The largest of the seven emirates that make up the federation of the UAE, Abu Dhabi is an archipelago that comprises 200 islands and a coastline that stretches 700 km. The emirate is home to Abu Dhabi City, which serves as the federal capital of the UAE. Since the UAE declared its independence in 1971, the emirate of Abu Dhabi has established itself as a regional economic and political powerhouse, and an internationally significant destination for investment.
With about 96% of the UAE’s proven oil reserves located in Abu Dhabi, the emirate is largely responsible for the UAE being home to the world’s seventh-largest oil reserves. Abu Dhabi is looking to sustain its economic growth by channelling oil revenue into expanding high-potential sectors such as financial services, ICT, agri-tech, health care, tourism and manufacturing.
The Abu Dhabi Economic Vision 2030, a wide-ranging economic development strategy, was launched in 2008 as a roadmap for building a sustainable, diversified and open economy. With targets including a reduced reliance on oil and gas over time and a greater focus on knowledge-based industries, successive five-year plans are being implemented to keep the emirate on track to achieve the goals of the vision (see Economy chapter).
History
Archaeological evidence on the coastal plain and in the Al Hajjar Mountains suggests that the area known today as Abu Dhabi has been inhabited continuously for the last 5000 years, with findings on Marawah Island pointing to settlements as far back as 8000 years.
The emirate’s modern history can be traced to the Bani Yas, a nomadic Bedouin tribe that settled around the Liwa Oasis in Al Ain prior to the 1600s. In 1761 members of the Bani Yas tribe first travelled to the island of Abu Dhabi, according to legend, in pursuit of a gazelle. This is the source of the emirate’s name, which means “father of the gazelle”. After finding freshwater, settlers began establishing permanent residences on the island. At first, the Al Nahyan family, which headed the Bani Yas tribe, remained in the Liwa Oasis, but in 1793 they moved to Abu Dhabi and began the construction of the round fort that currently forms part of Qasr Al Hosn.
Due to the region’s favourable position along trade routes between Europe, the Levant and Asia, the area has been an important centre for commerce since Roman times. For most of the emirate’s history, the local population made its living from a seasonal combination of harvesting dates from oases in the interior, and pearling in the shallow seas and lagoons off the coast, with the pearl trade supporting the settlement’s prosperity during the late 1800s.
In 1892 the town’s ruler, Sheikh Zayed bin Khalifa Al Nahyan, signed an agreement ceding control over certain matters to the British, who wanted to preserve their trade route to India, in exchange for protection from the Ottoman Empire. This would see the emirate join the Trucial States and become a British protectorate. Following the death of Sheikh Zayed bin Khalifa in 1909 and the collapse of the region’s pearling industry, caused by the rapid growth of freshwater pearl cultivation in Japan, the emirate’s prosperity declined.
However, the discovery of oil elsewhere in the region in the 1930s would change Abu Dhabi’s fortunes. The first oil concession in the emirate was granted in 1939 but – partly as a result of the Second World War – drilling did not start until 1950, with the first commercial discovery occurring at the end of that decade.
Transformation
The 1960s was a critical period in the emirate’s modern history. In 1962 the emirate started exporting oil, and in 1967 it joined the Organisation of the Petroleum Exporting Countries, becoming its ninth member. That year also saw Sheikh Zayed bin Sultan Al Nahyan ascend as ruler of Abu Dhabi. In 1968 – following the announcement by the UK of its intention to withdraw its forces east of what is now Yemen in 1971 – Sheikh Zayed invited the rulers of five neighbouring Trucial States to join him to create a new nation. On December 2, 1971 the emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain and Fujairah came together to form the UAE, with Sheikh Zayed elected by his fellow rulers as the country’s president and Abu Dhabi City declared its capital. The federation was completed with the inclusion of a seventh emirate, Ras Al Khaimah, on February 10, 1972.
Sheikh Zayed subsequently began to develop and modernise Abu Dhabi and the greater UAE, pursuing an expansive programme of infrastructure development, including schools, housing and hospitals, and establishing public services. The process of economic and social transformation would see the UAE become one of most modern and prosperous countries in the region. When Sheikh Zayed passed away in 2004, his son, Sheikh Khalifa bin Zayed Al Nahyan, succeeded him as president of the UAE and ruler of Abu Dhabi. Sheikh Khalifa passed away in May 2022 and was succeeded as president of the UAE and ruler of Abu Dhabi by his half-brother, Sheikh Mohamed bin Zayed Al Nahyan.
Demographics
Abu Dhabi’s population was 2.9m in mid-2016, according to the latest data available from the “Statistical Yearbook of Abu Dhabi 2020” published by Statistics Centre – Abu Dhabi (SCAD). Nationals made up approximately 19% of the population, with expatriates accounting for the remaining 81%. The UAE’s youth population has grown rapidly in recent years, with more than one-third of Emiratis below the age of 25. The fertility rate in the emirate in 2021 was 1.4 children per woman, broken down as 3.6 children per woman citizen and 0.9 children per non-Emirati woman.
Language & Religion
Arabic is the official language of the UAE, but English is commonly used. Most road signs and restaurant menus are provided in both English and Arabic. In addition, Tagalog, Bengali, Hindi and Urdu are all widely spoken. The official language of all government communication is Arabic, and most legal documents must be written or translated into Arabic before being submitted to government agencies.
Islam is the official religion of the UAE and has a wide-ranging impact on many areas of daily life in the country. The legal system, for example, is based on a combination of certain precepts of sharia law and international legal standards. Islam also plays a significant role in local culture, having a clear influence on art, music, the calendar and general behaviour. As is customary in many Muslim countries, during the month of Ramadan the pace of life slows. Many restaurants close during the day, and working hours change. As a sign of respect to those fasting, non-Muslims should refrain from eating and drinking in public during Ramadan.
The Sunni tradition is the dominant form of Islam in the UAE. However, Abu Dhabi’s cosmopolitan population includes adherents of a number of other religions, such as Christianity and Hinduism, and the emirate is home to a variety of houses of worship. The constitution of the UAE guarantees freedom of religion in accordance with established traditions and local customs.
Climate
Like much of the Gulf region, Abu Dhabi has a hot desert climate, which is characterised by clear skies year-round and little rainfall. Maximum daytime temperatures in January, the coolest month, hover around 26°C and fall to about 15°C at night, whereas summer temperatures from June to August regularly exceed 40°C. Rain is rare for much of the year, but occasionally falls during the winter months of December to March.
Topography
Although it is mostly flat, the emirate is also covered by vast sand dunes; the tallest, Tel Moreeb, is over 300 metres high. To the east are the Al Hajjar Mountains, whose highest point, Jebel Hafeet (1249 metres), is located south of the oasis town of Al Ain on the Omani border. Abu Dhabi’s coastline features over 200 islands and hundreds of hectares of mangrove forests, an important habitat for local wildlife. The emirate of Abu Dhabi occupies about 80% of the UAE’s total territory, and is itself divided into three separate regions: Abu Dhabi City; Al Ain (the Eastern Region), which borders Oman; and Al Dhafra, which shares a long frontier with Saudi Arabia to the south and west.
Abu Dhabi City
Located off the mainland on a number of islands, Abu Dhabi City is the capital of both the emirate and the UAE. Of the emirate’s 2016 population of 2.9m, Abu Dhabi City was home to 1.8m people, or 62.1% of the total. Additionally, the city is the most densely populated part of the emirate, with 164 people per sq km in 2016, compared to the emirate-wide figure of about 49 people per sq km.
Al Dhafra
Al Dhafra covers 60% of Abu Dhabi’s area and has substantial natural resources. It possesses 90% of the emirate’s hydrocarbons reserves, which in turn account for the majority of the UAE’s total reserves. The oil and gas sector is the main driver of the region’s economy. The vast Al Hosn gas project, the Barakah Nuclear Energy Plant, the Bab sour gas project and the expansion of the Ruwais oil refinery complex are some of the region’s large-scale developments. Their size makes them both important on a local level and significant contributors to growth and economic development in the country as a whole (see Economy chapter).
The region’s largest cities – Dalma, Sila, Ghayathi, Ruwais, Madinat Zayed, Mirfa and Liwa – are home to the majority of its residents. According to SCAD, Al Dhafra’s population was 334,000 as of 2016, giving it a population density of 9.5 people per sq km.
Al Ain
The emirate’s Eastern Region, Al Ain, although smaller in area than Al Dhafra, was home to 766,900 people as of mid-2016, with most of them living in Al Ain City, the emirate’s second-largest city. Al Ain’s location in the foothills of the Al Hajjar Mountains gives it a more moderate climate than the humid coastal plain, and historically made it a crossroads of trade routes between what is now Oman and the UAE.
Al Ain means “the spring” in Arabic, but the area is also known as the “Garden City” because of its location among natural oases and its ancient irrigation system. Al Ain is considered Abu Dhabi’s agricultural capital (see Agriculture & Food Security chapter). According to SCAD, the region had the majority of the emirate’s livestock in 2019, including 256,782 camels, 42,467 cattle, and 1.9m sheep and goats, as well as most of its plant holdings by area. Other industries are beginning to take hold as well, most notably aerospace and aviation. This is seen in the Nibras Al Ain Aerospace Park, which is hoped to create 10,000 jobs by 2030. The region also has a well-developed education sector and is a popular tourism destination, with a particular focus on the cultural and ecotourism segments.
Federal Government
As per the 1971 constitution, the UAE is a federation of seven emirates, each of which has a high level of autonomy. The federal government, based in Abu Dhabi City, has three branches: executive, legislative and judicial. Sheikh Mohamed, the president of the UAE and ruler of Abu Dhabi, appointed his eldest son, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, as crown prince of Abu Dhabi, and his brother, Sheikh Mansour bin Zayed Al Nahyan, as vice-president and deputy prime minister of the UAE, as well as minister of the presidential court. Sheikh Mohammed bin Rashid Al Maktoum was named the ruler of Dubai and the UAE’s prime minister. The Supreme Council of Rulers, made up of the hereditary rulers of each emirate, is the UAE’s highest national policy-making body.
The Council of Ministers, also known as the UAE Cabinet, is the executive branch of government. It is presided over by Sheikh Mohammed bin Rashid in his capacity as vice-president and prime minister. The Cabinet consists of 34 ministers, and many of the new cohort work in highly specialised areas, such as the minister of state for public education and advanced technology. The federal government oversees security and foreign policy, communications, fiscal and monetary policy, immigration, air traffic control and education, with the emirates retaining considerable power over their own affairs. The legislative branch of government consists of the Federal National Council (FNC). Of its 40 members, 20 are chosen by the rulers of the seven emirates – their allocation depending on the size of the emirate’s population – and the remaining 20 by an electoral college of eligible voters, totalling roughly 225,000 Emirati nationals. The most recent elections to appoint FNC members were held in October 2019. Prior to this election, in June 2019 the electoral rules governing the FNC underwent reform to ensure that 50% of all appointed and elected representatives are women. As a result, the FNC became the most gender-equal legislative body in the Arab world. The next FNC elections are scheduled to be held in October 2023.
Meanwhile, the judicial branch hosts the Federal Supreme Court and Courts of First Instance. The legal system operates both sharia and civil courts, and all judges are appointed directly by the president. In 2017 Sheikh Mansour bin Zayed Al Nahyan announced the establishment of special courts for expatriates and non-Muslims to handle disputes related to inheritance, divorce and child custody that will hear cases under the legal framework of the claimant’s own country or religion. Similarly, in September 2018 Abu Dhabi established a specialised court for labour cases and disputes.
Local Government
Abu Dhabi has used its autonomy to pursue a series of economic diversification programmes under the direction of the Abu Dhabi Executive Council, the executive branch of the emirate’s government. The council comprises 13 members that assist and advise the chairman, Sheikh Khaled, on matters relating to services and performance. The council sets the general policy of the emirate, its development plans, and its laws and decrees. It is also responsible for both approving and monitoring government-backed projects, and providing oversight of government operations as a whole. The implementation of policy initiatives is overseen by various departments and entities, nearly all of which are accountable to the council.
Business Environment
In recent years Abu Dhabi has introduced new policies to support businesses and industries, as well as attract foreign direct investment (FDI), in an effort to diversify its economy. In 2020 the emirate issued a resolution that allows foreigners 100% ownership of businesses in more than 3000 commercial activities, in line with federal law, and reformed the musataha investment partnership programme to enable international investors to rent and develop land owned by government agencies. In addition to measures such as rent rebates, discounts on utility bills and loan guarantee packages, in June 2022 Abu Dhabi launched a strategy to boost the contribution of the industrial sector to the overall economy. As part of this strategy, it will be investing Dh10bn ($2.7bn) across six industrial programmes to more than double the size of the emirate’s manufacturing sector to Dh172bn ($46.8bn) by 2031. Additionally, the Abu Dhabi government introduced land incentives for businesses in the manufacturing and industrial subsectors, offering land rates of as low as Dh5 ($1.36) per sq metre and long-term contracts. Lastly, in order to encourage and support private companies to list on the stock market, in October 2021 Abu Dhabi launched a Dh5bn ($1.4bn) fund to encourage listings on the emirate’s bourse.
Ensuring Stability
Launched in February 2019, Ghadan 21, or Tomorrow 21, is a blueprint for economic growth in the emirate that helped issue 6000 new housing loans, open 12 new schools and launch 300 projects to improve public spaces in its first year. This initiative and others are expected to create a supportive ecosystem to boost the competitiveness of small and medium-sized enterprises (SMEs) and accelerate private sector participation in the economy. In March 2020 the Abu Dhabi Executive Council announced a new 16-point stimulus package under Ghadan 21 in an effort to ensure economic stability amid the global impact of the Covid-19 pandemic. The initiatives included electricity and water subsidies for citizens and businesses, an allocation of Dh3bn ($816.6m) to the credit guarantee scheme for SMEs, and a suspension of tourism and municipality fees. Ghadan 21 proved to be instrumental in enabling Abu Dhabi to mitigate the economic challenges of the pandemic and ensure it emerged from the global crisis in a resilient position.
Economic Vision
To support the Abu Dhabi Economic Vision 2030, in 2016 a new five-year strategy known as the Abu Dhabi Plan was launched. This blueprint outlined shorter-term goals, including creating an effective private sector that provides business opportunities. Although the five-year plan was somewhat disrupted by the pandemic, the government has made progress in developing a diversified, sustainable economy that is integrated into global markets. Looking ahead, creating new sources of income and developing industries that are part of a knowledge-based economy are particular focal points, especially in high-valueadded, non-oil sectors like tourism, manufacturing, logistics, health care, education, financial services and ICT. While working to reach all of the emirate’s goals requires a concerted effort by both private and public entities, private sector funding and FDI will continue to play an important role in this process as the main drivers of economic growth. According to the Abu Dhabi Economic Vision 2030, non-hydrocarbons sectors of the economy, including petrochemicals, are projected to account for 64% of the emirate’s GDP by 2030, while oil and gas activities would contribute the remaining 36%.
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