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Gulf economies to pick up this year following spending spree: Reuters poll

Gulf economies to pick up this year following spending spree: Reuters poll

Reuters’ BUSINESS NEWS today January 22, 2020, claims that Gulf economies to pick up this year following spending spree: Reuters poll is written by Yousef Saba and Nafisa Eltahir.

DUBAI (Reuters) – Economic growth in the Gulf will pick up this year and next, helped by Saudi Arabia’s investment program and Expo 2020 in Dubai, although the region will continue to feel the impact of oil output cuts, a Reuters poll showed on Wednesday.

The above picture is a FILE PHOTO: A car drives past a construction site of Riyadh Metro and the King Abdullah Financial District in Riyadh, Saudi Arabia, November 12, 2017. REUTERS/Faisal Al Nasser

OPEC and non-OPEC allies agreed in December to deepen output cuts, coming in addition to previously agreed curbs of 1.2 million bpd, and will represent about 1.7% of global oil output.

Saudi Arabia’s economy grew 0.3% in 2019, and is expected to grow 2.0% in 2020 and 2.2% in 2021, the poll of 26 economists, conducted Jan. 7-21, projected. A similar poll three months ago gave the same forecasts for 2020 and 2021 but estimated 0.7% growth in 2019.

“Saudi Arabia’s third-quarter GDP data, showing a fall of 0.5% year-on-year, was broadly as expected, with OPEC+ cuts constraining the contribution of the oil sector to economic growth,” Oxford Economics wrote in a research note. But diversification efforts “show signs of feedthrough”, it said.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said a stronger non-oil sector would help Saudi Arabia.

“Real GDP growth in Saudi should benefit from stronger non-oil activity as the investment program gains momentum. The drag from the oil sector should moderate in 2020 following a sharp reduction in oil output in 2019,” she said.

Median forecasts for growth in Oman, a relatively small Gulf crude producer, were significantly slashed. Analysts saw 1.0% growth in 2019, 1.7% in 2020 and 2.3% in 2021. Three months ago, Oman’s GDP was seen growing 1.3% in 2019, 3.2% in 2020 and 3.0% in 2021.

Oman’s ruler of 50 years, Sultan Qaboos bin Said, died earlier this month.

Maya Senussi, senior economist at Oxford Economics, said deeper oil production cuts agreed by OPEC and allies in December, and prospects for non-oil activity remaining weak, have weighed on Oman’s outlook.

Analysts forecast growth of 1.7% in 2019 for the United Arab Emirates, down from 2.2% in the poll three months ago. Its 2020 and 2021 estimates were unchanged.

The governments of Dubai and Abu Dhabi, the country’s two main emirates, have boosted spending to provide stimulus to their economies.

Dubai, which will host Expo 2020 this year, announced a record budget of around $18 billion this year, a 17% increase year on year, while Abu Dhabi announced in 2018 a three-year package of $13.6 billion.

Kuwait, which said last week it expects a budget deficit of 9.2 billion dinars ($30.3 billion) in the fiscal year starting on April 1, was forecast to see 0.5% economic growth in 2019, down from the 1% expected three months ago.

Kuwait’s GDP growth was revised down to 1.9% in 2020 from 2.2% three months earlier. Expectations for its 2021 growth, however, have risen to 2.6% from 2.3%.

GDP growth for Qatar, the world’s largest exporter of liquefied natural gas, was revised down to 0.9% in 2019 from 2.0% three months ago. Its 2020 forecast was cut to 2.1% from 2.4%, while its 2021 estimate was lifted to 2.5% from 2.3%.

Polling by Md Manzer Hussain; Writing by Yousef Saba and Nafisa Eltahir; Editing by Susan FentonOur Standards:

The Thomson Reuters Trust Principles.

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UAE to accelerate space tech startups

UAE to accelerate space tech startups

Adelle Geronimo informs that despite all the hoo-hah in the Middle East, the UAE to accelerate space tech startups is no extraordinary youth employment programme. This follows the UAE launching in October 2018, its first satellite built entirely by Emirati engineers in the UAE and after sending an Emirati astronaut to the International Space Station. The UAE plans also to establish a self-sustaining habitable settlement on Mars by 2117.


space sciences

The UAE Space Agency has announced its collaboration with the Abu Dhabi-based global innovation hub, Krypto Labs, to launch the UAE NewSpace Innovation Programme, which aims to maximise the growth of space technology start-ups with NewSpace, the rising private spaceflight industry.

The programme falls under the purview of the National Space Investment Promotion Plan, which aims to heighten the role of the space industry in contributing to the economy of the UAE.

It is also in line with an MoU signed between the UAE Space Agency and Krypto Labs, which aims to increase innovation and investment in the space sector, drive a diversified UAE economy, and promote awareness through specialised initiatives that support space technology entrepreneurship.

Dr. Mohammed Nasser Al Ahbabi, Director-General of the UAE Space Agency, said, “The UAE NewSpace Innovation Programme invites students, entrepreneurs and start-ups to share their ground-breaking ideas and transform them into viable commercial products. This supports developing space technology as part of the UAE’s private spaceflight NewSpace sector, which aims to make space more accessible, affordable and commercial.”

Selected applicants will take part in a three-month incubation programme at the headquarters of Krypto Labs in Abu Dhabi, with access to the hub’s facilities. They will also have access to the innovation hub’s local and global network of investors, be mentored by global space experts, and develop their skills in business creation, marketing, and sales, among others.

Applicants will also have the opportunity to secure funds to ensure their start-ups are prepared to enter the market.

Eligible applicants must present an innovative and original idea with a clear technical approach, which generates a feasible and scalable product. The teams must have at least one Emirati team member.

Dr. Saleh Al Hashemi, Managing Director of Krypto Labs, noted, “By supporting innovators and young entrepreneurs, we aim to foster a spirit of originality and zest within start-ups to solve global challenges that keep the UAE on the frontier of the innovation map and elevate its position as a leader for innovation-focused businesses.”

Human potential in MENA is remarkable

Human potential in MENA is remarkable

KHALEEJ TIMES reported this January 9, 2020, that Human potential in MENA is remarkable: Atlantic Council President. The Atlantic Council Global Energy Forum is an international gathering of government, industry, and thought leaders taking place in the UAE capital, Abu Dhabi from January 10 through 12, 2020.


Despite regional turmoil, there are two critical areas of focus to work on simultaneously.

Despite 2020 looking to be a year of volatility, the President and CEO of the Atlantic Council expressed his optimism at the “remarkable” human potential of the MENA region.

In statements ahead of the fourth annual Global Energy Forum in Abu Dhabi, Frederick Kempe noted that despite regional turmoil, there are two critical areas of focus to work on simultaneously.

“One of them is to reduce conflict, to wind down the tensions of the region. But at the same time, you have to unlock the remarkable human potential of the Middle East and the GCC,” he said.

He told the Emirates News Agency (WAM), his predictions for 2020, noting that it would be a volatile year, particularly in the energy industry.

“Geopolitical uncertainty will play a larger role on energy prices this year,” Kempe added.

Reflecting on 2019 events, he noted, “It’s remarkable that energy prices have remained so low through everything we’ve gone through – Iranian sanctions, Libyan turmoil, Iraqi uncertainty.”

However, he added, “despite all that and partly because of the glut of oil we’ve had on the market, and the US oil and gas production, we’ve kept prices remarkably stable for a long period of time.”

“I think the big question is can that hold out in 2020,” he continued.

“You see prices rise by four percent when you get into a crisis, suddenly it seems as we’re in a de-escalatory phase if prices drop by five percent, and I think that’s what we’re going to see.”

Commenting on recent US-Iran tensions, and their impact on clean energy transitions, Kempe said, “A lot of people are focusing on the wrong lessons from the last few days. No doubt, there’s been a lot of tension.

“No doubt there was, for a period of time, increased risk of violent conflict. On the other hand, both parties stood back from that,” he added.

“No one in the region wants an escalation of the current tensions,” he stressed, adding, “Everyone that participated in de-escalating came to that. I think that’s promising.”

“I think all parties see no gain in war. The US doesn’t see any gain, Iran doesn’t see any gain; certainly, the Arab and GCC countries don’t see any gain,” the Atlantic Council President emphasised.

When asked to comment on how GCC countries, like the UAE, can play a role in the 2020 energy agenda, Kempe said, “If you look at the GDP of this region, and if you took the size of the Middle East population and put it anywhere in the world, you would have three times the GDP.”

World Bank figures indicate the GDP figures for the Middle East and North Africa reached $3.611 trillion in 2018.

“So imagine how much low-hanging fruit there is here and how much opportunity there is,” he said.

According to the International Renewable Energy Agency, IRENA, figures, the adoption of renewable energy technologies created 11 million new jobs at the end of 2018.

When asked to comment on how countries and international bodies can partner further to see effective climate action, Kempe revealed that through the Council’s Adrienne Arsht Centre for Resilience, the MidEast Centre, and the Rockefeller Foundation, a new initiative will see one billion individuals become resilient to climate change, tensions and crises.

More details on the announcement will be made as part of Abu Dhabi Sustainability Week 2020 next week.

The Atlantic Council Global Energy Forum is an international gathering of government, industry, and thought leaders to set the energy agenda for the year.

Taking place in the UAE capital from January 10-12, the 2020 iteration of the forum will focus on three key themes: the role of the oil and gas industry in the energy transition, financing the future of energy and interconnections in a new era of geopolitics.

MENA Travel & Tourism Competitiveness Index 2019

MENA Travel & Tourism Competitiveness Index 2019


It has been revealed by the local media that Chinese tourists numbers are growing by the day in the Gulf region. In effect, the number of Chinese tourists travelling to the GCC is expected to increase 54 percent from 1.4 million in 2018 to 2.2 million in 2023, according to new research. In however a wider view of the flows, here are excerpts of the WEF’s MENA Travel & Tourism Competitiveness Index 2019.


MENA Travel & Tourism Competitiveness Index 2019

Overview

The Middle East and North Africa (MENA) region significantly improved its T&T competitiveness since the last edition of the TTCI. With 12 of the 15 MENA economies covered by this year’s index increasing their score compared to 2017, the region was able to slightly outpace the global average in competitiveness growth. This is particularly important given that, in the aggregate, T&T accounts for a greater share of regional GDP than in any of the other four regions. MENA is also the only region where international visitor spending is greater than domestic visitor spending. Yet despite improved competitiveness and a strong reliance on T&T for overall economic growth, MENA continues to underperform the global TTCI score average.

MENA’s below-average competitiveness is primarily a result of low scores on indicators related to natural and cultural resources and international openness. The region’s historical and religious heritage and geographic features create the potential for significant natural and cultural tourism; yet, while some individual nations come close, no MENA country scores above the global average for natural resources and only Egypt and Iran score above for cultural resources. In fact, the entire region’s score in both of these areas has fallen in recent years. More needs to be done to expand habit protection and heritage sites. Moreover, digital demand for MENA’s natural, cultural and entertainment demand is fairly low, indicating potential gaps in marketing and traveller perceptions. One potential reason for this gap is continued safety and security concerns. Eleven MENA countries rank within the bottom 40 for terrorism incidents, with two among the worst 10 countries globally. Further, the region is plagued by geopolitical tensions, instability and conflict. Security concerns also play a role in why MENA members are some of the most restrictive when it comes to international openness, with only Qatar, Oman and Morocco making significant improvements. Consequently, travellers often face barriers when visiting the region, while the aviation and overall T&T sector is stifled by limiting bilateral air service and regional trade agreements.

More positively, stability, safety and security have started to recover throughout the region, slightly reducing travel fears and underlying one of the key reasons for the recent pickup in arrivals. Furthermore, it seems that there has been greater recognition of T&T’s importance, with broad regional improvements in T&T prioritization, including increased government funding and more effective marketing campaigns to bring back or attract new visitors. Greatly enhanced environmental sustainability also has the potential to pay dividends for natural assets (note that environmental sustainability comparison is influenced by the use of new data to measure marine sustainability). In addition, prices have become more competitive among countries within the region, amplifying MENA’s single biggest advantage relative to the global average. As one of the world’s main producers of fossil fuels, MENA includes some of the world’s lowest fuel prices, with some governments offering subsidies. Moreover, many of the region’s economies offer visitors greater purchasing power (especially Egypt, Algeria, Iran and Tunisia), which has been increased by lower exchange rates. Yet it is reductions in ticket taxes and airport charges as well as lower hotel prices that have primarily driven regional price competitiveness in recent years.

Infrastructure has also improved, with particularly impressive growth in the number of airlines and route capacity. Despite these gains, world-class infrastructure remains concentrated among the Arab states of the Persian Gulf. The Gulf countries have been able to use their natural resource wealth, central geographic location and relative security to develop world-class T&T infrastructure, defined by quality airports, ports, roads, tourist services and some of the world’s leading airlines. These efforts are in stark contrast to some other MENA nations that—due to a lack of investment and ongoing instability—have yet to develop competitive infrastructure, especially regarding air transport. Similarly, the region’s above-average score on the Enabling Environment subindex is due to the performance of the Gulf countries and Israel, which have developed economies, strong business environments, ICT readiness and some of the highest scores in safety and security. Finally, most regional economies also score near the bottom when it comes to female participation in the labour market, depriving the T&T industry of a greater labour and skills pool.

MENA Travel & Tourism Competitiveness Index 2019

Subregion Analysis

The Middle East subregion is by far the more competitive of the two subregions, outscoring North Africa on nine pillars. Thanks to the Arab states of the Persian Gulf and Israel, the subregion is wealthier and more developed than the North Africa subregion. Consequently, it is no surprise that the Middle East scores above the global and regional averages on indicators related to enabling environment and infrastructure, with particularly high ranks on ICT readiness and business environment. Nevertheless, the subregion does trail the world and North Africa on T&T prioritization and policy and natural and cultural resources. In particular, many Middle East nations score relatively low on the International Openness and Natural Resources pillars, which represent the subregion’s greatest disadvantages relative to global competition. One of the Middle East’s highest-scoring pillars is Price Competitiveness, with some economies leveraging their fossil fuel abundance to offer lower fuel prices. Since the 2017 edition of the report, the subregion has improved across all pillars of T&T policy and enabling conditions, safety and security, ICT readiness and much of infrastructure, but declined or stagnated on other pillars.

This year, eight out of the subregion’s 11 members improved their TTCI score since 2017. Oman demonstrated the greatest improvement, moving up eight places to 58th. MENA’s safest (3rd) country recorded the subregion’s fastest improvement for its human resources and labour markets (103rd to 65th), and is among the most improved when it comes to international openness (116th to 97th), environmental sustainability (109th to 57th) and overall infrastructure (60th to 52nd). Yet some of the improvement in environmental sustainability is exaggerated due to new marine sustainability metrics. In contrast, the UAE had the Middle East’s largest decline, falling from 29th to 33rd, including the biggest percentage decline in score on the Safety and Security pillar (falling from 2nd to 7th) and Ground and Port Infrastructure (19th to 31st) and the subregion’s only decline on Environmental Sustainability (40th to 41st). Nevertheless, the country remains in the lead in the Middle East and is MENA’s top TTCI scorer, leading on ICT readiness (4th), air transport (4th) and tourist service (22nd) infrastructure. The Middle East’s—and MENA’s—largest T&T economy is Saudi Arabia (69th), which scores above the subregion’s average on most pillars, but near the bottom on international openness (137th). Plagued by ongoing conflict and a lingering humanitarian crisis, Yemen (140th), ranks at the bottom of the global index.

North Africa scores lower than the Middle East, but demonstrates far greater improvement in overall competitiveness. The subregion outscores the Middle East on five pillars and bests the global average on four. North Africa is the most price competitive subregion in the world, with three out of its four members among the 12 least-expensive economies covered in the report. North Africa’s greatest advantage relative to the Middle East is its natural and cultural resources—although it still underperforms the world on both the Natural Resources and Cultural and Business Travel pillars. The subregion also bests the MENA average in prioritization of T&T and environmental sustainability, areas where it has improved since 2017. On the other hand, North Africa has underdeveloped infrastructure and T&T enabling environment, contrasting some of the high performers in the Middle East subregion. In particular, North Africa trails when it comes to tourist service infrastructure and ICT readiness. The subregion’s strong rate of improvement is due to enhanced safety and security, overall T&T policy and enabling conditions and air transport and ground infrastructure.

All four members of the North Africa subregion increased their TTCI scores over 2017. Egypt (65th) is the subregion’s top scorer and its largest T&T economy. The country is also MENA’s most improved scorer. Egypt is price competitive (3rd) and has MENA’s highest score for cultural resources (22nd). Its improvement comes from increases on 11 pillar scores. These include the world’s second-best enhancement of safety and security (130th to 112th), albeit from a low starting base. Morocco (66th) demonstrates North Africa’s slowest improvement in TTCI performance. The country is a close second to Egypt when it comes to overall competitiveness, boasting the MENA region’s top TTCI scores on natural resources (63rd) and North Africa’s best enabling environment (71st) and infrastructure (69th). However, TTCI performance improvement is tempered by declining safety and security (20th to 28th), which remains well above the subregion’s average, and a deteriorating combination of natural and cultural (41st to 54th) resources. North Africa’s lowest scoring member is Algeria (116th), which nonetheless did move up two ranks globally. The country ranks low on business environment (118th), T&T prioritization (132nd), tourist services infrastructure (136th), environmental sustainability (133rd), natural resources (126th) and international openness (139th). On the other hand, Algeria is one of the most price-competitive countries in the world (8th).

MENA Travel & Tourism Competitiveness Index 2019

Read more on the original PDF document.

Second Great Recession highly unlikely: Report

Second Great Recession highly unlikely: Report


At its December 2019 12th edition in Dubai, the Arab Strategy Forum affirmed that a Second Great Recession highly unlikely: Report. This gathering run under the theme of ‘Forecasting the Next Decade 2020-2030’ concluded that after all, it’s business as usual with no ad-hoc surprises at all.


DUBAI — The global economy is not likely to witness another Great Recession-style collapse, despite several indicators to the contrary in recent months, according to a newly-published report by the Arab Strategy Forum in partnership with Good Judgement Inc., the world’s leading geopolitical and economic forecasting institution.

Global Growth



Titled ‘11 Questions for the Next Decade’, the wide-ranging and far-reaching findings and themes of the report, will be discussed in depth by former ministers, decision-makers and politico-economic thought leaders, including former US Vice President Dick Cheney, at the 12th edition of the annual Arab Strategy Forum in Dubai on Dec. 9 at the Ritz Carlton, Dubai International Financial Centre.

The ‘state of the world’ style report– tackles 11 vital mega-trends and questions that will define the global social, political and economic landscape in the 10 years ahead. Unlike previous editions, this year’s report looks to predict the future leading up to 2030 – a crucial time for many Middle Eastern economies whose visions are set to come to fruition by that year.

‘11 Questions for the Next Decade’ analyses 11 major political and macro-economic situations – or ‘mega-trends’ as the report terms them – and their likely consequences to determine where the world is headed, come 2030. Topics covered range from the global recession to the fragmentation of superpowers and Brexit to the Iranian regime and America’s anticipated fall from dominance, to the emerging US-China tech war and the prospective ‘splinternet’, water scarcity in the region and the growing crop of gas fields in the East Mediterranean region.

Qualitative and quantitative feedback and data was garnered for the report’s 11 sections following rounds of discussions on Good Judgement’s online platform, with a series of ‘ignition questions’ posed to ‘Superforecasters’ – 150 experts from diverse backgrounds, such as political scientists, economics researchers, scholars, and subject-matter experts in professions ranging from finance to intelligence, to management and medicine. The ignition questions for each topic seek answers to the issues at the heart of major economic change in the years ahead. The Superforecasters’ answers serve as indicators and monitors of predicted change based on the outlined global mega-trends.

Mohammad Abdullah Al Gergawi, President of the Arab Strategy Forum, said: “The report provides answers to the most pressing questions today, these outcomes will have a significant impact on regional and global policies. It explores a range of scenarios that will support the decision-makers of today and tomorrow to guide progress and prosperity for generations to come.

“Unlike previous years, this year’s reports predict the future of the region and the world over the next decade in the context of the current events that will have a major impact. They provide an up-to-date analysis of the increasing need for decision-makers to understand future scenarios on which to base their plans.”

As the world’s first platform for forecasting geopolitical and economic events, both regionally and globally, and targeting the most influential leaders and decision-makers in the Arab world and beyond, the Arab Strategy Forum will provide invaluable insights from the world’s foremost thought leaders on the crucial topics addressed in the report and elsewhere. Below is a list of the mega-trends, their related ignition questions, and a brief summary of the findings from the ‘11 Questions for the Next Decade’ report.

• Will the world avoid another Great Recession through 2030?

Based on current global economic performance records and data from the last 100 years of economic cycles, the report sought to find out whether the next recession will be a repeat of the Global Financial Crisis / Great Recession (2007-2009) or whether we are likely to see a return to an earlier pattern of a brief economic downturn followed by resurgent and steady growth.

The report’s Superforecasters said there is a 76 per cent chance that the world will not undergo another global financial crisis similar to the one in 2007 in the next decade, citing central banks’ improved technological ability to adapt and steer skidding economies out of difficulty. In their analysis of the last 100 years’ of business cycles, the Superforecasters concluded that the Great Recession was an outlier rather than the expected norm.

• Will China, Russia, or a G7 country leave the World Trade Organization by 2030?

Considering the emerging tendency of two, or a group of countries, setting out to establish new regional trading systems, such as the US-backed Trans-Pacific Partnership or the Russian-backed European-Asian Economic Union, the report noted that such new trading entities pose a populist threat to long-established global trading systems.

It goes on to rule out the possibility of China, Russia or one of the G7 countries withdrawing from the World Trade Organization by 2030, as doing so would cost more than the gains are likely to be worth in the long run. However, considering the relentless pressure on the WTO in the face of populism, the post-World War II trading body faces a big challenge in maintaining its status and platform in the next 10 years.

• Will China, Russia, the US, or the EU lose 0.5% or more of its territory or population before 2030?

After the fall of empires in the 20th century, the question lingers over whether countries and blocs will fragment in the 21st century. The Superforecasters anticipate a 5% likelihood that the EU will lose 0.5% or more of its territory or population before 2030, a 2% likelihood that Russia or China will, and 1% likelihood that the United States will. Though the uncertainties and problems hanging over the United Kingdom are mainly considered ‘peaceful’, market volatility and decreased consumer confidence could have an impact on the EU’s territory and population in the next decade. The Superforecasters also said that a split or fragmentation in China or Russia, will only occur through a violent disruption.

• Will the US economy be ranked 1st, 2nd or 3rd in 2030?

Despite being the largest economy in the world since the beginning of the 20th century, the US’s position as the world’s number one is under threat from the formation of a multipolar system and the emergence of several countries and regions that contribute today to the international community.

The report claims that there is a 65 per cent chance that the US will still be the world’s largest economy a decade from now, and a 33 per cent likelihood it will be second, after China.

The most prominent countries competing with the United States, in terms of nominal GDP, the report adds, are China, the European Union bloc, and India. And, as the US economy shrinks to the size of other countries, it will be less able to influence other nations of the world.

• Will OPEC’s share of global crude oil production remain above 33% in 2030?

The Organization of Petroleum Exporting Countries (OPEC) currently holds a share of about 40 per cent of the world’s crude oil production. But the future of the organization and its domination is likely to be called into question, with the emergence of hydraulic fracturing and new oil discoveries outside the Middle East and North Africa.

There is a 90 per cent chance that OPEC will supply more than a third of the world’s crude oil supply in 2030. However, its fiscal revenue is likely to result in a decline in its production. Given its resilience and adaptation to multiple challenges in past decades, including wars, revolutions and global recessions, the organization is viable in a carbon-free world, but new and innovative adaptation measures are needed later, the report pointed out.

Cyberattacks

• Will a cyberattack shut down a major infrastructure system in a G7 country for 1+ days before 2030?

The Superforecasters see a 66 per cent likelihood of a cyberattack shutting down a major infrastructure system in a G7 country for at least one day before 2030. Outside of the G7, there are countries perhaps more vulnerable. “It will be worth monitoring these situations as harbingers of larger-scale attacks elsewhere. For instance, in the Philippines, government hearings recently raised concerns that China could remotely ‘turn off power’ in the country,” the report noted.

• Will Lebanon be involved in a major military conflict by 2030?

After the discovery of the East Mediterranean gas fields off the coast of Cyprus, Lebanon and Egypt, questions have arisen over whether the East Mediterranean gas fields will enhance the stability of the region or pose a security risk. The report said there’s a risk that offshore gas fields could escalate tensions between nations over disputed drilling rights, but potential energy revenues are worthwhile, and will lead to a strengthening of the region’s economic stability, as well as the internal stability of the concerned countries and reduce risks of war.

• Will water scarcity cause a deadly conflict between Jordan & Israel, Egypt & Ethiopia, or Turkey & Iraq before 2030?

Water scarcity is unlikely to drive any regional conflict in the MENA region over the next decade, the report stated. There is a small, 1 per cent chance of a conflict on the flow of water between Jordan and Israel, according to the Superforecasters. Meanwhile, the chance of a conflict between Egypt and Ethiopia or Turkey and Iraq during the next decade will reach 3per cent.

• China-US tech war and peace

Will a ‘splinternet’ – with one Internet led by the US and one led by China – be avoided as of 2030?

The Superforecasters offer an 80 per cent chance that a ‘splinternet’ – one Internet led by the United States and one led by China — will not be in place by 2030. “Information will continue to flow across global networks, even as other types of political or ideological information will be blocked,” the report pointed out.

Situation of the Automotive Industry in the MENA

Situation of the Automotive Industry in the MENA


Automotive LOGISTICS MIDDLE EAST AND AFRICA in an article titled MENA: Leading the way in innovation by Victoria Johns on 27 November 2019 gives us a clear picture of the prevailing situation of the automotive industry in the MENA region.


While it has some infrastructure and regulatory obstacles to overcome, the automotive industry in the Middle East and Africa (MENA) region is developing fast, driven by investment and innovation, as delegates heard at the ALMENA conference in Dubai last week.

20191122_224219

Despite a sustained period of decline over the last few years affected by a fall in oil prices and geopolitical strife, the Middle East and Africa is fast becoming a region of automotive and supply chain opportunity. Carmakers such as VW, Toyota, GM, Groupe PSA and Mercedes-Benz are investing in local assembly, ranging from North African countries including Morocco, Algeria and Egypt, to sub-Saharan markets such as Rwanda, Ethiopia, Kenya and Ghana. There are also some notable logistics developments there and in the Middle East.

According to figures from IHS Markit, light vehicle sales in the Middle East and Africa are to increase by 6% in 2020 to around 3.5m, supported by ongoing recovery in Saudi Arabia and Gulf countries. That is still below 4.65m units sold in 2015 but at that point Middle East sales were helped by increases in Saudi Arabia and Iran, the latter of which was seeing an (albeit brief) resurgence after sanctions were temporarily lifted. That said, by 2025 annual new light vehicle sales across the region are set to hit more than 5.3m, according to IHS projections.

Saudi Arabia already accounts for about 40% of total vehicles sold in the Middle East and IHS Markit forecasts annual sales could reach over 800,000 beyond units by 2030. Contributing factors including the recovery in price per barrel of oil and to a lesser extent the lifting of the ban on female drivers suggest sustained growth is expected to start in the next two years.

Countries within the Gulf Corporation Council (GCC) have established a national employment challenge to employ more local workers, the so-called ‘Gulfization’ policy, which is increasing labour opportunities in the area, something also fuelled by the exodus of foreign workers and the need for investment in local skills and talent.

Read more on Automotive LOGISTICS

Saudi Arabia ready to take over G20 reins

Saudi Arabia ready to take over G20 reins

Ellen Francis of UK Reuters informs that With young prince and PR push, Saudi Arabia ready to take over G20 reins. Here is her difficult to believe story. The young leader knows that his majority-youthful country has no hope for the future if it doesn’t rapidly transition to a post-oil economy before its world-famous reserves run dry, which is why he’s doing everything in his power to court infrastructural, industrial, defense, and technological investments in order to prudently give his people a chance to survive when that happens.


NAGOYA, Japan (Reuters) – Saudi Arabia is set to take over the G20 presidency for a year as it seeks to bounce back from an uproar over its human rights record and last year’s killing of journalist Jamal Khashoggi. Foreign ministers attend a dinner during the G20 foreign ministers’ meeting, in Nagoya, Japan November 22, 2019. Charly Triballeu/Pool via REUTERS

The kingdom’s new foreign minister, a prince with diplomatic experience in the West, landed in Japan’s Nagoya city on Friday to meet with his counterparts from the Group of 20 nations.

Prince Faisal bin Farhan Al Saud was appointed in October in a partial cabinet reshuffle, joining a new generation of royals in their 40s who rose to power under Crown Prince Mohammed bin Salman, 34, the de facto ruler of the world’s top oil exporter.

Saudi Arabia – a key U.S. ally in confronting Iran – has faced heavy Western criticism over the murder of Saudi national Khashoggi, its detention of women’s rights activists and its role in the devastating war in Yemen.

Diplomats say the G20 might help put Riyadh’s problems behind it and could prompt it to close more disputed files such as the Yemen war and the boycott of Gulf neighbour Qatar, though they have yet to see much progress.

King Salman has hailed the kingdom’s G20 presidency as proof of its key role in the global economy. [nL8N28041F]

Prince Faisal will pick up the baton at a ceremony on Saturday in Nagoya, where G20 foreign ministers have gathered for talks.

Japan – which headed the G20 this year – was the kingdom’s second-largest export market last year, at $33 billion, according to IMF trade data.

Apart from its reliance on Saudi oil, Japan has deepened its ties to the kingdom thanks to Japanese technology conglomerate SoftBank Group. Riyadh has been a big supporter of SoftBank’s massive Vision Fund.

Japanese Foreign Minister Toshimitsu Motegi told Prince Faisal he was pleased to meet him for the first time and both sides wanted to boost relations, according to a read-out from Japan’s foreign ministry.

Motegi praised Saudi work to stabilise southern Yemen, where Riyadh orchestrated a deal to end a power struggle between Yemen’s government, which it backs, and southern separatists. [nL8N27L6J1]

PR PUSH

King Salman also said this week Riyadh wants a political settlement in Yemen, where it has battled Iran-aligned Houthis in a nearly five-year war that has killed tens of thousands and drive parts of the country to the brink of famine.

A diplomatic source said there had been an “apparent de-escalation” in Yemen’s conflict in recent weeks. The source said Saudi airstrikes killing civilians would not be “a great backdrop for hosting the G20” and would not mesh with the kingdom’s message of opening up.

Diplomats said that Saudi Arabia plans more than a dozen G20 summits throughout the year on tourism, agriculture, energy, environment and digital economy.

Top diplomatic and business contacts suggest Riyadh has already gotten over much of the opprobrium it received over Khashoggi’s murder, but it still struggles to attract foreign investors, said analyst Neil Partrick.

A Saudi court charged 11 suspects in a secretive trial and Western allies imposed sanctions on individuals. But Riyadh still faces heat from some governments saying the crown prince – known as MbS – ordered the murder. He has denied this though said he takes ultimate responsibility as de facto ruler.

Riyadh has sought to fix its image or turn attention to its social reforms since Khashoggi’s 2018 killing at the hands of Saudi agents in Istanbul.

A share sale of giant Saudi state oil firm Aramco this month and a bond sale earlier this year – under a drive to diversify the largest Arab economy away from oil – attracted interest in the traditional sectors of energy and finance.

After boycotting the Saudis’ annual “Davos in the Desert” summit in 2018, Western executives returned to the 2019 gathering last month. “Davos in the Desert” is unrelated to the annual World Economic Forum in Davos, Switzerland.

Reporting by Ellen Francis in Nagoya and Stephen Kailin in Bahrain with additional reporting by David Dolan in Nagoya; Writing by Ellen Francis; Editing by Mark Heinrich

The Thomson Reuters Trust Principles.

Growth potential for SMEs in the MENA region

Growth potential for SMEs in the MENA region


Claudia Perri, Regional Commercial Director for Southern EMEA discusses the growth potential for SMEs in the MENA region. Unlocking growth for MENA’s SMEs is the write up published by Business Chief Middle East – Leadership.


SMEs in the Middle East and North Africa (MENA) contribute approximately $1 trillion to the region’s economy per year, accounting for 96% of registered companies and employing approximately half of the workforce. Unsurprisingly, these businesses are the backbone on MENA’s rapidly evolving economies and are being recognised as a priority among the region’s governments. However, SMEs face fundamental obstacles to their potential growth, namely stringent regulations and compliance procedures, but chiefly access to finance. Indeed, traditional lenders have typically shied away from smaller and less established businesses in the wake of the financial crisis, instead opting for the assurances of larger companies. 

However, as the region’s SMEs grow in importance, opportunities for alternative finance providers are emerging to plug the finance gap. Traditional lenders, including banks, are having to adapt and are increasingly responding to these needs and leveraging technology to ensure SMEs can tap into their full potential. 

SMEs emerging as a priority 

As the region shifts its economic focus away from oil to economic models that enhance the role of the private sector, governments have recognised the importance of SMEs. The added value of jobs and economic growth offered by these businesses has meant that SME have become a priority. For example, Dubai’s Department of Finance has most recently announced a set of initiatives to boost the UAE’s fledgeling SMEs, which have grown by over 30% in the last decade. Among these initiatives, the government has committed to allocating 5% of the government capital projects to SMEs.

Financial crisis still resonates for banks 

With SMEs therefore seen as a catalyst for economic growth, they still face major obstacles that stop them from reaching their potential. Following the financial crash in 2008, access to funding has been more limited in the region and indeed globally. 

SMEs face a $260 billion credit gap in the region, with just one in five SMEs benefitting from traditional finance and accounting for only 7% of bank lending. But now, the attitude of lenders, such as banks, is having to catch up as these businesses take on their role as pivotal contributors to economic growth.

Various types of alternative finance emerging

As a result of the credit gap faced by SMEs, innovative alternative financing options have emerged, fuelled by the increasing digitalisation of businesses in the region. Funding models, such as Peer-2-Peer lending are seeing growth increase, from $4.5 million total market volume in 2014 to $32.5 million in 2016. Over the same period, equity-based crowdfunding has enjoyed growth from $62 million to $100.32 million.

However, there are indications that this growth is slowing, where the lack of regulatory clarity and flexibility is making the activity of alternative finance providers more complicated. 

Opportunity for traditional lenders fuelled by technology 

The lack of regulatory clarity for alternative finance providers has created an opportunity for traditional lenders, such as banks – an opportunity they are beginning to tap into. The increasingly sophisticated digitalisation of finance has also enabled traditional lenders to adopt these processes, allowing them to mitigate risk and broaden their offering, making bank lending more accessible to SMEs.

One example of this is the growth of established models such as asset based financing and factoring. As this form of finance has evolved, the emergence of new technologies has improved its appeal to banks, making a long-established model increasingly effective, efficient and ultimately more attractive. This has resulted in asset based financing growing by 7% in the Middle East in 2018 alone – not far behind the global figure of 9%.

The increased take-up of such technologies by banks means that they can now not only compete with alternative finance providers to provide modern financing to SMEs, but they can also partner with these providers to evolve their offering even further. 

MENA is experiencing a period of exceptional growth for SMEs, but in order to realise the true potential of these businesses, we must place greater focus on access to funding. Only with better access to finance can these businesses unlock growth as they navigate supply chains, working capital gaps and encourage innovation. Well established lenders have in recent years shied away from such businesses, but as technology evolves and the popularity of alternative finance providers signal the changing demands of businesses, there is an opportunity for them to tap into this market once again. Banks that recognise the opportunity to seize digitalisation and work to learn from the innovation in alternative finance, will be the ones who are working hand in hand with the region’s governments to ensure that the businesses that form the backbone of their economies reach their full potential. 

See also:

For more information on business topics in the Middle East and Africa, please take a look at the latest edition of Business Chief MEA.

It’s when not if China’s Middle Eastern tightrope snaps

It’s when not if China’s Middle Eastern tightrope snaps

Dr James M. Dorsey says it’s when not if China’s Middle Eastern tightrope snaps. How is that?

China is manoeuvring to avoid being sucked into the Middle East’s numerous disputes amid mounting debate in Beijing on whether the People’s Republic will be able to remain aloof yet ensure the safety and security of its mushrooming interests and sizeable Diaspora community.

China’s challenge is starkest in the Gulf. It was compounded when US President Donald J. Trump effectively put China on the spot by implicitly opening the door to China sharing the burden of guaranteeing the security of the free flow of energy from the region.

It’s a challenge that has sparked debate in Beijing amid fears that US efforts to isolate Iran internationally and cripple it economically could lead to the collapse of the 2015 international agreement that curbed Iran’s nuclear program, accelerate Iran’s gradual breaching of the agreement in way that would significantly increase its ability to build a nuclear weapon, and potentially spark an unwanted military confrontation.

All of which are nightmare scenarios for China. However, Chinese efforts so far to reduce its exposure to risk are at best temporary band-aid solutions. They do little to address the underlying dilemma: it is only a matter of time before China will have no choice but to engage politically and militarily at the risk of surrendering its ability to remain neutral in regional conflicts.

Israeli intelligence reportedly predicted last year that Iran’s gradual withdrawal from an agreement that Mr Trump abandoned in May 2018 would ultimately take Iran to a point where it could create a nuclear military facility within a matter of months. That in turn could provoke a regional nuclear arms race and/or a pre-emptive military strike.

That is precisely the assessment that Iran hopes will persuade China alongside Russia and the European Union to put their money where their mouth is in countering US sanctions and make it worth Iran’s while to remain committed to the nuclear accord.

The problem is that controversy over the agreement is only one of the multiple regional problems. Those problems require a far more comprehensive approach for which China is currently ill-equipped even if it is gradually abandoning its belief that economics alone offers solutions as well as its principle of no foreign military bases.

China’s effort to reduce its exposure to the Gulf’s energy supply risks by increasing imports from Russia and Central Asia doesn’t eliminate the risk. The Gulf will for the foreseeable future remain a major energy supplier to China, the region’s foremost trading partner and foreign investor.

Even so, China is expected to next month take its first delivery of Russian gas delivered through a new pipeline, part of a US$50 billion gas field development and pipeline construction project dubbed Power of Siberia.

Initially delivering approximately 500 million cubic feet of gas per day or about 1.6 percent of China’s total estimated gas requirement in 2019, the project is expected to account with an increased daily flow of 3.6 billion cubic feet for 9.5 percent of China’s supply needs by 2022.

The Russian pipeline kicks in as China drastically cuts back on its import of Iranian liquified petroleum gas (LPG) because of the US sanctions and is seeking to diversify its supply as a result of Chinese tariffs on US LPG imports imposed as part of the two countries’ trade war.

China is likely hoping that United Arab Emirates efforts to stimulate regional talks with Iran and signs that Saudi Arabia is softening its hard-line rejection of an unconditional negotiation with the Islamic republic will either help it significantly delay engagement or create an environment in which the risk of being sucked into the Saudi-Iranian rivalry is substantially reduced.

Following months of quietly reaching out to Iran, UAE minister of state for foreign affairs Anwar Gargash told a recent security dialogue in Abu Dhabi that there was “room for collective diplomacy to succeed.”

The UAE official said the UAE envisions a regional order undergirded by “strong regional multilateralism” that would provide security for all.

Mr Gargash made his remarks against the backdrop of a Chinese-backed Russian proposal for a multilateral security arrangement in the Gulf that would incorporate the US defense umbrella as well as an Iranian proposal for a regional security pact that would exclude external players.

Presumably aware that Gulf states were unlikely to engage with Iran without involvement of external powers, Iran appeared to keep its options open by also endorsing the Russian proposal.

The various manoeuvres to reduce tension and break the stalemate in the Gulf put Mr. Trump’s little noticed assertion in June that energy buyers should protect their own ships rather than rely on US protection in a perspective that goes beyond the president’s repeated rant that US allies were taking advantage of the United States and failing to shoulder their share of the burden.

Potentially, Mr Trump opened the door to an arrangement in which the United States would share with others the responsibility for ensuring the region’s free flow of energy even if he has given no indication of what that would mean in practice beyond demanding that the United States be paid for its services.

“China gets 91 percent of its oil from the Straight, Japan 62 percent, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships…,” Mr Trump tweeted.

China has not rejected Mr Trump’s position out of hand. Beyond hinting that China could escort Chinese-flagged commercial vessels in the Gulf, Chinese officials have said that they would consider joining a US-backed maritime security framework in the region that would create a security umbrella for national navy vessels to accompany ships flying their flag.

Chinese participation would lay the groundwork for a more comprehensive regional security arrangement in the longer term.

China’s maritime strategy, involving the development of a blue water navy, suggests that China already de facto envisions a greater role at some point in the future.

Scholars Julia Gurol and Parisa Shahmohammadi noted in a recent study that China has already “decided to take security concerns in the (Indian Ocean) into its own hands, instead of relying on the USA and its allies, who have long served as the main security providers in this maritime region… If tensions continue to escalate in the Persian Gulf, Beijing may find it has no other choice but to provide a security presence in the Middle East.”

Dr James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture

Posted by The Turbulent World of Middle East Soccer on 12 November 2019 and republished on MENA-Forum with our compliments.

Alternative Transport market is Egypt-born startup Halan

Alternative Transport market is Egypt-born startup Halan

Taking a bite out of the opportunity in the alternative transport market is Egypt-born startup Halan. So, Egypt’s Halan is keen to dominate the Ride-Hailing Space for Two And Three-Wheelers. Let us read more on that if you please. But before we do so here is Codatu’s intro to their essay on the matter two years ago.

Greater Cairo (GC) is the largest urban area in the Middle East and one of the most populated cities in the world. The urban growth patterns of the metropolitan area reveal a fragmented city of heterogeneous parts that developed unplanned over the years. GC public transport network offers a large variety of means of transportation throughout three governorates but its lack of efficiency is forcing more and more people to use private cars. The extreme density of the urban fabric and the widespread congestion on the road network end up making the city’s livability very difficult.

Pamella de Leon, Startup Section Editor, on October 29, 2019, wrote in Entrepreneur Middle East, an international franchise of Entrepreneur Media the following.

Egypt's Halan Is Keen To Dominate The Ride-Hailing Space For Two And Three-Wheelers

Aside from private cars, taxis, and other four-wheeled vehicles, a ubiquitous sight on the streets of Cairo (and in other parts of the MENA, as well as the world at large) are the three-wheeled tuktuks and two-wheeled motorcycles to navigate daily traffic- and taking a bite out of the opportunity in the alternative transport market is Egypt-born startup Halan. The ride-sharing app for tuktuks, motorcycles, and tricycles -a first in the region- was launched in November 2017 in underserved communities in Cairo where roads tend to be too narrow for cars, and provided a cheaper alternative to cars and buses.

It grew across Giza, Alexandria, Minya, Luxor and Qalyubia governorates, and expanded to Sudan in 2018. It also offers on-demand logistics solutions to support large organizations and small businesses alike in their distribution and supply chain. Founded by Mounir Nakhla and Ahmed Mohsen, the former had the lightbulb moment when the idea was proposed to him by one of Gojek’s seed investors.

After meeting Nadiem Makarim, the CEO of Gojek, a startup that has been dubbed Indonesia’s first unicorn venture and has grown as an on-demand tech company for the transport, payment, and food sector, Nakhla was inspired from its success, and saw potential for a similar impact in Egypt. With Egypt’s population of more than 100 million, internet penetration, fast-growing sales of smartphone devices and a growing use of mobile apps, all the elements were positive, he notes.

“Transportation is one of the fastest ways of acquiring customers by solving a real need, and we wanted to be the app of choice for the underserved,” he says. “Egypt has north of 700,000 tuktuks already operating as taxis, and just over 1.5 million two-wheeler vehicles, used for both personal transportation and for delivery services, and this is where Halan comes in.”

Halan team

As part of the startup’s efforts to organize the market and ensure safety, Nakhla says they also have a meticulous screening process when recruiting drivers. Besides offering convenience to customers, Nakhla says they also provide incremental business for their drivers, and thus increase their incomes.

The founder and CEO is no stranger to working with Egypt’s mobility scene and underserved communities- he co-founded Mashroey, an Egypt-based light transport financing business, and Tasaheel, an Egypt-based micro-financing venture, which Nakhla says, has served more than 1 million customers combined. And the rest of the founding team are veterans in the transport field too: co-founder and CTO Ahmed Mohsen has published several papers in IEEE on AI, was part of the founding team and a shareholder in SecureMisr, a security consultancy company in Egypt, and founded MusicQ and CircleTie.

Plus Mohamed Aboulnaga, Careem’s former Regional Director and Fawry’s Business Development Manager, joined as co-founder and COO. They also have key members who have worked previously with Uber and Ghabbour Auto, which has resulted in a team that is comprised of “technically very competent, passionate, creative, results-driven individuals with a high work ethic. Each one with a unique strength, that when brought together make for an unrivalled team.”

After launching in 2017, Nakhla says that the company was doing around 50,000 rides by March 2018, and they closed their Series A round in the same year in a round co-led by Battery Road Ventures Holdings (BRVH) and Algebra Ventures. As for their funding, Nakhla put in 20% of the seed capital and raised the rest from Raouf Ghabbour, founder of GB Auto, as well as BRVH.

According to Nakhla, Halan has so far raised single-digit millions in total, and are currently in the process of their Series B funding round. The company’s business model involves taking a percentage of the ride fare as commission. Currently serving more than 100,000 customers, Halan has exceeded 10 million rides and operates in around 20-25 cities in Egypt and Sudan. As for its on-demand logistics offering, Halan is currently partnering with prominent names in the fast-food industry, including McDonald’s, KFC, Pizza Hut, Hardees, and many more. The startup has also been recently awarded Fastest-Growing Mobility Solution in the Market during the second edition of the E-Commerce Summit in September this year.

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