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Dubai: your gateway to Africa
Setting up a regional treasury centre in Africa is a notoriously intricate process. This is precisely why
informed multinationals have been looking for a more efficient route into the continent. Could Dubai’s
geographical proximity, favourable business environment, and significant technological and infrastructure
investments, provide the solution?
Earlier this year, Dubai International overtook London Heathrow to become the world’s busiest
international airport. Whilst passengers have been travelling from Dubai to all four corners of the
globe, there has been a noticeable uptick in traffic to Africa. In fact, Dubai-based airline, Emirates,
is now the largest carrier in Sub-Saharan Africa and the main non-African airline into the continent.
Whilst this snapshot of the aviation industry highlights an interesting micro trend, it is also illustrative
of a much bigger shift that is impacting the way in which multinational companies do business, and
where they do it from. “Dubai is fast becoming a centralised hub, not just for conducting business
in the Middle East and Asia, but also for doing business in Africa,” notes Geoffrey Gursel, Head of
Sales for Sub-Saharan Africa, Treasury and Trade Solutions, Citi. “Just as airline traffic has
increased, the payments flows between Dubai and Africa have also rocketed in recent years.”
A rising star
“Although Dubai has been a strategic port for millennia, what we are now seeing is something of
a perfect storm,” adds David Aldred, Head of Sales for Middle East, North Africa, Pakistan and
Turkey for Treasury and Trade Solutions, Citi. “The more traditional drivers for Dubai as a
strategic business hub – such as its favourable taxation regime, comparatively easy operating
environment, local talent pool, stable political and economic backdrop, and geographical
proximity to Europe, Asia and Africa – are now being supported by significant domestic and
regional advancements in technology and infrastructure,” he explains.
Indeed, the Dubai government has promised to invest over $8.1bn in new infrastructure in order
to host the World Expo 2020. The aviation industry is set to be a primary beneficiary of this
investment, as the emirate looks to further open its doors to both businesses and tourists.
Another key initiative that is boosting Dubai’s attractiveness is the Smart City vision. The aim is
to use the latest advances in technology – such as fibre optic wireless internet – to create a
model for providing government services that are easily accessible, quick and efficient, using
smart devices. These will include business-related services from ports, customs and bourses.
Elsewhere, the well-documented shift in global economic power is also working in Dubai’s
favour, says Gursel. “Since Dubai enjoys a strategic location on the new Southern Silk Road, it
is well poised to take advantage of economic activity into and among the world’s high-growth
emerging markets (EMs), such as Africa, as part of the evolving South-South trade corridor.”
Being an emerging economy itself, and therefore familiar with the challenges of transitioning into a developed economy, Dubai is
leading the way in terms of EM-to-EM connectivity, he says. And as Africa also becomes more sophisticated, connecting, integrating,
travelling and speaking with the continent from Dubai is becoming easier and easier.
“Numerous Chinese banks and corporates have already realised this and are now leveraging Dubai as a means to access the African
markets,” confirms Gursel. “Many other Western and Latin American companies – across all sectors – are also becoming increasingly
interested in Dubai’s potential as the gateway to Africa.”
Treasury matters
For treasurers, the beauty of all this is that it is now possible to run African treasury operations from outside of Africa, whilst achieving
the desired level of visibility and control. As Aldred explains, “With the ongoing drive towards centralisation and bank account
rationalisation, the days of having seven treasury centres around the world are, to a large extent, behind us. Having an on-the-ground
finance presence in every continent, or in some cases country, simply isn’t practical; neither is it necessary in the digital age.
David Aldred
Head of Sales for Middle East,
North Africa, Pakistan and
Turkey, Treasury and Trade
Solutions, Citi
Geoffrey Gursel
Head of Sales for Sub-Saharan
Africa, Treasury and Trade
Solutions, Citi
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Adam Smith Awards © August 2015