Red Sea region, including its military role in Yemen, underscores its commitment to protecting these critical maritime routes and ensuring the free flow of trade.

Humanitarian efforts and diplomatic engagement

Humanitarian initiatives form a critical component of the UAE’s strategy in East Africa. The establishment of a $50 million, 20-bed field hospital in Chad to support refugees from the Sudanese conflict exemplifies the UAE’s humanitarian outreach. This initiative is part of a broader policy focusing on East Africa, aiming to bolster the UAE’s international status and open up new opportunities for Emirati businesses.

The UAE’s diplomatic engagement in the region extends beyond humanitarian efforts. By fostering close ties with East African countries, the UAE aims to create a favourable environment for its businesses and secure strategic partnerships. The UAE’s comprehensive economic partnership agreement with Kenya, concluded in February 2024, is a testament to this approach, opening new avenues for trade and investment.

But UAE has faced challenges and battled controversies

Despite these efforts, the UAE’s activities in East Africa have not been without controversy. Allegations of supporting the Rapid Support Forces militia in Sudan and involvement in the Tigray conflict in Ethiopia have drawn criticism.

Additionally, the UAE’s strategic moves in the region face competition from other foreign powers like China and Saudi Arabia, which also seek to expand their influence.

The UAE’s involvement in the region has also attracted criticism from local and international actors. Allegations that the UAE is prolonging conflicts in Sudan and supporting controversial military actors have been met with denials from Emirati authorities, who assert that their involvement is primarily humanitarian. Nonetheless, these controversies pose a challenge to the UAE’s efforts to build a positive image and maintain stability in the region.

What it means for the future

Looking ahead, the UAE is expected to continue its expansion in East Africa, leveraging financial aid, investment, and diplomacy. The threat to international shipping from Yemeni Houthi rebels and the need to secure commercial partners and diplomatic links will likely reinforce the UAE’s engagement in the region.

However, the UAE will need to navigate the complexities of regional politics and potential security risks, including attacks from militant groups like al-Shabaab, which have previously targeted Emirati forces.

The UAE’s future in East Africa will likely involve a continued focus on economic and infrastructure development, coupled with strategic military and diplomatic efforts. By fostering strong partnerships and addressing regional challenges, the UAE aims to consolidate its influence and contribute to the prosperity and stability of East Africa.

Having become the fourth most invested power — after China, the European Union and the US — the UAE’s expanding footprint in East Africa has a strategic blend of economic investment, military cooperation, and humanitarian efforts to serve commercial interests, enhance its geopolitical influence, and make it the hegemonic power in the region.