Abu Dhabi, the capital of the UAE, has long been recognised for its oil wealth and strategic geopolitical location. However, recent statistics and strategic initiatives indicate that the emirate is making significant strides in diversifying its economy through a robust industrial sector.
According to new data from the Abu Dhabi Chamber, industrial licensing activities in the emirate have seen remarkable growth (excluding free zones). By the end of 2023, the number of new licenses issued surged by an impressive 51%, totaling 363 by year's end. This growth is notable not just for its magnitude but also for what it represents: a commitment to enhancing industrial capabilities and economic diversification efforts.
The rise in industrial licensing signifies a broader trend towards establishing a diversified economy that relies less on oil and more on manufacturing and other non-oil sectors. The implications of this growth are far-reaching, promising job creation, increased foreign investment, and an overall boost to the emirate's GDP. This trend is particularly significant given the global shift towards sustainable and diversified economic models.
THE ABU DHABI INDUSTRIAL STRATEGY (ADIS)
At the heart of Abu Dhabi's industrial transformation is the Abu Dhabi Industrial Strategy, spearheaded by HH Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council. This strategic initiative aims to significantly expand the industrial sector's contribution to the emirate's GDP.
AMBITIOUS GOALS
The Abu Dhabi Industrial Strategy sets ambitious targets to be achieved by 2031, which include:
Doubling the Manufacturing Sector: The strategy aims to grow the manufacturing sector to AED 172 billion, a significant leap that will enhance the emirate's economic resilience.
Job Creation: It seeks to create 13,600 skilled jobs, which will help cultivate a knowledgeable workforce in the industrial sector. This focus on human capital development is essential for sustaining growth in an increasingly competitive global market.
Boosting Non-Oil Exports: There is a goal to increase non-oil exports by 143% to AED 178.8 billion. This is a critical component of the strategy, as it aims to reduce the economy's reliance on oil revenues, aligning with global trends towards sustainability.
Enhancing Global Competitiveness: The strategy aims to improve the UAE's ranking in global industrial competitiveness indicators, where it currently holds the leading position regionally and ranks 29th globally according to the UNIDO Competitive Industrial Performance Index. By focusing on innovation and technology, Abu Dhabi seeks to elevate its status on the world stage.
These objectives are designed to strengthen Abu Dhabi's position as a competitive player in the global industrial arena, attracting both domestic and foreign investment.
GROWING FOREIGN PARTICIPATION
The diversification of Abu Dhabi's industrial base is further exemplified by the increasing presence of foreign companies. In 2023, 46 foreign firms engaged in 15 diverse industrial activities within the emirate. Notably, mining support services emerged as a leading area of foreign involvement, attracting 13 companies. The chemicals and basic metals sectors also witnessed significant foreign participation, with 5 and 4 companies respectively.
This influx of foreign investment not only enhances the emirate's industrial capabilities but also fosters knowledge transfer and innovation, essential components for sustainable growth. Foreign companies often bring advanced technologies and best practices, which can significantly uplift local industries.
STRATEGIC PARTNERSHIPS AND INITIATIVES
Various partnerships and initiatives have emerged in Abu Dhabi, aligning with the goals of the Abu Dhabi Industrial Strategy. Notable collaborations include:
KEZAD GROUP AND SOLAR ENERGY
The Khalifa Economic Zones Abu Dhabi (KEZAD Group) and Abundance Solar Panels Industries signed a landmark 50-year land lease agreement for a solar power plant in KEZAD Area A, Al Ma'mourah. With an investment of AED 55 million, the plant will manufacture solar panels and integrated photovoltaic modules, promoting energy efficiency across various industries. This initiative aligns with the UAE's green agenda and its commitment to achieving net-zero emissions.
The establishment of this facility is significant not only for local energy production but also for positioning Abu Dhabi as a leader in renewable energy technologies in the region. The solar power plant will play a vital role in reducing carbon footprints and enhancing energy security.
ELECTRIC COMMERCIAL VEHICLES MANUFACTURING
The Abu Dhabi Department of Economic Development (ADDED) has also signed a Memorandum of Understanding (MoU) with Emirates Global Industries - Alfahim Group to establish a facility for the manufacturing and assembly of electric commercial vehicles (ECVs). This facility will not only produce electric buses and trucks but will also focus on energy storage and charging solutions, contributing to the emirate’s green transition.
This initiative is particularly important in the context of global trends towards electric mobility and sustainable transportation solutions. By fostering local production of electric vehicles, Abu Dhabi aims to reduce its carbon emissions and create a sustainable transportation ecosystem.
URBAN AIR MOBILITY
In a groundbreaking development, Abu Dhabi will host the first facility in the Middle East and Africa to manufacture sustainable electric-powered aircraft and drones. A partnership between Monarch Airplane Manufacturing and EHang Holdings aims to establish a command-and-control center to manage urban air mobility, further enhancing the emirate's transportation ecosystem.
This project not only represents a leap towards innovative transportation solutions but also sets the stage for Abu Dhabi to become a hub for advanced aerial technologies. The integration of drones and electric aircraft into the transportation framework could revolutionise logistics and passenger transport in the region.
HYDROGEN ECONOMY
The Abu Dhabi Department of Economic Development has partnered with Broaden Energy to launch the first hydrogen equipment manufacturing complex in the region. With over AED 1 billion in investments, this complex aims to support the UAE's goal of becoming a top producer of green hydrogen by 2031. This initiative underscores Abu Dhabi's commitment to sustainability and technological innovation.
The hydrogen economy is gaining traction globally as countries seek cleaner energy sources. By investing in hydrogen production and infrastructure, Abu Dhabi positions itself as a key player in the future energy landscape, attracting global energy companies and fostering local expertise.
ENVIRONMENTAL LEADERSHIP
Sustainability is a core component of Abu Dhabi's industrial transformation. The Environment Agency – Abu Dhabi's Green Industries programme has awarded eco-labels to 13 facilities across various sectors, promoting environmentally friendly practices. This initiative not only recognises companies for their commitment to sustainability but also incentivises further investment in green technologies.
The awarded companies, which include Etihad Airways, Emirates Global Aluminium, and Emirates Steel Arkan, have set a new standard for environmental performance, demonstrating that industrial growth can go hand in hand with environmental stewardship. Their dedication to innovative pollution control solutions and best practices highlights the potential for sustainable industrial practices in the UAE.
As the world shifts towards a more sustainable and diversified economic model, Abu Dhabi's proactive measures in industrial diversification position it well for future challenges and opportunities. The continued focus on research and development, coupled with strategic investments in emerging technologies, will ensure that the emirate remains at the forefront of industrial innovation.