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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.

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Algeria’s Political deadlock and economic breakdown

Algeria’s Political deadlock and economic breakdown

The political impasse in which Algeria has been mired for more than seven months would result in a sharp economic slowdown in the short term. This Algeria’s Political deadlock and economic breakdown that the World Bank forecasters have reached is by any means comprehensive but could be read as some sort of alert.

By  Hakim Ould Mohamed in REPORTERS DZ of October 12, 2019.

The institution expects non-hydrocarbon sectors, as well as all oil and gas-related activity, to run through an air hole this year; which should have some unavoidable consequences on the country’s GDP growth. In effect, in similar way to other developing countries, it is expected to come down to 1.3% in 2019 from 1.5% the previous year.

Algeria's Political deadlock and economic breakdown

“Uncertainty policy is expected to lead to a slowdown in the non-hydrocarbon sector in 2019,” reads a World Bank report released last Thursday. The Bretton Woods institution has not failed to highlight the impact of the arrests of business leaders on investment morality grounds or lack of these, and more generally, on the economy. “Business leaders from various sectors were arrested in connection with corruption investigations, which has disrupted the economy due to sudden changes in the direction and supervision of these companies, as well as uncertainty over investment,” the same report said. Since the beginning of the crisis, a wave of arrests affected the business community, public institutions, banks and social bodies alike. This blocking situation had worsened over the weeks; appropriation sets did not meet, officials at the level of economic administration were careful not to take the slightest risk. That is to say how violent the shock wave was. The impact on the economy could be disastrous as the situation continues to worsen by the day. As such, the World Bank (WB) estimates that “the pre-election period also risks further delaying the fiscal consolidation process scheduled for 2019, increasing the budget deficit to 12.1% of GDP and increasing the risk of a more abrupt adjustment in the future.” For the WB, widening budget and current account deficits is almost inevitable. While the fiscal deficit would be unlikely to be reduced internally, “on the external front, the current account deficit is expected to widen to 8.1% of GDP, mainly due to a significantly larger trade deficit.”

 Investment is being impacted

 “As the course of political events is expected to have an impact on economic activity, it is also expected that more resources will be allocated to social measures, to the detriment of public investment spending,” the Bank predicts. The report, stating that “private sector activity and investment will be affected by political disruptions and an unfavourable business climate, as well as disruptions caused by delays in payment of workers in several industries.” This is the case, since the draft Finance Bill 2020 foresees a sharp decline in capital expenditure, to the tune of 20.1%, while operating expenses and social transfers are maintained as they are. WB experts are merely saying out loud what Algerian economists and operators are thinking, warning of a situation that could go along if solutions to the political impasse run out. “The delays at the end of the political impasse and political uncertainty could further damage the country’s economy, leading to increased imports and further dwindling foreign exchange reserves,” concludes the WB report. Moreover, macroeconomic indicators are unlikely to improve at any time under current political conditions.

 Economic growth to only 1.9% in 2020

 Moreover, against a background of falling capital spending and low morale among investors, the growth of the Algerian economy would be only 1.9% in the year 2020. A stagnation is due in particular to the “slow” growth of the hydrocarbons sector, combined with the contraction in economic activity, which has limited growth in non-hydrocarbon sectors, according to the WB’s economic monitoring report released on Thursday. “Growth in the hydrocarbon sector has been slow, with economic activity contracting by 6.5% and 7.7% in 2018 and the first quarter of 2019, respectively, partially off-sparing the effects of the slight increase in non-core growth 3.4% and 3.9% in 2018 and the first quarter of 2019, respectively,” the WB noted. The tiny increase in investment in the first half of the year (4.9%) was driven by public investment in construction, public works and hydraulics, as a result of the expansion of social housing programmes, the WB said. Furthermore, the institution believes that “the recent discovery of a new gas field suggests a rebound in gas production and exports, but only in the medium term, and if and only if the framework for investment in hydrocarbons lends it to it.” The World Bank is merely bringing water to the government’s mill, which has called the enactment of the new hydrocarbon law urgent.

Growth in Emerging Market and Developing Economies

Growth in Emerging Market and Developing Economies

Romain Duval and Davide Furceri, authors of this article that obviously elaborates on the currently so-called developing countries. It does not ignore that there is some differentiation between oil and/or other scarce natural resources and the non-exporters of the same. It might as well be talking about these two categories of countries but perhaps along with the character traits described in the image below. Why you might wonder. Simply because How To Reignite Growth in Emerging Market and Developing Economies as developed here, could well apply to all countries in the MENA region, perhaps worldwide not for the same reasons.

Growth in Emerging Market and Developing Economies
NPR quotes the Associated Press, which says that the term ‘developing country’ is more appropriate than Third World when referring to the economically developing nations of Latin America, Africa, and Asia.

Let us, in the meantime, read what they say.

Growth in Emerging Market and Developing Economies
(photo: Kacper Pempel/Reuters/Newscom)

Emerging markets and developing economies have enjoyed good growth over the past two decades. But many countries are still not catching up with the living standards of advanced economies.

At current growth rates, it would take more than 50 years for a typical emerging market economy to close half of its current income gap in living standards, and 90 years for a typical developing economy.

Our research in Chapter 3 of the October 2019 World Economic Outlook finds that implementing major reforms in six key areas at the same time—domestic finance, external finance, trade, labor markets, product markets, and governance—can double the speed of income convergence of the average emerging market and developing economy to the living standards of advanced economies. This could raise output levels by more than 7 percent over a six-year period.

Structural reforms can yield sizable payoffs.

More room for reforms

Policies that change the way governments work—known as structural reforms—are difficult to measure. They often involve policies or issues that are not easy to quantify, such as job protection legislation or the quality of supervision of the domestic banking system.

To address this, the IMF recently developed a comprehensive dataset covering structural regulations in domestic and external finance, trade, and labor and product markets. The data cover a large sample of 90 advanced and developing economies during the past four decades. To the five indicators, we added the quality of governance (for example, how countries control corruption) from the World Gov­ernance Indicators.

The new indicators show that, after the major wave of reforms in the late 1980s and—most importantly—the 1990s, the pace slowed in emerging market and developing economies during the 2000s, especially in low-income developing countries.

While this slowdown reflects the prior generation of reforms, as in advanced economies, there remains ample room for a renewed reform push, particularly in developing economies—notably, across sub-Saharan Africa and, to a lesser extent, in the Middle East and North Africa and the Asia-Pacific region.

Reforms can boost growth and living standards

Based on our empirical research of reforms in 48 current and former emerging markets and 20 developing economies, we find that reforms can yield sizable payoffs. But these gains take time to materialize and vary across different types of regulations. For example, a domestic finance reform of the size that took place in Egypt in 1992 leads to an increase in output of about 2 percent, on average, six years after implementation. We get a similar result for anti-corruption measures, whose effects are sizable in the short run and stabilize at around 2 percent in the medium term. In the other four reforms areas—external finance, trade, product markets, and labor markets—the gains are about 1 percent six years after the reform.

For the average emerging market and developing economy, the results imply that major simultaneous reforms across all six areas considered in this chapter can raise output by more than 7 percent over a six-year period. This would increase annual per capita GDP growth by about 1 percentage point, doubling the average speed of income convergence to advanced-country levels. Model-based analysis—which captures the longer-term effect of reforms and provides insights on the channels through which they affect economic activity—points to output gains about twice as large as the empirical model over the longer term (beyond 6 years).

One channel through which reforms increase output is by reducing informality. For example, lowering barriers to businesses’ entry in the formal sector encourages some informal companies to become formal. In turn, formalization boosts output by increasing companies’ productivity and capital investment. For this reason, the payoff from reforms tends to be larger where informality is pervasive.

Getting the timing, packaging and sequencing right

Some reforms work best when the economy is strong. In good times, reducing layoff costs makes employers more willing to hire new workers, while in bad times it makes them more willing to dismiss existing ones, magnifying the effects of a downturn. Similarly, increasing compe­tition in the financial sector at a time of weak credit demand may push certain financial intermediaries out of business, further weakening the economy.

In countries where the economy is weak, governments may prioritize reforms—such as strengthening product market competition—that pay off regardless of economic conditions, design others to alleviate any short-term costs—such as enacting job protection reforms now with a provision that they will take effect later. These reforms can also be accompanied with monetary or fiscal policy support where possible. 

Reforms also work best if properly packaged and sequenced. Importantly, they typically deliver larger gains in countries where governance is stron­ger. This means that strengthening governance can support economic growth and income convergence not just directly by incentivizing more productive formal enterprises to invest and recruit, but also indirectly by magnifying the payoff from reforms in other areas.

Finally, to fulfill their promise of improving living standards, reforms must be supported by redistributive policies that spread the gains widely across the population—such as strong social safety nets and programs that help workers move across jobs. For reforms to be sustainable and therefore effective, they need to benefit not just some, but all.

About the IMF Blog

IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day. The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

A Decade of Entrepreneurship in MENA

A Decade of Entrepreneurship in MENA

Looking back at a decade of entrepreneurship in MENA is by Triska Hamid of WAMDA who on September 30, 2019, reported the following.

This year marks a decade since Yahoo acquired Maktoob, in a deal worth $164 million. It was the first time that a technology company based in the Middle East had attracted such significant interest from a giant of its day.

At the time, the deal paled in comparison to the acquisitions and mergers typical in the region, between telecoms operators, industry and real estate. But for the entrepreneurship ecosystem, it was a seminal moment, validating the region as a place for technology and startups.

Back when this happened, there were no venture capital (VC) funds, mobile and internet penetration was low, Apple’s iPhone was still out of reach for most people and unicorns were mythical creatures with the power of flight.

Ten years later, the region boasts its own unicorn: Careem, which was acquired by Uber earlier this year for $3.1 billion, global investors are investing in Middle East startups and entrepreneurship is increasingly becoming a viable career path.

Maktoob was founded in Jordan by Samih Toukan and Hussam Khoury as an Arabic webmail service. It grew to become the main destination for Arabic speakers on the internet and amassed 16 million users. Beyond the main portal, Maktoob offered online payments through CashU, an e-commerce platform that resembled US-based eBay called Souq and gaming company Tahadi MMO Games.

Yahoo was only interested in the main portal and so Toukan and Khoury established Jabbar Internet Group to absorb Maktoob’s other assets. In hindsight, Yahoo failed to see the consumer trends that unfolded in the region and the inevitable rise of online payments and shopping.  

Souq became the biggest asset in Jabbar’s network. Emaar Malls reportedly made an offer of $800 million in 2017, but it was Amazon that would come to acquire the e-commerce site for $680 million of which $580 million was paid in cash. Emaar’s chairman Mohamed Alabbar decided to pump $1 billion into launching his own e-commerce platform, noon, as a result.

In between these two acquisitions, the technological landscape in the region had changed drastically. Internet penetration was on the rise, mobile penetration was close to or exceeded 100 per cent in every country of the Middle East and North Africa (MENA). Smartphones were also popular and Nokia’s dominance in the mobile phone market had been dismantled across the region, replaced by the app-friendly iPhones and Android-based Samsung and Huawei phones. With the introduction of 4G technology, the cost of mobile broadband fell from an average of $9.50 for half a gigabyte in 2016 to $5.27 for double the amount of data.

Empowering The Youth

Amid the protests and revolutions that disrupted the region’s economies in the so-called Arab Spring, the high youth unemployment highlighted the importance of the private sector for job creation. Entrepreneurship was presented as the silver bullet to stymie the rise of unemployment and a way to empower the youth, who make up two thirds of the region’s population.

Government policies and regulations across the Middle East and North Africa (Mena) slowly became friendlier to entrepreneurs and investors. Efforts to cut down startup costs continue as regional competition to become a hub for entrepreneurship has ignited. Startups have been recognised as a way to create not only employment but a means to solve for problems that societies and economies face in the Middle East.

The general shift in attitude and government policies created fertile ground for companies like Dubizzle, Talabat and Babil to emerge, most replicating models and ideas that had proved successful in other parts of the world. Germany’s Rocket Internet arrived in 2011 and began founding startups aggressively, replicating successful business models to launch companies like Namshi, which was recently acquired by Emaar Malls, wadi.com and Carmudi. Serious investors began to emerge and institutionalise and the region became home to VCs and angel investors with an eye to reap lofty returns. Today, there are several funds dedicated to entrepreneurship and a few governments have established fund of funds, to co-match VCs and help develop a local ecosystem that can generate economic growth.

One of the most prolific of these early angel investors was Aramex founder and Wamda chairman Fadi Ghandour. He was one of the initial investors in Maktoob and then in Jabbar Internet Group before establishing Wamda Capital.

“The world was changing and I had felt the internet change the world, I already felt it affecting Aramex, so when Samih and Hussam came for investment, for me, it was a no-brainer,” he says.

Still On The Backfoot

But even after all these years, there has only been a handful of exits valued at more than $100 million across the Middle East. Oil still accounts for the majority of gross domestic product (GDP) in the GCC, youth unemployment is the highest in the world at 26.5 per cent according to the World Bank and costs to start a business in the current hub of the region, Dubai is among the highest in the world. For almost every country, regulations still need improvement beyond registering a business. Innovation is also lacking, the highest-ranking MENA country in the Global Innovation Index is the UAE at 36th place, behind smaller economies like Cyrpus and Malta.

Yet, there is hope.

“There are more mature companies and more mature VCs, so there are better deals happening. Exits like Careem and Fawry, those kinds of big companies that are having a real impact is one key metric of a potentially successful ecosystem,” says Abdelhameed Sharara, founder of RiseUp. “I think we are still very early compared to the US and China, but it’s a very promising space compared to the past.”

The region also has a more active female population in the startup sector, with 23 per cent of startups in Gaza and the West Bank led by women, while 19 per cent are led by women in Beirut, both ahead of New York which stands at 12 per cent. Even at RiseUp, women accounted for almost 40 per cent of the attendees last year.

“The region has really become a place where entrepreneurs can thrive and provides supportive environments for startups,” says Amina Grimen, co-founder of e-commerce beauty site, Powder. “In the beauty space, looking at the accomplishments of big female players like Huda Kattan and Dr Lamees Hamdan is truly inspiring.”

Read more from WAMDAs

The Right Place To Locate Your MENA Business

The Right Place To Locate Your MENA Business

When you’re looking at where to locate in the MENA region, it’s important to weigh up the pros and cons of the different regions. Here are Four Tips To Find The Right Place To Locate Your MENA Business per Ahmad Saud Numan, Director of Marketing and Corporate Communications at Ras Al Khaimah Economic Zone Authority (RAKEZ).

You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

The image above is of What you need to know about the Middle East startup space to be read conjunctly with the proposed article.

Four Tips To Find The Right Place To Locate Your MENA Business
Image credit: Shutterstock

Setting up a business is exciting, but it requires level-headed planning. To be successful you need to consider the logistics performance of the country in question, along with its reputation, ease of company setup process, simplicity of doing business, and opportunities for future growth. So, when you’re looking at where to locate in the Middle East and North Africa (MENA) region, it’s important to weigh up the pros and cons of the different regions. If you’re considering this part of the world, here are four tips to improve your chances of finding the right place for your MENA business:

1. The best location for logistics A quick look at the World Bank Logistics Performance Index (LPI) helps define all the logistical considerations in six points: customs, infrastructure, ease of shipping, tracking and tracing, timeliness, as well as logistic services. These factors are important for all businesses and vital if you will be importing and/or exporting. Why the UAE has got logistics covered: In that World Bank Logistics Performance Index, the one MENA country that stands head and shoulders above all the rest is the UAE. It ranks 1st in the GCC and MENA. Globally it’s listed 11th, ahead of the United States and Switzerland. In terms of specifics, the UAE is placed 5th in the world for international shipments and 4th for timeliness. Meaning you can expect to have your deliveries reach their destinations by the deadline.

And it’s important not just to stop at Dubai when it comes to thinking about locations for your new MENA business. Investigate the other emirates that boast excellent logistical networks as well as ample warehousing space at a lower cost. Setting up in Ras al Khaimah, for example, is the perfect jumping-off point to do business across the UAE, the Gulf and entire MENA region, and it’s less than an hour’s drive to Dubai.

2. Finding an easy setup process Here we have to consider procedures, time, cost and minimum capital required to start a company. Different countries in the MENA region take different approaches to helping new businesses achieve this. There are a huge number of options, so it’s important to locate your company in a top-level business hub that can offer you a tailor-made solution. The UAE is always going to score highly when it comes to easy setup. Look for a hub within the UAE that gives you flexibility, allowing you to choose whether you want to set up on the mainland or in a free zone.

Why the UAE has the easiest setup process: In the World Bank’s Doing Business 2019 report, the UAE was ranked 25th in the world for starting a business, with a score of 94.06 out of 100. The MENA average was 82, with only one other regional country, Bahrain (89.57), breaching the top 100. Why? Well, the UAE was deemed to have hugely streamlined procedures and greatly reduced setup times. It’s worth looking outside of Dubai and Abu Dhabi as well– Ras al Khaimah has put in place a highly-simplified and fast-tracked business setup process. So, look for a hub that offers this level of service, and get your company off to a strong start. It’s about costs as well: Choosing the right location can mean halving your setup costs.

3. The importance of a good reputation The MENA country you set up in will be a reflection of your business. Set up in one that is well respected for business equality and fairness and this rubs off on the organization itself. It also affects how you are perceived by companies in the MENA (and wider) region with which you do business. 

Why the UAE’s reputation speaks well for your business: The UAE has a great reputation for business for a number of reasons. It’s politically stable, has a strong economy, and offers state-of-the-art infrastructure. Its laws prohibit monopoly and encourage competition, while maintaining intellectual property rights and trademarks. No surprise then that it’s probably the major international business hub of the Middle East. Even if you do business outside of the UAE, being based there puts you in great standing with the MENA region.

4. Having the room to expand Whatever the size of your business right now, you’re probably aiming to grow. This means you need to keep options open because what might be the best choice now, especially in terms of location and suppliers, may change in the future. You need a location that offers flexibility. One that has good access to other markets and one that lets you expand your offering. For example, you could be attracted by the easy setup process and zero taxation offered by many UAE free zones, but perhaps one day you will want to do business directly with the mainland. Finding the right hub that allows that type of flexibility will be a vital part of your decision-making. So, it’s important to think about your immediate requirements, and how those requirements might change down the road.

Why the UAE helps your company grow: On top the strong economy and great transport links, choosing the right business hub in the UAE brings peace of mind that you are set up for years to come. You haven’t just taken an ‘off the shelf’ solution but got one that truly reflects the kind of business you want to run today, and tomorrow. 

Question your way to success

When setting up in the MENA region, you need to make an informed decision rather than a leap of faith. You can improve your chances of success by asking the right questions about your business needs and the locations on offer. The UAE ticks the right boxes– the question, then, is making sure you pick the right economic zone and the right location within it.

Opinions expressed by Entrepreneur contributors are their own.

Oman is the most improved nation in MENA

Oman is the most improved nation in MENA

Oman is the most improved nation in MENA, moving up eight places to 58th, in the Travel & Tourism Competitiveness Index (TTCI) 2019 prepared by the World Economic Forum (WEF).

Oman most improved nation in MENA in WEF’s Travel and Tourism Survey is an article of the Muscat Daily of September 7, 2019.

Oman is the most improved nation in MENA

Conducted biennially, the survey found that Oman is MENA’s safest country and overall third in the world. Oman ranks third in safety and security due to lower homicides rates (19th in the world), a reliable police force (5th), and low costs of terrorism (7th) and crime (3rd).

Oman also recorded the region’s fastest improvement for its human resources and labour markets (103rd to 65th) and is among the most improved in international openness (116th to 97th), environmental sustainability (109th to 57th) and overall infrastructure (60th to 52nd).

The top 10 countries this year are Spain, France, Germany, Japan, the United States, the United Kingdom, Australia, Italy, Canada and Switzerland. India (40th to 34th) had the greatest improvement over 2017 among the top 25 per cent of all countries ranked in the report.

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,’ stated the report.

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 prioritisation and policy and natural and cultural resources.

This year, eight out of the Middle East’s 11 members improved their TTCI score since 2017. 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 infrastructure (22nd).

Each country receives a score in categories from business environment, safety and security, health and hygiene, human resources and labour market and ICT readiness.

Business set-up Package dedicated to Women

Business set-up Package dedicated to Women

Ras Al Khaimah Economic Zone (RAKEZ) has today launched its BusinessWomen Package, a ‘first-of-its-kind’ product in the United Arab Emirates (UAE) designed exclusively for women who are passionate about business.

Business set-up Package dedicated to Women
Business set-up Package dedicated to Women

The UAE’s first-ever business set-up package dedicated to women unveiled by RAKEZ

The package is offered at a pocket-friendly rate starting from AED 6,200 with instalment plan options, a free zone licence, a shared workstation and various support services in a one-stop shop.

Businesswomen who want to set up their company with the economic zone can either select the 1-Year or 3-Year Package. Both packages come with value-added services such as free usage of RAKEZ shared workstations, free printing of business cards, priority tokens at RAKEZ Service Centres and eligibility for a UAE Residence Visa(s). The 3-Year Package has an added benefit of one free investor visa, which is equivalent to AED 3,950. 

In addition, the newly-launched package gives businesswomen eight free zone licence types to choose from: Commercial, Educational, E-Commerce, General Trading, Individual/Professional, Media, Service and Freelancer Permit.

The UAE’s first-ever business set-up package dedicated to women unveiled by RAKEZ
The UAE’s first-ever business set-up package dedicated to women unveiled by RAKEZ

Commenting on the introduction of the new package, Ramy Jallad, Group CEO of RAKEZ, said: “We are very proud to launch the RAKEZ BusinessWomen Package, which is a clear testament to our commitment of encouraging more women to achieve their entrepreneurial dreams. In the past, we have conducted events exclusively for women, such as networking sessions. We have used these events as platforms to get to know what challenges they are facing and what can we do to support them. Then, here we are, we have introduced an entire package that has all the elements to help them become the successful businesswomen that they are meant to be. It comes with a selection of cost-effective office spaces, licences, as well as support services. All they have to do is pick the solutions that suit their needs and they are good to go.”

“This is just the tip of the iceberg,” Mr Jallad added. “Watch out as we are going to work on more initiatives to inspire women to be in business.”

According to the World Economic Forum’s 2018 Global Gender Gap Report, there is a 40% gender gap in the Middle East and North Africa in various areas of the society, including business. Closing this gap by promoting female entrepreneurship can help the region achieve a more sustainable and inclusive economic growth path.

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It’s Good To Teach Entrepreneurial Thinking At A Young Age

It’s Good To Teach Entrepreneurial Thinking At A Young Age

Published by Entrepreneur Middle East, an international franchise of Entrepreneur Media, this article dated August 15, 2019, is an eye-opener on not only the educational requirements of the near future but on the times we’re presently going through. There are according to Helen Al Uzaizi CEO, BizWorld UAE, Three Reasons Why It’s Good To Teach Entrepreneurial Thinking At A Young Age.

Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world.

Three Reasons Why It's Good To Teach Entrepreneurial Thinking At A Young Age

Moving from childhood into adolescence can be a very challenging time for kids. Not only are social norms changing, but their ability to adapt to their quickly evolving environments is being developed. Schools change, responsibilities change, and their lives become different from day to day. Throughout this time, maturing happens, and it aids in their ability to critically think, react to situations, and become more independent.

But is there a way to develop these skills sooner to help them mature, and ultimately, cope better? In a nutshell, yes. Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world. Creativity, problem-solving, and emotional intelligence are just a few of these skills that can be gained through early teaching and long-term practice. For kids that practice entrepreneurial thinking, in difficult situations, they are able to problem solve effectively by analyzing long-term ramifications. This kind of processing comes with so many benefits that will bode well for kids from childhood all the way into adulthood.

1. Positive habit-forming Entrepreneurial thinking is not just an activity, but rather a lens through which all situations are viewed. This is also known as a “positive habit.” Instead of going down another path, the child has to make a conscious decision to change their perspective. By making these daily decisions, kids become more aware of the benefits that come along with forming positive habits and find them easier to engage in a variety of life aspects.

2. Emotional support When a child is able to effectively problem solve, and see the fruit of their efforts, positive feelings and increased self-worth follow. This internal confidence leads to kids feeling emotionally supported, and it has a great effect on their ability to take criticism and grow without fear of failure.

3. Behavior Most of the time, bad behavior comes from the inability to control one’s emotions and/ or the inability to communicate. Practicing entrepreneurial thinking solves both of those inhibitors by giving the child the tools to be able to look at the problem from a big-picture and emotionally intelligent perspective. All of the attributes that are gained from teaching entrepreneurial thinking tend to lead to better behavior, emotional health, and positive habits by giving kids the tools to not only cope, but thrive. Equipping them early helps kids navigate the landscape of their lives so that they can face obstacles with creativity and without fear. Difficult situations, new experiences and issues that arise are all the more easily handled and learned from by learning and practicing entrepreneurial thinking young.

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Economic uncertainties within the GCC countries

Economic uncertainties within the GCC countries

Travel AND Tour World published on Monday, July 29, 2019, this article elaborating on the current tourism together with other types of related business activities in the Gulf region. Dubai with its impressive urban development, artificial islands and other coastline attractions has been for a time spearheading the regional shopping and business tourism. The recent economic uncertainties within the GCC countries as well as through the political movements of the US, the EU and all other heavyweights vested interests of the world economy seem to be behind this story.

Tourism slowdown in Dubai’s Jumeirah cuts 500 jobs

Economic uncertainties within the GCC countries

Due to a slowdown in the emirate’s tourism industry, Jumeirah Group has cut hundreds of jobs and according to people familiar with the industry, it weighs on the operator of Dubai’s sail-shaped Burj Al Arab hotel.

As per sources hundreds of jobs were slashed recently by the operators of Burj Al Arab along with 24 hotels worldwide.

As the information was private the government-owned luxury hotel chain, which manages 24 properties in eight countries, recently shed about 500 jobs.

Jumeriah has more than 13,500 employees according to its website and most of the cuts were support roles.

The tourism sector is stalled causing Dubai’s hotels to struggle and the occupancy level was found to be the lowest during the second quarter since 2009.

The average daily rates and revenue available per room fell to 2003 levels as stated by STR, a global hotel data provider.

There has been an oversupply due to new opening ahead of the 2020 World Expo.

The geopolitical tensions, relatively low oil prices, the ongoing real estate and the retail slump has caused Dubai-based companies and real estate developer and banks to cut down their staffs.

New measures have been introduced by the Dubai government to stimulate the economy by lowering business fees and providing long-term visas.

A new kind of company is revolutionising Africa’s gig economy

A new kind of company is revolutionising Africa’s gig economy

The World Economic Forum article dated 28 May 2019, could well be applied to most of the countries of the MENA region. Apart from the oil exporting ones, all the others’ informal economy appears to the naked eye as undergoing the same phenomenon but perhaps at a lesser density. In effect, very much like in the neighbouring sub-Saharan regions, the MENA’s informal markets seem to be pushing towards a new kind of business structure. A new kind of company is revolutionising Africa’s gig economy? Aubrey Hruby, Senior advisor to Fortune 500 companies replies.

For more than 30 years, governments and international development organizations have followed the same recipe for formalising the world’s informal economy; enacting new legislation and regulations or abolishing those that get in the way of the process.

Yet despite their efforts, 93% of the world’s informal employment is still found in emerging and developing countries, with 85.8% of employment in Africa considered informal. In Kenya, sub-Saharan Africa’s fifth-largest economy, the informal sector – commonly referred to as Jua Kali – is the country’s main job creator. According to the 2019 Economic Survey by the Kenya National Bureau of Statistics, Jua Kali was responsible for 762,100 of the 840,600 new jobs created last year. The ‘gig economy’, a new concept in developed markets, has been the norm in developing economies for decades.

A man waits for M-Pesa customers at his shop in Kibera in Kenya's capital Nairobi December 31, 2014. Safaricom, Kenya's biggest telecoms firm, is a model of how technology can be used to financially include millions of people with mobile telephones but without access to traditional infrastructure such as the banks that are available to the wealthy or those living in cities. Safaricom in 2007 pioneered its M-Pesa mobile money transfer technology, now used across Africa, Asia and Europe. It proved that money can be made from people who earn a few dollars a day.
Can ‘bridge companies’ like M-Pesa forge links between Africa’s formal and informal economies? Image: REUTERS/Noor Khamis

By 2035, Africa will contribute more people to the workforce each year than the rest of the world combined. By 2050, the continent will be home to 1.25 billion people of working age. In order to absorb these new entrants, Africa needs to create more than 18 million new jobs each year. Given the urgent need to provide jobs and livelihoods to Africans, it is time to examine the conventional wisdom that informal markets must transition into formal markets. Development finance institutions (DFIs) and private investors in African markets can play a critical role in both advancing Africa’s gig economy and changing the narrative that growth in informal markets is incompatible with sustainable development.

Across African markets, companies are pioneering business models that bridge the formal and informal sectors; in these models, each company is a formal entity but can mobilise large numbers of informal actors in their supply chains or service delivery. While this has been done in dairies in Kenya and at coffee and cocoa outgrowers across the continent and in other sectors for nearly a century, the penetration of mobile phones has enabled a new breed of African companies to monetise their ability to organize and inject trust into fragmented informal markets. However, unlike Uber or Airbnb, which disrupted largely formal sectors, many of Africa’s new ‘gig economy’ firms are writing the rules for whole new industries in local markets.

Perhaps the most high-profile example is Safaricom’s M-PESA. Since its launch in 2007, M-PESA, a mobile payments system developed by Kenya’s largest telecoms operator, has enabled millions of informal sector workers to move money at a lower cost, which has provided a significant boost to the Kenyan and Tanzanian economies. Another, more recent example, is Nigeria’s Cars45, operated by Frontier Car Group. Nigeria’s $12 billion used car industry is largely informal and characterised by distrust, a lack of standardisation and the absence of a structured dealer network. Cars45 facilitates the buying and selling of used cars by pricing and rating their condition transparently and conducting online auctions. Many sectors throughout the continent remain highly informal and would benefit from these types of bridges into formality. These ‘bridge companies’ are going to define the future of employment in African countries.

DFIs are ideally placed to invest in bridge companies in African markets, given their long presence and in-depth engagement with local financing environments. The International Finance Corporation (IFC) and the UK’s CDC Group already invest in technology-enabled start-ups, and others, including OPIC, are adapting their strategies to be able to do so. Many of the continent’s most promising technology-enabled bridge companies are starting to raise funding large enough to attract the attention of DFIs. Frontier Car Group recently raised $89 million, Kenya’s Twiga Foods raised $10 million, and Nigeria’s Kobo365 has raised $6 million. Overcoming a dearth of funding remains one of the highest barriers for African entrepreneurs, and the development impact of investing in those that improve employment is enormous.

The gig economy comes with limitations. Lack of legal rights, limited career progression, stagnant pay and a lack of benefits are just some of the issues that will need to be addressed in an ‘Uberised’ world. These challenges, plus the day-to-day economic uncertainty, make the informal sector far worse in many ways than the formal. Bridge companies – because they are registered, and have a public brand and centralised management – can be pressured into addressing issues around workers’ wellbeing. Studies into the financial behaviours and needs of low-income families by BFA, a consulting firm specialising in financial inclusion policies, found that workers often aspired to ‘gig economy’ jobs but hated casual labour (such as waiting on a corner to be hired for the day) because of the lack of reliability and predictability.

The future of work is changing and the mass job creators of today will not be able to meet the needs of tomorrow’s workforce in the same way. Bridge companies are pioneering new ways of injecting efficiency and higher productivity into traditional informal markets. Investing in this trend is critical to solving Africa’s pressing job creation need.

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