Some of this song is in Arabic, but most isn't. The Arabic is limited to names and expressions.
For the non-English parts, in order to be as phonetically consistent as possible, every time a sound appears, the same letter(s) is/are used to represent it. However there are doubtless some mistakes. In particular, words ending with "n" may in fact end in a "d" or "m" sound.

Guide to pronunciation:
Consonants are pronounced as in English except...

dh pronounced as "th" in English "these"
ch pronounced as "ch" in Scottish "loch"

vowels are as follows...

a as in "hat" OR as in "around"
e as in "met"
i as ee in "seen"
o as in "hole" OR as in "hot"
u as in "put" OR as in "but"

ai as y in "why"
ei as ay in "way"

"adhim" (in front of a person's name) means "great"

No distinction has been made between short and long vowels except in the Arabic word "Salaam" where the standard English spelling is used.

Now the big question...what does it all mean!

Well, firstly Mustapha is in three languages:
English, Arabic, and an unidentified language which we can assume is the Parsi language.

The English bits are obvious. "hey!", "yeah!" and "will pray for you".
The Arabic is as follows...

Mustapha Ibrahim is an Arabic/Islamic name.
Allah - Islamic title of God, literally means (the)God.
Allah-i - I think this is an exclamation like English "gosh!" or "good grief!" or "blimey!"
Salaam Aleikum - an Arabic greeting, literally means "Peace be upon you".
Aleikum Salaam is the correct response, literally "upon you be peace".

"Mochamut", despite slightly strange pronunciation, is definitely meant to be the name of the prophet Mohammed.

The rest of the song is in the unidentified language. We'll assume it is Parsi partly because of Freddie's family background, and partly because an Iranian friend of the translator was able to recognise about one word in ten (!) and of course the Parsis were the original Persians and their language is presumably related to modern Persian (Farsi). Recent checks have been made with someone who speaks excellent Arabic and they assured me that it is definitely NOT Arabic.

What is the song actually about? Your guess is as good as mine! Someone suggested it might be about an Arab friend of Freddie's, perhaps from his childhood in Zanzibar. Maybe. I can't even guess, except to say that the large number of Islamic references seems significant.

Mustapha lyrics
Lyrics Listing