AMEInfo‘ Hadi Khatib, business editor, in an exclusive article about how the GCC consulting market faces 6 key post-pandemic challenges elaborated on the consulting sector in the Gulf area of the MENA.
The consultancy business is directly or rather proportionately related to the construction sector that is predicted by GlobalData to recover in 2021 slowly but after contracting by 4.5% in 2020. The region ramping up vaccination programmes is optimistically forecast to recover with 1.9% in 2021 and 4.1% in 2022, by the same leading data and analytics company. So, let us hear Hadi’s thoughts.
The GCC consulting market faces 6 key post-pandemic challenges
After a 12% contraction last year, the GCC consultancy sector faces six challenges to continue leveraging the region’s aspirations for sustainable and profitable business and economic development
The standout performer in 2020 was healthcare, seeing exceptional growth of more than 19%
GCC’s largest consulting market, financial services, took a big hit in 2020, with revenues falling by $160 mn
A strong consulting market growth of approximately 17% across the GCC region forecasted in 2021
The GCC consulting market contracted for the first time in its history—down by just over 12% in 2020, with COVID-19 wiping out nearly $400 million in revenues. The market is now worth around $2.7 billion, a new report by Source Global Research revealed.
2020 saw nervous clients put consulting projects on hold, particularly in hard-hit industries, such as retail, hospitality, and aviation, but also mega projects such as NEOM, World Cup 2022, Qiddiya, and more.
AMEinfo interviewed Edward Haigh, Joint Managing Director at Source Global Research, to inquire about last year’s results and next year’s forecasts.
The discussion revealed six key areas consultants need to keep in mind to gradually recoup their losses and continue leveraging the region’s aspirations for sustainable and profitable business and economic development.
“Consultants will continue to play an important role helping clients in all sectors create greater efficiencies in their organizations, but the key for consultants today will be to re-engage and re-align with their clients in this new normal,” Haigh told AMEinfo.
Areas where COVID-19 boosted consultancies
The standout performer in 2020 was healthcare, seeing exceptional growth of more than 19%.
“So much of that initial surge and response to the pandemic has already happened, and as such consulting to the healthcare sector will slow down in 2021, but pick up again in 2022,” Haigh said. “Consultants will bring new solutions and world-class innovation and expertise to bear on the issues healthcare professionals are facing, particularly around engaging with patients, embedding technology in everything organizations do, and providing remote diagnosis and access to healthcare.”
The GCC consulting market also saw growth in the technology market segment in 2020, as the need to rapidly facilitate the shift to remote working drove strong demand of 5.2%.
Cybersecurity services performed particularly well as companies sought to secure remote work, driving growth of 11.4% last year. Source Global Research expects the cybersecurity consulting market to grow a further 30% in 2021, taking total revenues to $236 mn.
While the GCC’s largest consulting market, financial services, took a big hit in 2020, with revenues falling by $160 mn, Source Global Research expects consultants working in this sector to regain their losses in 2021, as banks push forward with ambitious digital transformation projects, spurred on by both customers embracing digital banking and the competitive threat from fintechs.
Consulting bounce back: Forecasts for 2021
Source Global Research is forecasting strong consulting market growth of approximately 17% across the GCC region in 2021.
Some 63% of organizations in the GCC say their use of consulting support will increase over the next 18 months, with an especially strong interest in the energy & resources, technology, media & telecoms, and manufacturing sectors. Healthcare will prove to be an important sector for consultancies as well.
“The current underpinning the GCC healthcare market today is the creation of a state of the art, forward-looking, citizen-centric, healthcare system fit for its time. There is far less legacy that’s being carried forward if we are to compare the GCC with markets such as the US or UK,” Haigh explained. “This presents a far greater opportunity to create a future healthcare system from scratch, and a greater opportunity for consultants to provide support, too.”
6 challenges facing GCC consultancies
1- Consultancy fee rates
Around 44% of clients expect consultants to cut their fees this year, with 13% expecting the cuts to be steep, in contrast to pre-pandemic expectations that 84% of GCC clients expected rates to rise.
The reason provided was that 55% of clients said they believe many firms are qualified to perform the work that needs to be done, driving down rates.
Haigh said: “Given the ongoing pandemic and its deleterious effect on the consulting market last year, one might well expect consulting fees to suffer over the next 18 months.”
2- Freedom of movement
“The GCC’s consulting market arguably relies on two things more than anything else: freedom of movement for consultants and reliably high oil prices.”
While oil prices suffered during the pandemic with average closing prices of $40, 20% less than 2019, oil has rebounded in 2021 and is currently flirting with $65 going to $70, spelling relief for consultancies.
“Access to Qatar has, historically, not been easy and only those who had previously established presence in the country were able to operate there, but enough work exists in other parts of the region— Saudi and the UAE for example—and so attention shifted elsewhere,” Haigh said.
“But to some extent, the events over the past 12 months have helped find a solution to that. For many, instead of having to be on-site, remote consulting proved it matters less whether someone is based in Riyadh or Dubai,” Haigh revealed. “The really exciting opportunity for leaders in Saudi, UAE, and other GCC countries is that this provides access to consultants wherever they are in the world, not just in the region.”
3- Geopolitics and reputational risks
Geopolitics and reputational risk weigh very significantly on the minds of consultancies, according to Haigh.
“The risks are prevalent in the GCC more than anywhere else. They have the potential to cause dramatic changes in consultants’ businesses, whether that’s a market shutting down suddenly, the taps being turned off, or a leader insisting on changing consultancies midstream,” explained Haigh.
“Consultants have helped clients identify some of the problems that they themselves are creating, but honestly, consultants are used to working in these fairly extreme conditions.”
Relative to other parts of the world, those with relationships tend to benefit more significantly in the GCC. In the early days, consultants had to invest a lot of time building those relationships with clients. Spending a year on building a personal and professional relationship before seeing anything in return is quite normal here.
5- Client ambitions
Haigh said consultants don’t mind their clients’ desire to get things done very quickly, but “Consulting firms tend to find themselves cast in the role of naysayers a bit.”
“They are often put in a position where they affirm their ability to perform the project at hand, but have to caution the client that it will take more time than originally allocated,” Haigh said.
“Based on their experience with other projects, consultants are always trying to insert more realistic time frames and find a way to harness and manage their clients’ ambitions and expectations.”
6- Talent allocation
UAE and Saudi have recently been involved in a tug of war to attract business, each easing regulatory frameworks and offering business incentives to pull SMEs, entrepreneurs, and large corporates over to their side.
“This is a healthy competition for supremacy on projects, and it has been a major driver of growth for consultancies for a number of years,” Haigh explained.
“But, I think what is less clear, is how this will impact the market in terms of supply. Saudi is the largest consulting market, but UAE is where most of the consultants are based. And moving consultants between those two countries has been an enormously challenging thing,” Haigh indicated.
Haigh added that there is a real supply issue for consultants across the region, not just in terms of keeping up with demand, but also figuring out who to put where.
“Making sure that the expertise is available on both sides was made all the more challenging with physical restrictions on talent getting into the country, or talent themselves preferring to work in and from the UAE, instead of more restrictive areas,” said Haigh. “Localization efforts in many GCC countries has exacerbated supply challenges.”
MEA construction activity flat; infrastructure on recovery path
DUBAI, Construction activity in the Middle East was broadly flat in the last quarter of 2020, but there are clear signs of growth in areas such as ICT and energy infrastructure, according to the latest RICS Global Construction Monitor.
The RICS Construction Activity Index for the Middle East and Africa was seen at -10% in Q4, up from -11% in Q3 and -40% in Q2.
This indicates that whilst activity broadly flat, this is an improvement on the negative trends reported back in Q2, stated the expert.
Moreover, looking at a sector level reveals some areas of strength in terms of infrastructure activity, it added.
A net balance of -34% of respondents in the Middle East and Africa said that their workloads in private residential fell in Q4, with -41% of respondents also reporting a fall in private non-residential.
However, -1% of respondents saw a fall in infrastructure workloads, which is more or less flat, and looking at the sub-sectors, there was a rise in workloads in ICT and energy infrastructure, said the RICS report.
Financial constraints continue to hold back activity in the last quarter, with 89% of respondents reporting this as an issue. Cost of materials and insufficient demand are also the main factors holding back activity, it added.
According to RICS, professionals believe infrastructure will be at the forefront of the wider recovery of the sector over the next twelve months.
Middle East experts also expect workloads in private residential and private non-residential to increase this year.
Looking at headcount and profit margins, whilst a net balance of +7% of respondents expects to see a rise in headcount over the course of 2021, -6% of respondents expect profit margins to fall.
Sean Ellison, Senior Economist, said: “The building blocks for recovery are being put into place, with construction activity growing once more on the back of concerted infrastructure investment and rising optimism.”
“Despite the early signs of recovery challenges remain. Whilst construction will play a vital role in wider global economic recovery, the sector’s recovery is not yet entrenched – nor is it universal across countries,” remarked Ellison.
“With infrastructure a key driver in leading this bounce back, greater government spending will be vital. Many governments have committed to substantial infrastructure spending, bringing forward shovel-ready projects and we can expect more fiscal stimulus. How effectively this capital is put to use will dictate the speed of our recovery,” he added.
Globally, infrastructure projects have been central to the construction sector’s return to growth.
The RICS Global Construction Activity Index returned to positive territory in Q4. It rose to +3, signifying the market’s return growth, and up from -9 in Q3 and -24 in Q2.
The trend of modest growth was not uniform across all regions, however. The strongest results were seen in the Americas (+5) and APAC (+8), with respondents noting an increase in aggregate workloads.
However, there is a more mixed picture in Europe (-1) and MEA (-10), where sentiment in Spain, Turkey and South Africa was notably weaker.
Alan Muse, Sector Lead Building & Construction Standards, RICS: “Using effective and timely infrastructure stimulus measures to rejuvenate the economy is never straightforward. New build infrastructure schemes are invariably complex with long gestation periods.”
“Concentrating on quick wins in the repair and maintenance of infrastructure may have a more immediate impact on the market and a quicker multiplier effect. In addition, fiscally constrained governments need to attract more private sector investment into this sector and de-risking projects through the application of standards to improve reporting, data collection and predictability is crucial,” observed Muse.
“Transparent and prioritised pipelines of implementable design and construction work are key to attracting private sector investment from pension funds: comparing pipelines of projects on a common datum basis using ICMS and RICS standards will ensure a consistent and more meaningful approach,” he added.
UAE FIRST NATIONAL RAIL NETWORK TO ‘TRANSFORM THE ECONOMY’ AND KEY ROLE IN REDUCING CARBON FOOTPRINT
Engineers in the Hajar Mountains between Dubai and Fujairah are making way for 16 Kilometers of tunnel, which will one day see trains shooting through it on a journey that stretches from coast to coast, and even possibly further afield.
The UAE is known for its love of cars as well as its strategic ports and airports, but now is betting big on its first national rail network. The 1,2000-kilometre artery will connect the Gulf of Oman to the Persian Gulf, down through the emirates, into Abu Dhabi’s interior and to Ghuweifat on the border of Saudi Arabia, a key step in a long-mooted rail network crossing the Arabia peninsula.
“The top line implication … is that it has the potential to transform the UAE economy — and not just the UAE, but potentially the GCC [Gulf Cooperation Council],” says Richard Thompson, editorial director of the Middle East Economic Digest.
GOING GREEN WITH SUSTAINABLE TRANSPORT
But the move also signals the country’s green ambitions. The UAE has one of the world’s largest footprints per capita, according to the World Bank, and sustainable transport is one way the government plans to reduce it.
The diesel rail line could save 2.2 million metric tons of greenhouse gas emissions per year through its freight capacity alone, says the developer. That’s equivalent to taking 375,000 vehicles off the road and even has the potential to electrify in the future, which would massively benefit the environment by cutting emissions further by using renewable energy.
“I think rail has a huge role to play in helping the UAE reduce its carbon footprint,” says Thompson. “Rail can provide a much more efficient mode of transport for goods and people movement around cities; it can help your cities function better.”
Led by Etihad Rail and funded by the UAE Ministry of Finance and the Abu Dhabi Department of Finance, it has been designed first for freight, and passenger capacity to follow. There is no completion date announced just yet, through “the network is growing as planned” with all contracts awarded, Etihad Rail told CNN.
The network will include links to Jebel Ali Port, Khalifa Port and the Port of Fujairah and industrial hubs in Abu Dhabi, Dubai and Ras Al Khaimah. The route across the UAE, according to Thompson, when connected to an in-progress Saudi network could create a direct link from the Indian Ocean to the Red Sea across the peninsula, bypassing the Straits of Hormuz to the north and the Horn of Africa to the south, with big repercussions for the movement of international cargo.
“You have a more efficient mode of transport, linking ports with each other and removing congestion on the roads and contributing to decarbonization,” he explains.
The executive director of commercial at Etihad Rail, Ahmed Al Musawa, expects 60 million metric tons of freight will move from road and sea to the rail network annually.
Beyond consolidating the UAE’s position as an international transport hub, there will be benefits at a national level too, Al Musawa says. Stage one of the network in Abu Dhabi has transported 33 million metric tons of sulfur since 2016 and has turned the UAE into the world’s largest exporter of the element, he says. Sulfur is used in the manufacturer of everything from fertiliser to paper.
Stage two, which stretches 367 miles began constructions earlier this year, could have even wider benefits.
Kevin Smith, the editor in chief of the International Railway Journal, identifies the railway as a “key strategy … to diversify (the UAE’s) economy slightly away from oil and gas.”
“I think the steel industry, oil and gas industry, then the mining and quarrying industry, should be the main beneficiaries,” says Thompson. “(The network) has the potential to integrate the northern emirate economies much closer into the national economy and accelerate growth and investment in those places.”
OFF THE ROADS TO THE RAILS?
It’s still unknown how the rail line will change the daily lives of the population. Passenger trains running at 124 miles per hour are touted by Etihad Rail – but no date has been announced. If the network follows through, it could change commuting forever.
“When you have direct, fast access, naturally that does change the way we perceive (distance), or we select where we live or work or study,” Al Musawa says. “The access to materials, services and markets can evolve around such a network.”
But will it convince Emiratis to swap their cars for trains? Thompson says there are some obstacles, including the “last mile problem” — getting people from their homes to train stations.
Walking in the summer sun isn’t an attractive option, but Al Musawa says ride-sharing and “other micro-mobility solutions” may be the answer, adding Etihad Rail is learning from other countries’ experiences.
“I think there’ll be great demand,” Smith argues. “Their whole cities are built around the car, but I think the popularity of the metro (in Dubai) has shown that people will use it if it’s there.”
The damaged buildings include 50 ancient buildings reports Hassan Darwish of Anadolu as 8,000 buildings damaged by Beirut port blast last week are increasingly showing that it is merely the result of a degree of negligence never attained anywhere else in the world.
BEIRUT: At least 8,000 buildings, including 50 ancient structures, were damaged by last week’s massive explosion at the Beirut port, according to the High Relief Commission in Lebanon (HRC) on Tuesday.
Speaking to Anadolu Agency, HRC Secretary-General Mohammed Khair said the calculation of all damage from the blast will be concluded on Wednesday.
According to Anadolu Agency reporter, the scale of damage differs from one area to another.
The HRC is affiliated with the Cabinet and its functions include aid distribution and disaster management.
The government has blamed a neglected stockpile of 2,750 tons of ammonium nitrate stored in a warehouse for the explosion, which killed at least 160 people, injured thousands and left a vast trail of destruction across the capital.
Last Tuesday’s port blast, which rocked Beirut to its core, came at a time when Lebanon was already dealing with a severe financial crisis, and the coronavirus pandemic.
Protesters have taken to the streets with violent anti-government demonstrations for the past two days, storming official buildings and clashing with police.
*Bassel Barakat contributed to this report from Ankara
Climate Fund Managers (CFM) and UPC Renewables (UPC) will develop a 30MW Sidi Mansour wind farm in Tunisia. It is reported on African Review of 24 July 2020.
This Sidi Mansour Project is meant to help Tunisia reduce its imports of fossil fuels. It announced earlier on in 2016 the launch of its solar energy plan, to make its electricity generation mix through renewables ten-fold to 30%.
Tunisia boosting renewable energy drive
The project will be one of the first wind independent power producers (IPP) in the country. Climate Fund Managers is participating as co-developer, sponsor, financial advisor and E&S advisor to the project, through the development and construction financing facility under its management, Climate Investor One (CI1).
UPC will lead the development of the project with its local team that will lead land securitisation, permitting, grid connection, wind resource assessment and engineering and procurement contracts.
“We can start the construction of the Sidi Mansour wind farm in 2020, helping stimulate the Tunisian economy, create local jobs and a social plan for local communities while respecting international environmental protection guidelines,” said Brian Caffyn, chairman of the UPC Group.
The Sidi Mansour Wind Project is set to assist Tunisia in meeting its renewable energy goals. “As potentially the first Wind IPP in Tunisia, this project will be a testament to how CI1’s full lifecycle financing solution can unlock investment in renewable energy in new markets,” according to Sebastian Surie, regional head of Africa for CFM.
In January 2019, UPC was selected as one of the four awarded companies under the “Authorisation Scheme” tender for its 30MW Sidi Mansour project in Northern Tunisia and subsequently signed a PPA with Société Tunisienne d’Electricité et du Gaz. Over its lifespan, the Sidi Mansour Project is expected to lead to a reduction of 56,645 tonnes equivalent of carbon and create more than 100 jobs. The total investment size of the project is expected to be approximately US$40mn.
Originally posted on RobinAndrew: An initially-slight tale, which grows and grows right up to its end, as slight lives desperately try to grow themselves into something important without completely relinquishing the comforts to which they have accustomed themselves. Emerson writes with an almost nineteenth-century reserve which aptly suits her characters and relates as well to…
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