Conflict and Fragility

Reports and papers

The political economy of Gulf investments in the Horn of Africa

26 Apr 2018 - 14:32
Source: Willem van den Berg-the Clingendael Institute
Riyal Politik

The Gulf and the Horn of Africa share a long history of economic and political engagement. In recent years, following a decade of political disengagement, the Gulf states have become once again major economic and political actors in the Horn region. Horn states have hardly remained passive clients, however, and actively court Gulf states for funding, as economic drivers and remittances have been a key factor for maintaining their domestic political settlements as well as a major determinant of conflict in the region.

In this report authors Jos Meester, Willem van den Berg and Harry Verhoeven explore the extent and impact of Gulf state economic engagement in the Horn as well as the linkages between these financial streams and prospects for regional stability in the Horn of Africa. It traces the historic ties framing perceptions of the relationship between the regions, describes the determinants and instruments of Gulf investment, trade and aid to the Horn. It maps the scope of Gulf investments across Horn states and economic sectors, identifying approximately USD 13 billion between 2000 and 2017, mainly in Ethiopia and Sudan, across the agriculture, manufacturing and construction sectors. 

Such financial streams are key to supporting Horn political settlements, providing the working capital required for further co-option, and to several regimes maintaining a degree of macroeconomic stability (especially under sanction regimes). Gulf countries are important business partners and have been known to mix political, business and religious motives in their interactions. Horn actors themselves however are not passive recipients. Economic drivers have been key to conflict in the Horn, and actors have at times actively courted Gulf countries for financing. The implications of such mobilised resources can have significant consequences on regional stability, migration and security.