Dubai, one of the seven emirates in the United Arab Emirates (UAE), has opened its doors to expand business relations and trade with Africa, but it views South Africa as a perfect location to source much of its food supply needs and to partner with local businesses to promote the agri-business and hospitality sectors.
The Dubai Chamber of Commerce and Industry and the South African Business Council are also conducting a campaign to promote business partnerships with South Africa. Journalists from South Africa were invited to visit what council president Richard Harris described as “an economic miracle” in the middle of the desert.
Next month the Ruler of Dubai, the Prime Minister and vice-president of the UAE, Sheikh Mohammed bin Rashid Al Maktoum, will be hosting the Africa Global Business Forum, a two-day summit focusing on doing business in and with Africa, which will be attended by representatives of two major African economic trade blocs, including Common Market for Eastern and Southern Africa (Comesa) and the SADC, both of which include South Africa.
Hisham Abdullah Al Shirawi, the chairman of Economic Zones World and a key participant in a discussion on free economic zones, believed that African states could tap into the Dubai model of special economic “or free” zones to turbo-charge industrial development. This model could also be replicated for the development of free zones for agricultural and agro-processing purposes in Africa, he said.
Pressed on which countries in Africa would be suitable food sources, he said the test would be countries where water was in abundance and which were not spoilt by strife. He believed Dubai investors would avoid countries where there were clan clashes trying to control agricultural land or monopoly companies with unfair concession arrangements in place.
Chamber director-general Hamad Buamim said agri-business remained the biggest employer in Africa and had the potential to drive the continent’s development.
“The UAE imports more than 80 percent of its food, spending 25.5 billion UAE dirham (about R61.8bn) on food imports in 2010. Dubai has more than 13 500 food establishments and imports food from more than 150 countries,” he noted.
South Africa was the 13th largest food source for Dubai.
The 2 000 forum delegates will explore the lessons learnt from the success of the UAE – and Dubai – free zones and what special features make these zones a success.
Interviewed at the Jebel Ali free zone in Dubai, Al Shirawi made no bones about the positive role of the royal family in driving the economic vision that has turned Dubai into a transshipment hub and a world industrial powerhouse.
The royal family have driven the vision to industrialise Dubai, while weaning the economy off its dependence on oil wealth, a resource that started to dry up in the 1980s. Today the financial services and banking sector, the hospital sector, transshipment activities and industrial expansion have reduced oil revenue to just 3 percent of gross domestic product.
Al Shirawi believed there was a significant business opportunity for African states – and South Africa in particular – to tap into the massive potential to supply the UAE with foodstuffs.
He pointed out that it was expensive to sustain agriculture in the desert region because the process of sea-water desalination was expensive.
Much of Dubai’s huge economic success has been built on a model of attracting multi-national businesses to the free economic zones.
There is no corporate or personal income tax.
Al Shirawi noted that foreign companies operating in the free zones – which included a technopark, a medical free zone and an auto park – were allowed 100 percent ownership of their Dubai operations.
Outside of the zones a 51 percent local partner was required.
“There is zero percent corporate tax for 50 years, a concession that is renewable,” Al Shirawi said, noting that there was no restriction on capital repatriation and a zero percent import or re-export duties.
“There is no restriction on foreign talent or employees,” he added.
Hassan Al Hashemi, the Dubai chamber’s director of external relations, pointed out that part of the economic magic wand was that multi-national companies operating in Dubai did not pay any fees when transferring capital in and out of the emirate.
Harris said there were 234 South African companies doing business already in Dubai. Nedbank Private Bank, previously Fairbairn, was about to launch in the emirate, while Grinaker – known as Al Jaber Grinaker LTA Engineering and Contracting (Alec) in Dubai – had played a major role in the construction of the Madinat Jumeirah. The ancient Arabian style resort consists of two grand boutique hotels, 29 stand-alone summer houses, a traditional souk with a choice of over 40 restaurants, bars and lounges and a 4 500 seat multi-purpose arena, and is set along 2 kilometres of private beach with 25 outdoor swimming pools in the city.
Grinaker has also been part of the building of a concourse at the Dubai Al Maktoum International Airport.
Other South African businesses in Dubai are Nandos, Standard Bank, Barloworld Logistics, Mugg & Bean and the Butcher Shop and Grill, while Murray and Roberts were instrumental in the early phase of the construction of the Burj Al Arab hotel built in the sea and designed to resemble a billowing sail.
Harris, a former Capetonian who runs a life assurance business, also believed that there were huge opportunities to attract Dubai investment in the agricultural sector in South Africa. “It could include poly-tunnel farming in the Karoo,” he said.
Saleh Abdullah Lootah, whose family started the first Islamic bank in the Arab world, runs various food related businesses. He said he was in talks with a South African firm, Khan’s Meat, to look at a partnership to provide halaal foods to the South African market.
Piers Schreiber, the vice-president for corporate communications and public affairs of the Jumeirah Group, said it was interested in expanding in Africa. At present he was not certain whether the luxury five-star brand could be sustained in South African cities, but the group was looking for opportunities to expand in southern Africa.