This study is conducted in accordance with CRU´s political economy analysis framework. The purpose of moving the political economy analysis to a sector level is to situate the private sector and investment opportunities within a deeper context, in which the most significant power and state connections are understood. The framework combines traditional conflict analysis with elements from social network and power analysis, and draws on recent research across a range of disciplines, namely new political economy, new institutional economics as well as conflict studies. Combined, and especially when applied to a sector — such as the justice sector, the private sector, the security sector, or the political arena more generally — these analytical lenses help bring to the surface the politics and power dynamics that may facilitate or hamper proposed interventions in conflict-affected situations. This way it uncovers hidden stakeholders, the practices and exchanges that facilitate the main actors’ relation to power, and the written and unwritten rules and structures that form the silent backdrop of these relations. This identification of arrangements of power helps identify potential spoilers and entry points for action by showing which structures might be amenable to changes and which structures might be used to the policy maker’s advantage.
The report thus supports conflict sensitivity programming, by recognising that ‘[t]he success of most development efforts, including efforts to strengthen the state and build institutions of public accountability, rises or falls according to the degree to which these efforts are aligned with — or at least do not fundamentally threaten — the interests of powerful national and local actors who are in a position to thwart or co-opt those efforts.’ In a similar vein, the analysis recognises that ‘many times well-intentioned interventions become ineffective because they reinforce an equilibrium that sustains the outcome the intervention attempted to change. These situations can arise from interventions that do not take into account the existing power balance.’
The research design included desk research, quantitative research (see mapping methodology below) and field work. Desk research included a literature review of existing literature and news articles on the topic, as well as initial explorations of the drivers and motives behind Gulf investment projects. Field research was conducted by Jos Meester and Willem van den Berg in November and December of 2017 in Addis Ababa and Dire Dawa, Ethiopia. A total of 23 people were interviewed. These interviewees included bankers, lawyers, businessmen in the agricultural, horticultural, pharmaceutical and manufacturing industries, government officials at the Ministry of Trade and the Ethiopian Investment Commission, former diplomats, researchers at government funded think tanks, researchers at private think tanks, independent researchers, religious elders, and journalists. Reflecting the tensions surrounding the topic, government officials and religious elders are relatively lightly represented. Most of those approached were either unwilling to be interviewed on this topic, or were reluctant to share their views past the facts and figures presented in official government reporting. Only a few were willing to significantly elaborate on their views and experiences. While the information derived from these interviews is informative and may be generalisable to a certain extent, it should be noted that neither the Horn nor the Gulf forms a homogenous block. Extrapolations not taking into account the local context on either side of the Red Sea may therefore obscure important differences.
For this mapping Clingendael’s database on commercial investments by Gulf countries (Saudi Arabia, the UAE, Kuwait, Qatar) in the Horn of Africa (Ethiopia, Sudan, South Sudan, Somalia, Djibouti, and Somaliland) has been used. These investments include foreign direct investments as well as foreign portfolio investments, and involve Gulf entities buying assets of or setting up business interests in the Horn of Africa (both greenfield and brownfield, including affiliates, fully owned subsidiaries and joint ventures). The database is an overview of commercial investments and therefore does not include religious funding, macroeconomic credit, payments to individuals in the Horn, payments for peace processes or similar activities.
This database draws on data from secondary systematic overviews, including Land Matrix, Grain, farmlandgrab.org, Zephyr’s comprehensive mergers and acquisitions data, the International Forum of Sovereign Wealth Funds, and the Ethiopian Investment Commission. The team examined the activities of the largest Gulf companies in six sectors (agriculture, banking, logistics and shipping, sovereign wealth funds, construction and infrastructure, telecommunications) in each of the Gulf states in scope. From this examination, all operations and investments partaking in the Horn of Africa were included in the database (following triangulation with secondary sources). A number of news websites and business registers were manually searched for any articles or entries pertaining to Gulf investments in the Horn of Africa. Any entries encountered that could be verified from multiple sources were included in the database. The database was further enriched with data on ODA projects drawn from the websites of the Arab Fund for Economic and Social Development, the Kuwait Fund for Arab Economic Development, the OPEC Fund for International Development, the Arab Bank for Economic Development in Africa (BADEA), the Saudi Fund for Development, and the Islamic Development Bank.
The database contains 434 investments from 2000 to 2017, spread over 36 locations across the Horn of Africa, in 16 sectors, worth approximately USD 13 billion, and 309 ODA projects between 2000 and 2017, worth a combined total of USD 6.6 billion. The data includes dates, locations, sectors, investment amount, investment type, investment partners and employment creation. For countrywide projects where the specific city or region location data is not available, the project has been coded as taking place in the capital city when represented visually. Similarly, for regional projects the centre of the region was taken as the location of the project for visual representation.