Advertisements
Mutual Necessity Relationship between the Gulf  and India

Mutual Necessity Relationship between the Gulf and India

In the World Economic Forum’s Global Agenda, stories on Migration and Workforce and Employment abound. This one on India‘s record-breaking diaspora is the latest. It is doubly interesting because of a) the significant presence of more than 8 million NRIs (non-resident Indians) in the Gulf and b) it is reflective of a mutual necessity relationship between the Gulf and India.

In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, becoming their largest source of external financing. ‘Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.’ Per Image above: REUTERS/Pawan Kumar.

Katharine Rooney, Senior Writer, Formative Content, the Indian diaspora elsewhere seem to be not that dissimilar to that of the GCC’s.

Excerpts of the WEF article:

India’s record-breaking diaspora in numbers

When Indian Prime Minister Narendra Modi visits the United States, he is among compatriots – 4.4 million of them.

India has the largest diaspora in the world, with around 18 million of its citizens living in other countries. The US is their top destination: in 2017, people of Indian descent made up 1.3% of the American population, and they are the most successful immigrants in the country.

As economist Nirvikar Singh says in an interview with the University of California Santa Cruz, “Indian entrepreneurship is a very important engine of economic growth.” The co-author of a book on the Indian diaspora in the US notes that 8% of the founders of high-tech companies are Indian. With Sundar Pichai running Google and Satya Nadella the CEO of Microsoft, Indians play a prominent role in some of America’s biggest tech firms.

Indian-Americans watch Narendra Modi in Madison Square Gardens in New York. The US is a key destination for Indian emigrants.
Image: Reuters/Lucas Jackson

Economic factors lure large numbers of Indians to the Persian Gulf, particularly the United Arab Emirates (UAE), which is home to 3.1 million Indians. The number of Indians living in the UAE and other countries in the region such as Saudi Arabia and Oman increased fourfold in the space of a decade, from 2 million in 2005 to more than 8 million in 2015.

It’s a numbers game

Despite a sizeable outflow, India is still home to 1.39 billion people – and by 2027, it’s set to overtake China as the world’s most populous country. While there has been progress in reducing extreme poverty levels, there are still 176 million people living in poverty in India, and money remitted by expatriates is an important part of economic development and growth. In 2018, Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.


According to the Reserve Bank of India, inward remittances helped to finance 43% of the country’s trade deficit in 2017-18. They also help to meet the needs of the poor by covering the cost of daily living expenses and allowing people to invest in business and education.

Countries with the largest diasporas – India has the world’s biggest, with nearly 18 million people living abroad.
Twenty countries or areas of origin with the largest diaspora populations (millions) Image: UNDESA

The ever-changing direction of migration

With a significant spike in emigration since 2015, India has overtaken other countries that once represented significant migrant populations – many escaping political upheaval or conflict.

But there has been a huge jump in migration from Syria, with more than 5.6 million fleeing the country since war broke out in 201, and a steady rise in the number of people leaving Pakistan, where the government has encouraged outward migration as a way to combat unemployment, reduce poverty and earn foreign exchange through remittances.

Migration Explore the latest strategic trends, research and analysis This article is part of the India Economic Summit

Become a Member or Partner to participate in the Forum’s year-round annual and regional events. Contact WEF now.

Advertisements
MENA region’s Countries in the World Economy

MENA region’s Countries in the World Economy

The point of this article dated September 5, 2019, published by World Economic Forum in collaboration with Visual Capitalist and elaborated by Jeff Desjardins, Editor-in-Chief, Visual Capitalist, is to possibly enlighten us on the actual world situation. We could also get a clear picture of the actual position of the MENA region’s countries in the world economy at 5th as ranked by the World Bank.

The $86 trillion world economy – in one chart

U.S. dollar, euro and Swiss franc bank notes are seen in a bank in Budapest August 8, 2011.The forint lead currencies lower in emerging Europe; the euro and the dollar lost ground against the Japanese yen and the Swiss franc amid worries about a European and American debt crisis spiralling out of control.   REUTERS/Bernadett Szabo (HUNGARY - Tags: BUSINESS) - GM1E789002701

The $86 Trillion World Economy in One Chart

The world economy is in a never-ending state of flux.

The fact is that billions of variables — both big and small — factor into any calculation of overall economic productivity, and these inputs are changing all of the time.

Buying this week’s groceries or filling up your car with gas may seem like a rounding error when we are talking about trillions of dollars, but every microeconomic decision or set of preferences can add up in aggregate.

And as consumer preferences, technology, trade relationships, interest rates, and currency valuations change — so does the final composition of the world’s $86 trillion economy.

Country GDPs, by Size

Today’s visualization comes to us from HowMuch.net, and it charts the most recent composition of the global economic landscape.

It should be noted that the diagram uses nominal GDP to measure economic output, which is different than using GDP adjusted for purchasing power parity (PPP). The data in the diagram and table below come from the World Bank’s latest update, published in July 2019.

The Top 15 Economies, by GDP

The above 15 economies represent a whopping 75% of total global GDP, which added up to $85.8 trillion in 2018 according to the World Bank.

Most interestingly, the gap between China and the United States is narrowing — and in nominal terms, China’s economy is now 66.4% the size.

A Higher Level Look

The World Bank also provides a regional breakdown of global GDP, which helps to give additional perspective:

The low-income countries — which have a combined population of about 705 million people — add up to only 0.6% of global GDP.

Looking Towards the Future

For more on the world economy and predictions on country GDPs on a forward-looking basis, we suggest looking at our animation on the Biggest Economies in 2030.

It is worth mentioning, however, that the animation uses GDP (PPP) calculations instead of the nominal ones above.

Have you read?

More readings on the WEF’s agenda.

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.

A deep dive into the MENA games industry

A deep dive into the MENA games industry

SPECIAL REPORT of Region focus: A deep dive into the MENA games industry dated August 30th, 2019, by Will Freeman is literally illuminating in the sense of shedding the light on the presence of the games industry in the MENA region that was discretely kept away from the attention of the many. Here it is.

A deep dive into the MENA games industry

Ask anybody with their ear to the rail of the global games industry about the MENA region and they’ll very likely assert that it offers ‘opportunity’.

The vast area has for some time now been associated with market potential that games companies from across the globe would be wise to harness.

However, the detail around what founds that opportunity, how it should be seized and the reality of its distinct challenges can seem like something of a mystery. A thorough analysis, however, reveals a region that might not be as atypical or enigmatic in its machinations as many assume.

As the oft-talked about BRIC region – ‘Brazil, Russia, India and China’ – has blossomed from ‘emerging’ to ‘emerged’, the MENA countries have been quietly building an impressive momentum of their own. And it is the mobile games sector specifically that provides the region with its most striking prospects.

By MENA, of course, we mean ‘Middle East and North Africa’. It is ultimately an area without a firm or agreed definition. But for the purposes of this article – which kickstarts a series of pieces looking at MENA – we’re considering numerous countries, including but not limited to, Jordan, Saudi Arabia, the United Arab Emirates/Dubai, Bahrain, Iran and Lebanon.

Nations such as Israel, Turkey and Egypt also warrant reflection, though those are places with games sectors that are relatively well-known to the outside world and even distinct from the rest of their MENA family.

Speaking the same language

While one could spend a lifetime developing a universally agreed framing of ‘MENA’, the reality is that the opportunity for mobile games developers, publishers, platforms and service providers is significantly defined by a language; not a list of countries. That language is Arabic, and one thing is clear; the Arabic speaking world provides a substantial audience for those that make a living from mobile games to consider.

A deep dive into the MENA games industry
Petra, Jordan

“The reason why the mobile gaming market [here] is so interesting comes from the fact that Arabic is the fourth most spoken language in the world, yet less than one per cent of all content available online is in Arabic,” offers Hussam Hammo, CEO of Jordanian outfit Tamatem, which specialises in publishing and maintaining mobile games in the MENA region.

“More than 70 per cent of the population of the Arabic speaking countries – around 400 million – use Arabic as their default language on their smartphones. Add to that that countries like Saudi Arabia have the highest ARPPU in the entire world, and you have a perfect opportunity.”

Record-breaking ARPPU alone should immediately prick the ears of industry observers. For while the world’s biggest gaming market China has ARPPU of around $32, Saudi Arabia’s ARPPU is a striking $270. Tamatem’s own figures, meanwhile, point to consumers in MENA spending $3.2 billion on games broadly back in 2016.

Arabic is the fourth most spoken language in the world, yet less than one per cent of all content available online is in Arabic.

Hussam Hammo

And then there are those 400 million people keen to digest Arabic language smartphone titles. They are presently served with a bounty of gaming content; but a great deal more fails to support both Arabic language – and culture.

An appetite for growth

It seems clear there is an underserved and ravenous appetite for gaming in MENA, which means one thing; there is a generous capacity for growth. Indeed, consulting giant strategy& predicts that by 2022, mobile gaming across MENA will stand as a $2.3 billion industry.

Smartphone penetration has also hit alluring levels in many MENA countries. 46 per cent of Saudi Arabia’s 33,554,000 residents own a smartphone, according to Newzoo data. That’s just shy of 15.5 million people.

The United Arab Emirates, meanwhile, can boast of an 80.6 per cent smartphone penetration rate. That is against a relatively modest population of 7.5 million, but it still presents a demographic worth serious attention.

Contemporary data on smartphone penetration on Jordan is a little harder to come by, but the Pew Research Center’s data for 2016 lists a 51 per cent rate. The same study gives Lebanon a slight lead at 52 per cent. Of course, not every country in MENA provides such appealing device penetration, but looking at the region as a whole, growth is forecast.

The global trade body for mobile network operators, the GSMAcounted 375 million unique mobile subscribers across MENA in 2017. They expect that number to reach 459 million by 2025. By that same year, GSMA predicts the area will count 790 million individual SIM connections, not including IoT devices. That’s a striking 118 per cent penetration rate, if you consider the region’s entire population, across all languages.

As for the make-up of mobile device breakdown in MENA, region-specific data is in relatively short supply. StatCounter figures for specific countries in the area do, however, paint a fairly familiar picture.

As of July 2019, in Saudi Arabia specifically Android accounts for 65.6 per cent of in-use handsets, while iOS trails at a still-healthy 34.12 per cent. That leaves a trivial amount of unknown and fringe or legacy OSs, including the likes of Series 40, which still has a 0.01 per cent penetration rate in the country.

A deep dive into the MENA games industry
United Arab Emirates

Over in Jordan, Android dominates with 84.65 per cent of the market, while iOS accounts for 15.15 per cent of smartphones. And in the UAE, Android can claim 77.34 per cent of the market, with iOS holding on to 22.18 per cent. The picture appears reasonably consistent, including looking back over the last year.

The Google Play and Apple App Stores dominate, but that is a topic PocketGamer.biz will return to in-depth later in this series of features.

Cultural localisation

‘Growth’ remains the keyword if you look at MENA as a place to succeed with gaming content. And, when considering mobile specifically, that growth which will likely be significantly facilitated by providing a great deal more games in the Arabic language. Those 400 million handsets set to Arabic by default are active now, and their number is likely to climb.

Not that language is the only factor in localising a game for MENA. The region is culturally a different place from both the West and areas like China or Southeast Asia. Making a game created outside of MENA culturally appropriate for the market will perhaps offer the biggest challenge to companies external to the area.

The UAE and the Gulf region are at the forefront globally in terms of 5G launches and plans.

Jawad Abassi

It’s a perfect example of the distinction between translation and true localisation. As for the key to mastering cultural localisation? Collaboration with resident MENA outfits may be an absolute necessity.

Tamatem is one of a number of companies specialising in publishing to MENA, and it’s certainly not alone in its effort. Babil Games, MENA Mobile and others are striving to connect international games companies with the local market.

And then there are those taking the opposite approach. Saudi Arabia’s Manga Productions, for example, endeavours to deliver ‘animation and video game projects to promote Saudi ideas and messages internationally through unique and professional productions’. As a local market, MENA is culturally distinct, but that doesn’t stop it from being globally ambitious.

Another factor central to the potential of mobile gaming in MENA is, of course, the arrival of 5G networks. GSMA points out that in some parts of MENA, 5G has already been commercially deployed.

“The UAE and the Gulf region are at the forefront globally in terms of 5G launches and plans,” confirms Jawad Abbassi, head of Middle East and North Africa at GSMA.

“Operators in MENA – particularly in the GCC States – are among the first to launch 5G networks commercially. Following these launches, operators in 12 other countries across MENA are expected to deploy 5G networks, covering around 30 per cent of the region’s population by 2025. By then, regional 5G connections will surpass 50 million. Early global 5G pioneers include the GCC countries, South Korea, the United States, Australia and the United Kingdom.”

Clearly, when it comes to infrastructure, much of the MENA region rivals some the rest of the world’s tech leading nations.

Ultimately, of course, MENA is a diverse and multifaceted place. Its various nations all bring their own distinct make-ups, and in taking a broad perspective this round-up has perhaps just served to highlight the fundamentals of a very real opportunity.

The figures speak for themselves. But if you want to move on what MENA offers? You’ll want a little more detail.

That is why this piece is just the start of a series of articles looking at the companies, countries and trends shaping MENA’s mobile gaming future.

So keep an eye on Pocketgamer.biz and consider joining us at Pocket Gamer Connects Jordan on November 2nd and 3rd, where you can come and meet the publishers, developers and game tech outfits that might be the future of your success in MENA.

Get the latest mobile games news, interviews and in-depth analysis on TwitterFacebookLinkedIn and our daily newsletter.


Pocket Gamer Connects Helsinki is on October 1st and 2nd 2019. Book now!

TAGS: 

Will Freeman
A deep dive into the MENA games industry
  • Will Freeman is the former editor of trade publication Develop, having also written for the likes of The Guardian and The Observer.
Saudi Arabia struggles to end oil addiction

Saudi Arabia struggles to end oil addiction

Reuters’ BUSINESS NEWS on July 25, 2019, posted this article titled Old habits die hard: Saudi Arabia struggles to end oil addiction written by Rania El Gamal and Saeed Azhar to clearly show us how things of fossil fuels nature tend not to change a bit if not at all and despite all efforts to the contrary.

DUBAI (Reuters) – When Saudi Aramco was on the verge of a deal last year to buy a stake in an Indian oil refinery, its boss quickly boarded a company jet in Paris and flew to New Delhi.

FILE PHOTO: Saudi Energy Minister Khalid al-Falih addresses the media flanked by India’s Oil Minister Dharmendra Pradhan (L) and Saudi Aramco Chief Executive Officer Amin Nasser (R) during International Energy Forum (IEF) to announce Saudi Aramco’s participation in a planned refinery project in the western state of Maharashtra, in New Delhi, India, April 11, 2018. REUTERS/Altaf Hussain/File Photo

Chief executive Amin Nasser arrived unannounced early on April 11, 2018, finalised the agreement and signed it later that day. Negotiators had just finished hammering out the details.

His last-minute flight, after a business trip to France with Crown Prince Mohammed bin Salman, underlined the importance of the deal both to Saudi Arabia and its huge state oil firm.

The planned investment in the $44-billion (£35 billion) refinery and petrochemical project on India’s west coast is a prime example of how Aramco is trying to squeeze value out of each barrel of oil it produces by snapping up refining capacity, mainly in fast-growing Asia.

But it also underlines the challenge Saudi Arabia faces in reducing its heavy economic reliance on oil. The results of its programme to diversify have been mixed, some projects are moving slowly and others are too ambitious, economic and energy analysts say.

Prince Mohammed’s stated goal of being able to “live without oil” by as early as 2020 looks set to be missed.

“Saudi Arabia’s oil addiction is as strong as ever…economically, of course, the Saudi economy runs on oil. Oil still dominates GDP, exports and government revenues,” said Jim Krane, energy fellow at Rice University’s Baker Institute.

“That said, Saudi Arabia is changing its relationship with oil. The dependence remains. But the kingdom is squeezing more value out of its oil,” he said.

The slow progress means the Saudi economy is likely to remain hostage to oil prices for longer than planned. Any delay in implementing change also risks denting Prince Mohammed’s image as a reformer.

SECURING THE FUTURE

Announcing his plan three years ago, the Crown Prince said Saudi Arabia must end its “oil addiction” to ensure the world’s biggest oil exporter and second largest producer cannot be “at the mercy of commodity price volatility or external markets.”

He spoke after a fall in crude oil prices boosted the Saudi fiscal deficit to about 15% of gross domestic product in 2015, slowing government spending and economic growth.

This year the deficit could hit 7% of GDP, according to the International Monetary Fund, as oil-related growth slows following production cuts led by the Organization of the Petroleum Exporting Countries.

Aramco is central to the Crown Prince’s reform plan in several ways, not least because its planned partial privatisation will generate income for the reforms.

The company has also been involved in most of the kingdom’s high-profile deals in the last two years as it increased investment in refining and petrochemicals.

In that time, Aramco has announced at least $50 billion worth of investments in Saudi Arabia, Asia and the United States. It aims to almost triple its chemicals production to 34 million metric tons per year by 2030 and raise its global refining capacity to 8-10 million barrels per day (bpd) from more than 5 million bpd.

In March last year, Aramco finalised a deal to buy a $7 billion stake in a refinery and petrochemicals project with Malaysia’s Petronas. A month later, Nasser and a consortium of Indian companies signed the initial deal that would give Aramco a stake in the planned 1.2 million bpd refinery in India’s western Maharashtra state.

In February of this year, Aramco signed a $10 billion deal for a refining and petrochemical complex in China. Last month it signed 12 deals with South Korea worth billions of dollars, ranging from ship building to an expansion of a refinery owned by Aramco.

“This is what I call the back to basics approach to economic diversification in the Gulf,” said Robin Mills, chief executive of energy consultancy Qamar Energy in Dubai. “The energy industry has the assets, capital and skills, so it’s the engine of new projects – refining, petrochemicals, gas and so on.”

MR UPSTREAM LOOKS DOWNSTREAM

In March, Aramco said it was acquiring a 70 percent stake in petrochemicals firm Saudi Basic Industries (SABIC) (2010.SE) for $69.1 billion from the national wealth fund, known as the Public Investment Fund (PIF).

Aramco is gaining new markets for its crude and building a global downstream presence – the refining, processing and purifying end of the production line. Its aim is to become a global leader in chemicals.

“We are not investing left and right, we are investing in the right markets, we are investing in the right refining assets, we are investing where we create value from fuels to chemicals,” Abdulaziz al-Judaimi, Aramco’s Senior Vice President for Downstream, told Reuters in May.

Nasser, previously known by Aramco employees as Mr Upstream, is leading the downstream expansion. He wants to bring Aramco’s refining capacity closer to its oil production potential, which is now at 12 million bpd.

Aramco wants gradually to match the downstream presence of its big competitors and, like Saudi Arabia as a whole, to reduce its vulnerability to any downturn in demand for crude oil or oil price volatility.

“You want to secure your demand in key markets,” said an industry source familiar with Saudi Arabia’s oil plans. “You have to become more dynamic, to become more adaptable, you have to make sure that you secure your future. Malaysia was one example, India was another.”

For years, Aramco has been a regular crude supplier to Indian refiners via long-term crude contracts.

Yet while it has stakes in refineries or storage assets in other important Asia markets such as China, Japan and South Korea – and owns the largest refinery in the United States – it has not secured that same access in India, a fast-growing market for fuel and petrochemicals.Slideshow (2 Images)

“India is a market that you just can’t ignore anymore,” an industry source said.

Aramco has also shifted its marketing strategy in China. It is now more oriented towards independent refiners to boost Saudi crude sales after years of dealing almost exclusively with state-owned Chinese firms.

SLOW PROGRESS

But overall, plans to wean Saudi Arabia of oil have advanced slowly.

Few details have emerged of a $200-billion solar power-generation project announced by the PIF and Japan’s SoftBank in March 2018. It is unclear how or when the project will be executed, and Saudi’s Arabia’s energy ministry is moving ahead with its own solar projects.

In a blow to potential investment, the image of Saudi Arabia and the reputation of the Crown Prince have been damaged by the murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul last year.

Leading businessmen and politicians boycotted an investment forum meant to showcase the kingdom’s new future away from oil, and it was only big deals with Aramco that saved it.

Also, the partial privatisation of Aramco has been delayed since it set out its plans to acquire the stake in SABIC, though senior Saudi officials including Energy Minister Khalid al-Falih have said it could now happen in 2020-2021.

The PIF, chaired by Prince Mohammed, was meant to receive around $100 billion from the flotation. Instead it will get around $70 billion from the sale of its SABIC stake.

The PIF made its mark on the global stage three years ago by taking a $3.5- billion stake in Uber Technologies. But since 2016, the PIF’s direct investments overseas stand at just $10.5 billion, according to Refinitiv data, and many of the fund’s announced commitments have yet to materialise.

The funds’ main investments over the past two years were inequity shares in companies such as electric car makers Tesla (TSLA.O) and Lucid Motors and Gulf e-commerce platform Noon.com.

Such deals would not necessarily attract inward foreign investment, help develop industries or create jobs.

Additional reporting by Marwa Rashad and Hadeel Al Sayegh; writing by Rania El Gamal; editing by Ghaida Ghantous and Timothy Heritage

Our Standards: The Thomson Reuters Trust Principles.

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.

Have you read?

China’s Global Investments Declining Everywhere Except for the MENA

China’s Global Investments Declining Everywhere Except for the MENA

Foreign Policy’s INFOGRAPHIC published this article written by AFSHIN MOLAVI on May 16, 2019. It is about China’s Global Investments Declining Everywhere Except for the MENA as clearly showing in Three charts highlight Beijing’s growing interest in the Middle East and North Africa.

As Chinese President Xi Jinping concluded the latest high-level Belt and Road gathering of world leaders in Beijing last month, China’s signature project has seemingly entered a new phase: worldwide acceptance of the Belt and Road Initiative (BRI) as a fact of international life (like it or not). So, with the wind at its back, is China doubling down on its investments worldwide? Not exactly. The total value of China’s global investments and construction contracts actually fell by $100 billion in 2018, according to data analyzed from the American Enterprise Institute’s China Global Investment Tracker. Just about every region saw a significant decline in Chinese investment or construction projects except, surprisingly, for one: the Middle East and North Africa (MENA).

A flurry of Chinese investment and construction projects in the MENA region over the last three years has made it a key geoeconomic partner for Beijing. But surely, in pure volume terms, the MENA region could not have attracted as much Chinese economic activity as sub-Saharan Africa or East Asia, right? Think again. The MENA region ranked as the second-largest recipient of investment and Chinese construction projects worldwide after Europe in 2018, as the chart below shows.


MENA’s Growing BRI Clout

In 2018, the Middle East and North Africa leapfrogged other emerging markets as a destination for BRI projects.

SOURCE: AEI CHINA GLOBAL INVESTMENT TRACKER, 2005-2018; COMPILED AND CONCEIVED BY AFSHIN MOLAVI.

The MENA region ranked ahead of traditional BRI stalwarts East Asia and sub-Saharan Africa last year, recording $28.11 billion in new projects. The region still lags behind both those regions as a whole since the launch of BRI in 2013 and dating back to 2005, but a three-year surge has brought it in closer proximity to the top of the table. That could mean a windfall for Chinese state-owned construction companies as the majority of MENA projects involve construction, rather than foreign direct investment.

Of the 2018 MENA total, nearly three-quarters was targeted at Egypt, the United Arab Emirates, and Saudi Arabia. Those three countries also make up half of the “$20 billion club”—the group of countries with more than $20 billion worth of projects from China dating back to 2005.


Chinese Investment in MENA Countries

MENA countries with more than $20 billion worth of investment and construction projects by Chinese firms since 2005.

SOURCE: AEI CHINA GLOBAL INVESTMENT TRACKER, 2005-2018; COMPILED AND CONCEIVED BY AFSHIN MOLAVI.

The list here is heavily skewed toward regional oil producers, with the exception of Egypt, and most of China’s projects in the region involve construction rather than investment. Despite a recent setback, Chinese state-owned enterprises will likely play a prominent role in Egypt’s ambitious infrastructure program, including the building of a new, gleaming capital city just outside Cairo. Chinese construction companies were vitalin President Abdel Fattah al-Sisi’s ambitious Suez Canal economic zone project.

At the Belt and Road Forum last month, Chinese enterprises also announced a new $3.4 billion investment to build a trade hub for Chinese goods in Dubai’s Jebel Ali Port, as well as a manufacturing and processing hub for animal and agricultural products for the food industry. China’s dramatic ramp-up of projects in the UAE suggests that it sees the country as an important piece of its Belt and Road logistics network.

Other significant nodes of China’s economic footprint in the region are Israel ($12.19 billion), Kuwait ($10.43 billion), and Qatar ($7.27 billion), according to data analyzed from AEI’s China Global Investment Tracker for the years 2005-2018.

China is pouring a lot of concrete and cement into construction projects in the region but what of Middle East exports to China? How is China affecting the bottom line of key MENA states?

The answer broadly: If you have oil or gas, China is likely to be a major export destination.


Exports to China From MENA Countries

China has emerged as a vital export destination for several countries in the Middle East and North Africa. For these countries below, China made the top five in 2018.

SOURCE: IMF DIRECTION OF TRADE STATISTICS; COMPILED AND CONCEIVED BY AFSHIN MOLAVI.

Major oil and gas producers generate significant revenues from Beijing, and China ranks as the top export destination for Saudi Arabia, Iran, Kuwait, and Oman, according to an analysis of data from the International Monetary Fund’s Direction of Trade Statistics.

In some cases, key U.S. allies such as the UAE send nearly three times more exports to China than to the United States, and for Kuwait, Qatar, and Oman, the gap is even starker, with nearly eight times, nearly nine times, and nearly 28 times, respectively, more goods exported to China than to the United States.

For Saudi Arabia, the difference in 2018 was less stark, sending some 30 percent more exports to China than to the United States, according to an analysis of IMF data. Expect this gap to widen as the United States continues to ramp up domestic oil production.

Meanwhile, most North African countries still maintain an export profile heavily dependent on Europe rather than on China, and Israel sends four times more goods to the United States than to China.

You can expect this map to get to darker shades of red over the next decade, particularly as China’s demand for energy—especially natural gas—continues to grow.

Afshin Molavi is a senior fellow at the Foreign Policy Institute of Johns Hopkins School of Advanced International Studies and the editor and founder of the New Silk Road Monitor blog.

Hunger continues to rise in the Near East and North Africa

Hunger continues to rise in the Near East and North Africa

Further to the article on the MENA wars over water, energy and food, here is the most obvious consequence as Around 52 million in Near East, North Africa, suffering chronic undernourishment, new UN food agency report reveals 

Hunger continues to rise in the Near East and North Africa region where over 52 million people are undernourished.

Conflicts and widening rural-urban gaps hamper the region’s efforts to end hunger by 2030.

Photo: ©FAO/ Louai Beshara
A child collects eggs in Al-Ghizlaniyah near Damascus. In Syria, FAO assists vulnerable communities to increase their dietary diversity and improve food and nutrition security through backyard poultry production.

8 May 2019, Cairo/Rome – Hunger in the Near East and North Africa region (NENA) continues to rise as conflicts and protracted crises have spread and worsened since 2011, threatening the region’s efforts to achieve the 2030 Agenda for Sustainable Development, including Zero Hunger.

The Regional Overview of Food Security and Nutrition in the Near East and North Africa, published today by the Food and Agriculture Organization of the United Nations (FAO), indicates that 52 million people in the region are suffering from chronic undernourishment. 

Conflict continues to be the main driver of hunger across the region.  More than two-thirds of hungry people in NENA, approximately 34 million people, live in conflict-affected countries, compared to 18 million hungry people in countries that are not impacted directly by conflict. 

Stunting, wasting, and undernutrition are also far worse in conflict countries than in the other countries. 

“Conflicts and civil instability have long-lasting impacts on the food and nutrition security of both affected and surrounding countries in the regions” said Abdessalam Ould Ahmed, FAO Assistant Director-General and Regional Representative for the Near East and North Africa. 

“The impact of the conflict has been disrupting food and livestock production in some countries and consequently affecting the availability of food across the region,” he added. 

“Rising hunger is also compounded by rapid population growth, scarce and fragile natural resources, the growing threat of climate change, increasing unemployment rates, and diminished rural infrastructure and services” Ould Ahmed underscored.
The report highlights that the region is not facing just a hunger crisis as some of the highest rates of obesity are also found in countries within the region, putting pressure on people’s health, lifestyles and national health systems and economies.  Addressing obesity requires food systems that ensure that people have access to healthy nutritious food and also increased public awareness and information on the risks associated with overweight and obesity.

Inadequate rural transformation hampers efforts to eradicate hunger and malnutrition by 2030 

The report shows that not only do conflicts undermine the region’s Zero Hunger efforts, but also the degree of rural transformation. 

“Countries that are not in conflict and have gone furthest in transforming rural areas in a sustainable way including through better management of water resources, have achieved better food security and nutrition outcomes than those in conflict or with lower levels of rural transformation,” Ould Ahmed said, noting how the report stresses that more efforts are needed to boost rural employment, stimulate economic growth in rural areas, reduce urban-rural gaps, and improve agricultural productivity and rural infrastructure and services. 

The report highlights how unemployment, particularly for young people and women across all age groups is a significant challenge in the NENA region and is often higher than in other regions of the world. This is aggravated by rural-urban gaps – with significant disparities in living standards and poverty rates between rural and urban areas – and differences in labour productivity between traditional agriculture and industry and services. This gap is deepened by differences in access to education, health as well as other public services and housing.

At the same time, rural areas accommodate around 40 percent of the population, where the majority of poor are living. The report shows that the average wages for those employed in agriculture are likely to be far below those of workers outside the sector. Partially as a result of lower wages in agriculture, rural areas in the NENA region generally have higher income poverty rates than urban areas. On average, rural poverty is about twice as high as poverty in urban areas.

Transforming agriculture to achieve Zero Hunger

At a regional level, there are significant opportunities for transforming agriculture in a sustainable way, starting with the provision of  improved access to markets for farmers, promoting investments in agriculture, transfer of technology and other innovations, more efficient and effective management of water resources, as well as key policy changes that support the shift from subsistence farming to commercial and diversified production systems.

“There is a great need to encourage our region’s farmers to produce according to the comparative advantage of the region,” Ould Ahmed said, highlighting that the NENA region has a great potential in the production of crops and livestock products that are least intensive in arable land and water and more intensive in use of labour.

The report highlights that greater efforts and actions are needed to support the development and implementation of policies and programmes to abolish rural-urban differences. 

Key facts and figures

  • Number of hungry people in the Near East and North Africa: 52 million, 33.9 million are in conflict countries directly and 18.1 million in non-conflict countries.
  • Children under five affected by stunting (low height-for-age): 21.1 percent.
  • Children under five affected by wasting (low weight-for-height): 8.7 percent.
  • Children under five who are overweight (high weight-for-height): 9.1 percent

Note to editors: NENA countries include Algeria, Bahrain, Egypt, Iran (Islamic Republic of), Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, the Syrian Arab Republic, Tunisia, the United Arab Emirates and Yemen.

Archaeological Discovery in Egypt to Boost Tourism

Archaeological Discovery in Egypt to Boost Tourism

On April 19, 2019, Willamette International Travel came up with this story that follows an earlier one on how Egypt Unveils Ancient Burial Site, Home To 50 Mummies or how all related works with an ancient culture could serve all purposes, notably those of tourism.

Travel News: Archaeological Discovery In Egypt To Boost Tourism

WIT (14).png

Archaeological Discovery In Egypt To Boost Tourism

Travelwirenews reports in a major archaeological discovery, Egypt on Saturday unveiled the tomb of a Fifth Dynasty official adorned with colourful reliefs and well preserved inscriptions. The tomb, near Saqqara, a vast necropolis south of Cairo, belongs to a senior official named Khuwy who is believed to have been a nobleman during the Fifth Dynasty, which ruled over Egypt about 4300 years ago. “The L-shaped Khuwy tomb starts with a small corridor heading downwards into an antechamber and from there a larger chamber with painted reliefs depicting the tomb owner seated at an offerings table,” said Mohamed Megahed, the excavation team’s head, in an antiquities ministry statement. Flanked by dozens of ambassadors, Antiquities Minister Khaled al-Enani said the tomb was discovered last month. It is mostly made of white limestone bricks. Ornate paintings boast a special green resin throughout and oils used in the burial process, the ministry said. The tomb’s north wall indicates that its design was inspired by the architectural blueprint of the dynasty’s royal pyramids, the statement added. The excavation team has unearthed several tombs related to the Fifth Dynasty. Archaeologists recently found an inscription on a granite column dedicated to Queen Setibhor, who is believed to have been the wife of King Djedkare Isesis, the eighth and penultimate king of the dynasty. Egypt has in recent years sought to promote archaeological discoveries across the country in a bid to revive tourism that took a hit from the turmoil that followed its 2011 uprising.

First World Expo in the MENA region to be in 2020 Dubai

First World Expo in the MENA region to be in 2020 Dubai

Dubai’s Expo 2020 will be a six-month long event that is expected to support up to 905,200 full-time equivalent job-years between 2013-2031.

It is the first World Expo to take place in the Middle East and North Africa region in the 168-year history of the event.

In a recent report titled, The economic impact of Expo 2020 Dubai, Ernst Young (EY) concluded by “As the host, Dubai aims to use the event to further enhance its international profile and reputation.”

All mainstream Gulf media picked up the story and below is Arabian Business’ that could possibly be one of the best.

Revealed: Dubai Expo 2020 to deliver $33bn boost to UAE economy

EY research says the largest event to be held in the Arab World is predicted to add the equivalent of 1.5% to UAE GDP

Revealed: Dubai Expo 2020 to deliver $33bn boost to UAE economy
Matthew Benson, partner, Transaction Advisory Services, MENA, EY.

Expo 2020 Dubai will boost the UAE economy by AED122.6 billion ($33.4 billion) and support 905,200 job-years between 2013 and 2031, according to an independent report published by global consultancy EY.

During the peak six-month period of the World Expo, the largest event to be held in the Arab World is predicted to add the equivalent of 1.5 percent to UAE gross domestic product.

The scale of investment pouring in to construct and host an event of this ambition, as well as goods and services consumed by the millions expected to visit and the businesses that will occupy the Expo site in the legacy phase, will result in an economic dividend that will benefit businesses large and small across a range of sectors for years to come, according to the report.

From November 2013 – when Dubai won the bid to host the Expo – until its opening in October 2020, the economic impetus will be driven by the construction sector as work continues on building the site and supporting infrastructure such as roads, bridges and the Dubai Metro Route 2020 line, EY noted.

Najeeb Mohammed Al-Ali, executive director of the Dubai Expo 2020 Bureau, said: “This independent report demonstrates that Expo 2020 Dubai is a critical long-term investment in the future of the UAE, which will contribute more than 120 billion dirhams to the economy between 2013 and 2031.

“Not only will the event encourage millions around the world to visit the UAE in 2020, it will also stimulate travel and tourism and support economic diversification for years after the Expo, leaving a sustainable economic legacy that will help to ensure the UAE remains a leading destination for business, leisure and investment.”  

The report added that small and medium enterprises, a core component of the UAE economy, will receive AED4.7 billion in investment during the pre-Expo phase, supporting 12,600 job-years.

Job-years is defined as full-time employment for one person for one year and describes the employment impact over the life or phase of a project.

During the peak six months of Expo 2020, visitor spending on tickets, merchandise, food and beverage, hotels, flights and local transport will propel economic activity.

Expo 2020 expects 25 million visits, with 70 per cent of visitors coming from outside the UAE, providing the hospitality industry with an unmissable opportunity to show the world what the UAE has to offer.

The EY report added that the positive thrust will continue in the decade after Expo closes its doors in April 2021, thanks largely to the transformation of the site into District 2020, an integrated urban development that will house the Dubai Exhibition Centre.

Matthew Benson, partner, Transaction Advisory Services, MENA, EY, said: “Expo 2020 is an exciting long-term investment for the UAE, and is expected to have a significant impact on the economy and how jobs are created directly and indirectly.

“As the host, Dubai aims to use the event to further enhance its international profile and reputation. The event will celebrate innovation, promote progress and foster cooperation, and entertain and educate global audiences.