Foreign Minister Lars Loekke Rasmussen addresses a press conference on Denmark's new strategy for Africa on Monday. AFP
Foreign Minister Lars Loekke Rasmussen addresses a press conference on Denmark's new strategy for Africa on Monday. AFP

Denmark closes embassies in Mali and Burkina Faso



Denmark will close its embassies in Mali and Burkina Faso, citing a series of military coups that "severely limited the scope for action in the Sahel region", its Foreign Ministry said on Monday.

The two countries, followed by Niger, last year ended their military and security co-operation with European countries, who had been helping them tackle armed groups in the Sahel. Instead, they turned to Russia and its Wagner mercenaries, further straining relations with their western allies.

Mali has been ruled by a military junta since 2020 and has been battling ethnic Tuareg rebels in the north with help from Russia's Wagner. The Swedish ambassador was ordered to leave the country in August, after a Swedish minister criticised Malian support for Russia. In Burkina Faso a military government took over by coup in 2022.

"One of the most important foreign policy questions of this century will be whether African countries will orient themselves more towards the East or the West," the Danish Foreign Ministry said in a statement.

"We have a clear interest in African countries looking to us in Europe to set the course for their future. We must demonstrate that we offer an attractive alternative to the increasing Chinese and Russian influence on the continent."

The move will be met with the opening of new embassies in Tunisia, Senegal and Rwanda, as part of Denmark's new engagement strategy in Africa. Diplomatic staff at the embassies in Egypt, Kenya, South Africa, Nigeria and Ghana will be bolstered.

Tunisia was an "important partner for Denmark", as the springboard for the majority of migrants crossing the central Mediterranean from the African continent to EU territory. Tunisia also bore the "potential for an expanded partnership" with Denmark on the green transition.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: August 26, 2024, 3:48 PM