DP World: From the Gulf to the Horn of Africa

Photo: Jebel Ali Port, Dubai, September 2020, iStock

Author: S. Mansour

The trajectory of Dubai Ports World (DP World) in the Gulf and its expansion in the Horn of Africa is revealing the nexus of state and commercial involvement in counterterrorism, counter-piracy, maritime security, and supply chain protection. Albeit DP World is owned by the Emirate of Dubai, a closer look at its investments in Africa reveals its close alignment with the security policies and geostrategic considerations of Abu Dhabi.

DP World: A History of Growth

Dubai Ports World’s origin can be attributed to the establishment of Port Rashid in 1972, named after Sheikh Rashid bin Saeed Al Maktoum who ruled Dubai from 1958 until his death in 1990. In 1979, Sheikh Rashid completed the Jebel Ali Port in Dubai. In 1991, the two ports were brought together under the administration of the newly formed, state-owned Dubai Ports Authority (DPA). In the same year, Dubai Ports International (DPI) was established, and administered its first project outside the United Arab Emirates (UAE) at Jeddah Islamic Port in the Kingdom of Saudi Arabia. More than a decades later, in September 2005, DPA and DPI merged to form Dubai Ports World (DP World). DP World evolved into a world-leading port operator including logistics and supply chain management. It is managing ports in the Middle East, India, and Europe, and it is currently operating in more than 50 countries commanding 10% of the world’s container traffic. The company reported the handling of about 71.2 million TEU in the fiscal year 2020.[1]

The set-up of DP World blurs the lines between state and private capital. DP World has a close relationship with the state and, thus, with the ruling families of the Emirates, particularly the government of Dubai. Dubai World, a globally operating holding company holds an 80% share in DP World, the remaining 20% were traded on the Nasdaq Dubai, a Dubai-based stock exchange that lists regional and international shares in the Middle East.[2] The Emirate of Dubai, therefore retains control of the company and ultimately decides its investments. In February 2020, DP World bought its shares traded on the Nasdaq Dubai for $16.75 a share, more than its closing price of $13 per share.[3] By buying all of its shares, the governmental assered full control over the company. This decision was justified on the basis of the company’s desire to implement medium- to long-term strategy, which runs contrary to the logic of financial markets that are mainly focused on short-term gains. This change implied that the company is willing to increase its investments worldwide.

DP World in Africa

DP World is increasing its operations in Africa and concentrates its investments in three cities: Dakar (Senegal), Sokhna (Egypt) and Berbera (Somaliland). In 2020, DP World expressed its interest in developing the southern terminal at Port Sudan, the country’s main maritime transit point.[4] In June 2021, DP World and Somaliland initiated the first phase of the Berbera Port expansion, which included the establishment of a new container terminal that allegedly enhanced the capacity of Berbera from 20 to 500,000 TEUs annually. Additionally, DP Worlds plans to establish a free zone in Berbera emulating the model of Jebel Ali Free Zone in Dubai. The development plan of the port and the free zones promises to transform the city into a center for the region’s maritime trade, serving land-locked countries in the region, and particularly Ethiopia, which owns a 19% share in the port. Ethiopia is aiming to diminish its dependence on Djibouti, through which it currently operates its international maritime trade. DP world’s investment in Dakar (Senegal) is even larger and follows a similar route, as it aims at establishing a main logistics hub linking trade across West and Northwest Africa.  The initial investments will comprise $837 million, while $290 million are reserved for a second phase. DP World’s interest also extends to South Africa. In June 2021, the company announced that it would pay up to $887 million to acquire South Africa’s Imperial Logistics, which has operations in 25 countries in Africa and Europe. DP World,  in partnership with British CDC Group, also established an African investment platform. The company plans to invest $1 billion. through the platform, while the GDC Group dedicated to spend about $320 million over the next years.

DP World’s orientation toward the African continent is shaped by economic and geopolitical considerations and by its quest to ensure food security for its citizens. DP World envisions itself as managing the central gateways for cargo-transport to and from Africa. Non-oil exports and re-exports from the UAE to Africa already amounted to about $20 Bio in 2018. DP World makes 10% of its income on the continent as is speculating on increasing trade volumes in the near future.[5] While DP World’s global trade remained constant, and even decreased in some regions, trade with African countries increased and with it the demands on Africa’s port infrastructures.

Achieving food security is a primary concern for several Gulf states, and the UAE which has particularly limited arable land and water. The country is highly dependent on food imports. The Abu Dhabi-based agribusiness Al Dahra is investing in agricultural production in Zambia, Uganda and Ethiopia. Abu Dhabi’s sovereign wealth fund (ADQ) acquired a 50% share in Al Dahra in May 2020 to enhance food security.[6] The UAE’s investment policy is closely coordinated between state-owned and private companies across various sectors. An example for this approach is DP World’s investment in a multipurpose terminal in Lunda (Angola). In the same time, the UAE is signing a memorandum of understanding (MoU) with Angola to expand the agro-industrial co‑operation between the two countries.[7] By increasing DP World’s investment in African ports, Dubai fortifies its position as a gateway to African markets while securing access to agricultural products.

Furthermore, DP World investments follows geostrategic considerations. They aim at strengthening UAE’s regional role vis-a-vis its rivals, namely Qatar and China. Some port investments aim at weakening these competitors, such as plans of investments in Port Sudan which is operated by a joint venture between a Chinese and Qatari company.  The war in Yemen adds a further dimension to Emirati investments. DP World won a 30-year concession to develop the Eritrean port of Assab in 2018, where the UAE navy and air force already aimed at securing the waterways from potential Houthi attacks.

DP World’s investments in Africa are not without risks. One of the major challenges for DP World activities is political instabilities, such as the current civil war in Ethiopia, the military coup in Sudan, and the ongoing activities of the Islamist al-Shabaab in Somalia. Geopolitical competition and ongoing rivalries might also impede DP World’s expansionist goals. The overall negative impact of the Covid-19 pandemic on the global economy and its detrimental effect on maritime transport[8] provide a further and quite unexpected challenge. Nevertheless, the company could also utilize the global health crisis to expand its investments to reap the benefits of expected economic restoration and growth.

[1] DP World reports +7.6% gross volume growth in Q4 2020 and flat growth for FY2020, DP World, accessible at: https://bit.ly/2ZR9kPl

[2] Natasha Turak, Dubai’s massive port operator DP World is delisting and returning to private ownership, CNBC, February 18, 2020, accessible at: https://cnb.cx/3GRfrUQ

[3] Natasha Turak, op.cit.

[4] Mohamed Al Amin, DP World, China Harbour Vie for Roles in Sudan’s Red Sea Ports, Press From, March 2, 2021, accessible at: https://bit.ly/31f6Smm

[5] د. إبراهيم كرسني، التوجه نحو أفريقيا: موانئ دبي، مركز دبي لبحوث السياسات العامة (بحوث)، 17 يناير 2021، موجود على الرابط التالي: https://bit.ly/3o0Cuns

[6] Chris Janiec, Interview; How Abu Dhabi’s AQD is strengthening food security, Agri Investor, October 5, 2021, accessible at : https://www.agriinvestor.com/interview-how-abu-dhabis-adq-is-strengthening-food-security/

[7] UAE’s DP World expands in sub-Saharan Africa, Economist Intelligent Uni, January 5, 2021, accessible at: https://country.eiu.com/article.aspx?articleid=1580576141&Country=Senegal&topic=Politics&subtopic=Forecast&subsubtopic=International+relations

[8] See United Nations Conference on Trade and Development (2020) Maritime Transport Review. New York. https://unctad.org/webflyer/review-maritime-transport-2020 (Accessed: 17 October 2021).