Saudi Arabia's "financing for African countries" strategy

RIYADH, Saudi Arabia

Saudi Arabia said last week it was preparing a financial portfolio of $10 billion worth of exports and another $5 billion in development financing for African countries as it sought to tie down what it said were ‘historical’ ties with the continent.

This will include a $1 billion fund for water projects to be erected by 2033, as well as security programmes and cleaner energy projects targeting at least 750 million people in Africa.

This is coming at a time Saudi Arabia is hunting for a vote for hosting rights of the World Expo in Riyadh due in 2030 but the host is selected on November 28.

Saudi Crown Prince Mohammed bin Salman told a gathering of African leaders in Riyadh that he intends to support “innovative solutions” for African debt as well as improve cashflows in African countries. The project is to run until 2030, the presumptive year in which the globe is supposed to have attained the sustainable development goals (SDGs).

“The Kingdom of Saudi Arabia supports sustainable development and recognises every country’s right to utilise their resources and capacities,” he said at the inaugural Saudi-Africa Summit, which brought together representatives of 50 countries across the continent, among them the entire Horn of Africa leaders.

“The kingdom is keen to support innovative solutions to address African debt, as it sought during its presidency of the G20 in 2020 to launch initiatives to suspend debt service payments during the pandemic for low-income countries, and the Common Framework for Debt Treatment initiative in many African countries,” he said.

In 2020, Saudi Arabia advocated for delayed repayments on poor countries’ loans, debt relief or suspension of interest accruing.

But the 2020 programme under the International Monetary Fund (IMF) was conditional. Known as the Common Framework, it required individual indebted countries to sign a memorandum of understanding with a lender, which will then seek similar favours from other lenders. 

“The Common Framework is intended to deal with insolvency and protracted liquidity problems, along with the implementation of an IMF-supported reform programme,” the IMF said at the time.

G20 creditors had agreed to coordinate to provide debt relief “consistent with the debtor’s capacity to pay and maintain essential spending needs.”

It was unclear whether individual countries had secured any monies yet. But Ghana and Kenya were among those seeking money to provide immediate cash in their economies. On Thursday, Saudi Arabia’s Finance Ministry said it would disburse some $533 million worth of development financing to Africa without naming the countries to benefit.

Usually, Saudis lend either directly via the Saudi Fund for Development or via the IMF. Since 1974, some 600 loans and grants have come to Africa via the Saudi fund worth some $14 billion and spread in 54 countries, a bulletin by the Saudi Fund showed. The fund says it plans $800 million more by 2030 for projects, loans, and grants.

In Riyadh, Saudi Arabia said it was keen to develop “cooperation and partnership and trade ties.” It also launched the King Salman Development Initiative in Africa.

“We also look forward to launching new Saudi investments worth over $25 billion in various fields.

The King Salman Humanitarian Aid and Relief Centre had provided some $450 million in aid to 46 African countries. But Africa’s immediate need is to revive economies, especially in countries that look stable now like Kenya, Tanzania and Rwanda.

Leaders including Kenya’s President William Ruto, Ethiopian Prime Minister Abiy Ahmed – who have been looking for funds to inject into their dragging economies were present.

“There is great complementarity in our development aspirations as adopted continentally in AU’s Agenda 2063, in the UN’s Sustainable Development Goals and in Saudi’s Vision 2030,” said Dr Abiy.

“We must look into deepening cooperation, placing development financing high on the agenda of Saudi-Africa cooperation, so as to seize the opportunities presented in these visions for economic advancement.”

Eritrean President Isaias Afwerki, South Sudan’s Salva Kiir, Tanzania’s Samia Suluhu Hassan and Rwanda’s Paul Kagame were also present as were African Union chairperson and Comorian President Azzali Asoumani, Nigerian President Bola Tinubu, Mauritius President Prithvirajsing Roopun and Malawi’s Lazarus Chakwera.

Sudanese junta leader Abdel Fattah al-Burhan had made the first trip to Riyadh since the war broke out in Khartoum in April between his Sudanese Armed Forces and the Rapid Support Forces.

Nigerien Prime Minister Ali Mahamane Lamine Zeine also made his first overseas trip since he was appointed to lead a government under the junta in August.

The Saudis had touted the meeting as part of efforts to enhance political coordination, address regional security threats and promote economic transformation. But they are targeting Africa, lately, to compete with Middle Eastern peers such as the United Arab Emirates and Qatar, as well as Turkey who have all been increasing diplomatic presence on the continent.

The offers aren’t free lunch, however. Saudi Arabia wants to host the World Expo in Riyadh due in 2030.

“We aim to host Expo 2030 in Riyadh, to present an unprecedented version in the history of this exhibition that may contribute to projecting a better future for humanity,” the Crown Prince said.

“We look forward to your participation in highlighting the important role of Africa, its human and natural resources, growth opportunities and future potential.”

Riyadh is competing with Busan in South Korea for the hosting rights which will be known by 2026. All the invited countries have voting rights, a vote each.

The kingdom currently enjoys diplomatic relations with 54 African countries, with 31 resident embassies. By 2027, officials said Saudi Arabia will increase those to 42.