On a construction site opposite the Burj al-Arab hotel in Dubai in 2009 (Karim Sahib/AFP).

Financial opacity, a tightly controlled press, wage disparities… While the UAE’s largest city is gradually establishing itself as an essential hub for African business, that success has not been equally distributed.

[SERIES] DUBAI, CAPITAL OF AFRICAN BUSINESS (4/4)

The Dubai expatriates interviewed for this report were unanimous about their life and work conditions, whether they had been living here for a few months or several years.

However, behind the veneer of glass towers and immaculate shopping malls, there is another, much darker reality when it comes to the conditions of another category of the population: that of unskilled migrants, who come to sell their labour on the city’s building sites as domestic workers or even sex workers. Although prostitution is officially banned in the Emirates, it is very much present and visible in some locations where sex workers’ business cards sometimes litter the pavements.

Human trafficking

Poorly protected and badly paid, the plight of this shadowy workforce has recently come to light, particularly in the run-up to the World Expo that Dubai hosted from October 2021 through March 2022.

“The government of the United Arab Emirates (UAE) does not fully meet the minimum standards for the elimination of trafficking” in human beings, the US State Department wrote in its latest Trafficking in Persons (TIP) report.

But after years of denouncing certain inertia, the TIP report highlighted “considerable efforts” in certain areas, with the launch of prosecutions in several cases, while regretting that “violations of labour law that were indicative of traffickings, such as confiscation of passports, late or non-payment of wages, fraud, change of contract, restriction of movement and related abuses” were settled through administrative procedures rather than criminal prosecution.

‘Ethnic gap’ in wages

“I am aware that people are living in extreme hardship. I’ve also seen this on the African continent and I’ve seen it in France,” said the Franco-Senegalese columnist and entrepreneur Hapsatou Sy, adviser to Sheikh Ahmed Bin Faisal Al-Qassimi’s private office, when asked about the issue by The Africa Report in 2021.

Gulf Business, an economic media specialised in the region, noted an “ethnic gap” in the region’s salaries. In the Emirates, for example, “a Western construction project manager earns an average of $15,072 (€13,916) a month, 58.4% more than the $9,513 earned by an executive of the same rank but of Asian nationality, with the salaries of their Arab counterparts falling between these two amounts,” wrote the newspaper in its latest investigation, carried out in 2017. No figures were provided for African executives.

Press censorship

While praising the city-state’s absolute “sense of security”, conversations quickly reveal the democratic and security limits of Dubai’s system, which expatriates seem to experience as “foreigners”. “Dubai is extremely protected and controlled, but that seems normal to me in a society where native residents represent barely 10% of the total population. If you don’t do anything wrong, everything will be fine,” says Frédéric Marchand, development director for Trouvay & Cauvin, a company specialising in the sale of construction equipment.

“A lot of the media [organisations] are based here, so we’re aware of everything that’s going on around the world. But if something serious happens in Dubai itself, it’s guaranteed we won’t find out about it,” says an “Africa” executive from a major European company who has been based here for two years.

The “Titan”, a yacht owned by Russian Alexander Abramov, moored in Dubai’s Al-Rashid port in April 2022 (AFP).

In January 2022, the public prosecutor’s office interrogated several citizens who had posted testimonies on social networks about rockets fired by the Yemeni Houthi militia against the UAE. In June of the same year, almost the entire editorial staff of the newspaper Al Roeya was collectively dismissed.

The journalists had published an article on the reactions of the Emirati population to the rise in energy prices. Amnesty International’s 2022 report, which cites these two events, highlights the emirate’s complete control over domestic news.

Shades of grey

Dubai, the blessed land of offshore company registration and tax optimisation, where you can set up a company in a matter of days, even remotely, is also considered to be the Mecca of tax havens and their illegal corollaries. Tax evasion and money laundering are at the top of the list, as revealed by numerous investigations, including the Pandora Papers, conducted in 2021 by the International Consortium of Investigative Journalists. However, the UAE is not on either of the EU’s tax haven lists – black or grey. But it does appear on the Financial Action Task Force’s grey list.

In 2022, however, the US-based global watchdog on money laundering and terrorist financing highlighted the country’s political commitment and continued efforts to “implement targeted financial sanctions without delay”, “significantly improve [its] ability to confiscate the proceeds of crime” and to develop international cooperation.

Diminishing appeal

Against this backdrop, will Dubai retain its fiscal advantages for long? While the people we spoke to generally consider the measure to be “reasonable”, the introduction of a new 9% tax rate on annual corporate profits in excess of AED375,000 ($102,000) is a “major turnaround”, according to researcher Roland Marchal, who also points to market entry conditions that “are no longer as flexible as they used to be”.

In his view, “the city-state’s focus has changed, with Dubai now dreaming of itself as a global city of luxury tourism.” This does not prevent it from “remaining an economic hub, but only for already established wealth.” He believes African entrepreneurs looking for new horizons would be better off setting up in cities like Shenzhen, China, where “the procedures are simpler, the entry ticket is lower and the African community is already well established.”

Soon, the emirate will also have to consider its long-standing “friend” and great rival, Saudi Arabia, which under the aegis of Crown Prince Mohammed bin Salman has started diversifying its economy and intends to establish itself as a business destination to be reckoned with.​​