‘Dubai is the financial capital of Africa?’ What is the Gold Mafia talking about?

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Image Credit: David Rodrigo, Unsplash

One statement in the Al Jazeera documentary on corruption and looting in Zimbabwe stuck with me. One guy said ‘Dubai is Africa’s financial capital’ or something to that order. It wasn’t the first time I had heard that, but it was the first time I cared.

My little geography knowledge says Dubai, the UAE city, is not in Africa. How can it be the financial capital of Africa then? Let us look into that.

First, we must understand that Dubai ranks 17th on the Global Financial Centres index. There is no African city in the top 50. The ever-popular Mauritius comes in at number 92 on that list.

So, let’s look at why Mauritius was/is popular and then look at why many are now choosing Dubai instead.

Mauritius

We know that many African corporations are registered in Mauritius, including the Econet Group. Why? Mauritius has multiple tax benefits and non-resident companies can enjoy exemption from corporate tax, capital gain tax, and withholding tax.

Not only that, they allow for unlimited transfer of dividends, capital or profits from Mauritius to any other country.

Zimbabwe lacks this and that’s one of the major reasons we are finding it hard to attract investors. Forex shortages and a local currency that’s useless outside the country make it hard to expatriate dividends etc.

Anyway, Harare falls short in the ease of setting up a company too. The application process is efficient and can be completed online in Mauritius. As you can imagine, this ease of registering a company may attract those looking to do some illegal stuff as we saw in the Al Jazeera documentary.

Dubai

Dubai pretty much matches and beats Mauritius on all of the above.

The Free Zones in Dubai offer tax concessions and customs duty benefits to non-resident investors. It is hard to beat the deal they offer:

  • 100% foreign ownership
  • 100% corporate tax exemption
  • 0% personal income or inheritance tax
  • 100% repatriation of capital and profits
  • No currency restrictions
  • No restrictions on hiring foreign employees
  • No restrictions on the number of visas
  • Easy registration process (even as some in the Al Jazeera documentary attested.)

So, the fact that Dubai is also the better tourist destination may then also factor into entrepreneurs’ decisions. Dubai has a higher quality of life too.

That’s not to mention that Dubai is in a better location. Mauritius is a small island in the wilderness that is the Indian ocean.

Dubai on the other hand is just as close, distance-wise, to Africa and is closer to Europe and Asia too. Indeed it’s easier to connect to other continents from Dubai than from Mauritius. That could be swaying some to choose Dubai over Mauritius and other tax havens.

Indeed we find that the number of African companies registered with Dubai Chamber reached 24,800 in 2021. From 2019 to 2021, African company registrations had grown by 15.5% and the President and CEO of Dubai Chamber said,

Steady growth in Dubai Chamber membership reflects growing confidence in Dubai as a preferred hub for African companies.

Tax havens

Dubai is not technically a tax haven but its tax regime is still pretty attractive.

In the Gold Mafia documentary, we saw how some criminals are taking advantage of Dubai’s ease of doing business. Setting up companies to be used in elaborate money laundering schemes on the fly. That’s of course unfortunate.

However, even at the best of times, when companies being registered there are not used for any criminal activities, tax havens still have their detractors.

The argument is that they deprive a country of much-needed revenue and discourage investment in the nation to which those funds would otherwise flow.

That is true but when we remind ourselves of just how hard it can be to register and run a business in Zimbabwe and most other African countries, we can’t help but understand why some entrepreneurs are choosing to register their companies in places like Dubai.

Zimbabwe is open for business but that means very little to many unless they are into gold. So, if the chance comes, very few would pass on the chance to register their companies in places like Dubai.

What do you think about all this? Should we be comfortable with statements like ‘Dubai is the financial centre for Africa?’ I don’t like it but I get it.

Also read:

RBZ could face sanctions following Al Jazeera documentary. That’s a big deal

Biden extended sanctions on Zimbabwe and revealed it’s all about safeguarding US interests

Crypto undermining power of the West to cripple economies through sanctions – Ukraine-Russia war shows

13 comments

  1. 🤔 Hmm

    …Say ‘Open for Business’ without saying ‘Open for Business’

  2. Anonymous

    BTW, there seems to be a few glitches sneaking into the site. Not disastrous by any means but glitches nonetheless

    – The home page can sometimes fail to load when navigating away from a previous page, giving an ‘Oops! That page can’t be found.’ error.
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    I’m mostly on mobile when these happen so I’m not sure how platform specific these behaviours are✌🏽

    1. Anonymous

      Android phones do that

      1. Anonymous

        Not just Android phones. The home page issue is probably a Query related issue. There is something modifying the query somewhere. It doesn’t always fail but it does fail sometimes. Somebody needs to turn on debugging and check for it in debug.log

        1. Geralt of Rivea

          You are right. I also get that error when using a PC. It’s been there for a while though

    2. Leonard Sengere

      Thank you for this. We are working to resolve this.

  3. Dumisani

    Africa has always been its own enemy, it is unfortunate that historically violence and power have always moved in tandem and as a result not the best leaders emerge but the most violently powerful. These leaders position themselves to stay in power and look the other way when corruption within their ranks occur because they owe so many to be in power. Businesses are easy to set up but there are kickbacks on each and every stage even sadly to meet a head of state. This bureaucracy is laced in greed and vindictiveness to the extent of preventing projects that would have benefitted the country if they do not get their cut. Serving the country is an after thought for most political players whose priorities are positioning themselves to benefit most from the gravy train. Without political will to eradicate corruption as did China with the death sentences the level of impunity will impoverish Africa forever

    1. philosopher

      One of the things I always find fascinating about such documentaries and the commentary that follows is the lack of an informed African perspective.

      There is a lot of pejorative invective thrown around about the African politician. The assumption seems to be that African politicians are somehow more lacking in moral rectitude, inept and selfish than politicians from other places.

      What most geo-political analysts and social scientists will tell you however, is that politicians’ actions in any given situation have more to do with what they need to achieve versus (the often competing) things they need to do to stay in power to be able to reach the achievements. When what they need to do to stay in power takes up more of their time, then they achieve less.

      The question for me is then, what are the constraints that keep African politicians more busy trying to stay in power than in delivering for their citizens?

      If one tries to answer that question, one might very well look very differently at such documentaries.

      *Disclaimer* I do not support the political party currently running the government nor any of the many Zimbabwe opposition parties. I only have a scholarly interest in the dynamics of Global politics.

    2. Anonymous

      Some say ‘hatina’

  4. War-machine

    Ma blacks pfungwa yeprogress ahwana asi kuba ndo specialty yawo

  5. Nhema

    Dubai is a market place policy makers in Dubai mean business.for example you can buy gold in dubsi in shops no need for a licence u can even sell gold without a licence in dubai it is legal you can buy gold coins that you keep at home and sell them when you feel like and not forgetting they are no gold deposits in Dubai and do you know that much of the worlds gold is in Dubai they mean business

    1. Kenso

      U mean to say Gold is a legal tender in Dubai

  6. Kenso

    @leonard-sengere:Does this mean All African companies registered in Dubai are engaged in money laundering schemes

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