The international financial crisis is likely to weaken Africa's links with the West and drive it towards other emerging markets, especially China.
The spectacle of huge western banks collapsing while China, Africa's biggest emerging market partner, remains relatively unscathed is likely to have a lasting political and cultural, as well as financial, impact.
"There is gradually going to be a shift in the centre of financial gravity from the West to the East," said Patrick Smith, the editor of the new Africa-Asia Confidential newsletter.
"African economies are going to be looking much more to the East to sell because they realise the western markets are going to be tighter. They are going to have to re-orient their economies, that is where you will see a displacement of western interests."
But while Africa will look east and to Russia and Brazil, analysts say China's ability to expand its footprint in Africa, a presence that has worried the West, will be limited by several factors including its massive existing commitment.
The World Bank's chief Africa economist last week said the crisis could dramatically cut western capital flows that have fuelled recent growth on the continent. Humanitarian funds are also likely to be squeezed by the crisis.
China has so far felt much smaller reverberations of the crisis and remains on course for strong expansion. While GDP forecasts have been reduced, they are expected to remain a robust 8.5 per cent to nine per cent this year and Beijing will still need Africa's oil and other commodities to fuel its rapid industrialisation.
Africa is also seen increasingly as a source of food supply and precious agricultural land.
Chinese officials predict Sino-African trade could reach up to US$110 billion (Dh404bn) this year, 40 per cent more than last year. "There is a withdrawal of [western] capital from emerging markets, from frontier markets back to traditional asset management-type investments, while at the same time Chinese investments continue unabated," said Martyn Davies, the head of Frontier Advisory, a research company in South Africa.
"China's investment towards the continent won't fall off at all, despite global financial turmoil," said Mr Davies, a China expert.
Most analysts agree there will be little significant fall in China's investment, most of it part of a long-term strategy focused on securing raw materials, and on big infrastructure projects. But it is questionable whether the crisis will create much extra space for Chinese expansion.
Razia Khan, the head of Africa research at Standard Chartered, points to India, Russia and Brazil as other sources of continuing investment."I am not sure that the characterisation that this is going to leave the way open for increased Chinese engagement in Africa to the exclusion of all other interests is necessarily the correct one," she said.
Gulf sovereign wealth funds will also still look to Africa for big moneymaking opportunities, even if western portfolio investments dry up. "I think for most investors there is still very much the perception that Africa is undervalued as a region," Ms Khan said.
Mr Smith said China was so hugely invested in the continent already that it would be physically difficult for it to do more. "It has a portfolio approaching $30bn of major energy construction projects and mineral extraction projects in Africa," he said.
"I am sure that if there are some great opportunities and there is less competition from the West [then] obviously they are going to jump on it, but it is difficult to see where, because already they were outstripping the West in all the big new projects."
"I do think there are structural issues, they must have limits of their own engineers. How many power plants can they actually construct in Africa?"
In addition, China is unlikely to remain immune from the global crisis, despite the comparative insulation of its financial system.
"We are into a period of cyclical downturn and that will affect Asia as much as it is going to affect the rest of the world," said Stephen Bailey-Smith, the head of Africa research at Standard Bank.
"China at the moment is an export-orientated country and that is not going to be a good place for them, so their demand for commodities will be less... I do not buy the decoupling argument, absolutely not," he added.
Like other analysts, Mr Bailey-Smith also believes predictions of a reduction in longer-term western investment in African infrastructure projects could be overblown. "Are the companies in the West particularly leveraged in their FDI [foreign direct investment] exposure? No. Not really."
* Reuters
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2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
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UAE currency: the story behind the money in your pockets
FIGHT CARD
1. Featherweight 66kg
Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg
Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg
Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg
Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg
Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg
Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg
Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg
Mostafa Radi (PAL) v Abdipatta Abdizhali (KGZ)
9. Featherweight 66kg
Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg
Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Ruwais timeline
1971 Abu Dhabi National Oil Company established
1980 Ruwais Housing Complex built, located 10 kilometres away from industrial plants
1982 120,000 bpd capacity Ruwais refinery complex officially inaugurated by the founder of the UAE Sheikh Zayed
1984 Second phase of Ruwais Housing Complex built. Today the 7,000-unit complex houses some 24,000 people.
1985 The refinery is expanded with the commissioning of a 27,000 b/d hydro cracker complex
2009 Plans announced to build $1.2 billion fertilizer plant in Ruwais, producing urea
2010 Adnoc awards $10bn contracts for expansion of Ruwais refinery, to double capacity from 415,000 bpd
2014 Ruwais 261-outlet shopping mall opens
2014 Production starts at newly expanded Ruwais refinery, providing jet fuel and diesel and allowing the UAE to be self-sufficient for petrol supplies
2014 Etihad Rail begins transportation of sulphur from Shah and Habshan to Ruwais for export
2017 Aldar Academies to operate Adnoc’s schools including in Ruwais from September. Eight schools operate in total within the housing complex.
2018 Adnoc announces plans to invest $3.1 billion on upgrading its Ruwais refinery
2018 NMC Healthcare selected to manage operations of Ruwais Hospital
2018 Adnoc announces new downstream strategy at event in Abu Dhabi on May 13
Source: The National
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UAE currency: the story behind the money in your pockets
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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