The following outlines one particular area where to build low-carbon, resilient societies that share the same transboundary water situation of the MENA region.
The region is generally one of the most vulnerable regions to climate change, enduring extremely high temperatures, desertification, water scarcity, degraded marine and coastal ecosystems and high levels of air pollution.
Jordan has launched a US$600 million project in 2007 to pump water from its Disi aquifer in the south, signalling an end in sight to the kingdom’s chronic water shortage, experts and government officials say. But as it happens, it is not as simple as that.
It is argued that there are striking differences between the social, environmental, economic, and political perspectives of any groundwater essentiality between different countries. Thus, international law has been focused on this source of water. This is especially acute if critically relying on the groundwater that could be up to 97% of the whole water resources.
Al Disi Aquifer is known as a non-rechargeable type, as it is separated from any surface water or any water source. Accordingly, this aquifer is difficult to be sustainably utilized; its water, labelled fossil has been accumulated over a long time.
It is in the Arabian Peninsula, mostly in Saudi Arabia, but part of it is in Jordan. Jordan is a country of mostly arid land, with limited sources of water that has been and still is experiencing the hydro-hegemony influence of its other neighbour, i.e., Israel. In other words, the Jordan River, which is the only source of water in Jordan is being dominated and used by Israel, despite a certain agreement between the two countries.
Jordan has the scarcest water availability, suffering an extreme shortage of water, and its land is almost all arid, furthermore, it is considered affected by the hegemony of its neighbours’ concept, where most water resources are utilized without any restraints. Therefore, Jordan has focused on other sources like the Disi aquifer to maintain its basic needs of water.
Saudi Arabia’s land is arid with no underground water resources. Their economic development must have been oriented towards utilizing the fossil fuel that became the main source of the economy. The government focused on developing the agriculture of wheat mainly, to maintain certain food security, which contribute only to 1.7 of their GDP. It is assumed by the Draft Synthesis Report that agriculture had been supported by the government, but it is mainly dependent on the underground to the extent that some aquifers have dried up leading the government to recently stop its funding of the farming companies.
Al Disi aquifer is a very important source of freshwater for that area, located between Jordan and Saudi Arabia. This is due to its efficiency in the sustainable development of water with the environmental ecological balance. This aquifer lies in the huge area of almost all of Jordan and extends to the area of Tabuk that is in Saudi Arabia, comprising a confined type of groundwater aquifers. The City of Aqaba depends on the Disi aquifer as a main source of water. It is assumed to be an area of free trade and depend on tourism and investments even in times of shortage in the supply of water. The project of the Red Sea to Amman from the Jordan River will initiate an alternative water supply to Al Disi, and the water from the latter will be used in Aqaba city.
It is expected that Jordan will have less water in the future, and farming will suffer a shortage of water, according to the increasing pressure on water demand for domestic purposes. This is due to the significant increase in the refugees that came to Jordan from different neighbouring countries like Iraq and Syria. To this end, many assume that Jordan has reached an extreme shortage of water, and the Jordanian authorities should rely on other resources like the Jordan River, and co-operational negotiation is significantly essential to initiate more projects like the Red Sea-Dead Sea project will be very helpful to fill the gap of water needs.
Yet the most disappointing results of the situation of the watershed in Jordan is that both the Jordan and Yarmuk Rivers, which are the main sources of surface water, are suffering from extreme drawbacks, either from over abstracting or building dams for hydroelectric by neighbours. Thus, the most significant finding of this situation is that the aquifer water is important for Jordan natural resources, according to Musa Hantash, the Jordanian water secretary, saying that the “Al-Disi should be protected as national wealth for coming generations,” this is due to the aquifer vast spatial distances that are covered.
Both countries Saudi Arabia and Jordan had started to extract water from the aquifer in 1977 for different purposes, but in 1983 both have started to use this water excessively in agriculture.
The excessive of extracting water is due to the Lack of international mechanisms like the international agreement that guide the countries towards a framework of the sustainable manner in water utilization. Yet different transboundary agreements have different mechanisms.
This aquifer agreement represents one of the contemporary approaches to transboundary underground water management that focuses on the domestic allocation of water abstraction from specific areas and avoiding vulnerable ones, which support water management.
The fossil aquifer Al Disi like many transboundary aquifers between many MENA countries, like North-Western Sahara Aquifer Sass, Tunisian and Nubian Sandstone between Egypt and Nubian Sandstone Aquifer System in Chad, Egypt, Libya, and Sudan, the world’s greatest non-renewable aquifer. These aquifers are regarded as very essential to balancing the sustainable development of nature and keeping some control on sediments.
In the recent Cop26 climate talks in Glasgow, all agreed that adaptation, meaning becoming resilient to the inevitable effects of climate change would be as important as actions to lower greenhouse gases. Here is CLAIRE SMITH in New Civil Engineer elaborating on why an Environment Agency boss says 2022 must become the year of climate adaptation. In effect, 2022 will matter for climate action especially in the MENA region and above all in the least developed countries (LDCs). But first, let us see why in the advanced economies.
Environment Agency boss says 2022 must become the year of climate adaptation
20 January 2022
Environment Agency chair Emma Howard Boyd has called for this year to become one that is focused on climate adaptation in order to deliver climate-resilient infrastructure.
In a speech delivered yesterday at the Coastal Futures conference, Howard Boyd also pushed for a review to assess the true cost of climate impacts and the value of investing in resilience.
However, she warned that lack of public awareness on flooding will compound the future risk the industry is working to mitigate against.
Howard Boyd urged for the adaptation emphasis to follow on from the climate focus delivered during COP26 last year and to build on industry knowledge gained in the last 70 years since the 1953 floods in East Anglia.
“In 1953, 307 lives were lost on land and more than 177 people were lost at sea in the east coast surge,” she said. “Caused by a mixture of high spring tides, low pressure and strong northerly gales, it led to significant developments in flood protection, forecasting, and warning and informing systems. The effectiveness of these improvements means that today, many people do not realise they are artificially shielded from disaster.
“For instance, halfway through COP26, millions of people were protected from the highest tide of the year because we operated the Boston Barrier, the Hull Barrier and the Thames Barrier.
“It’s self-evidently a good thing that people can live without fear but, lack of awareness compounds future risks.
“Last year, 200 people died in Germany’s floods. It was reported that people did not know what to do when they heard warnings. Following that tragedy, we reviewed the situation in England.
“Here, 61% of people living at flood risk do not understand that they are. In November, Storm Arwen hit the coast leading to waves over 10m tall. Had these waves coincided with a high or spring tide, impacts could have been worse than in 1953. We cannot put this down to luck.”
According to Howard Boyd, the data analysed by the Environment Agency shows that climate change “is making it harder to hold weather-related shocks at arm’s length”.
She added: “Climate change is taking existing risks and it is increasing their severity, frequency and duration.”
Howard Boyd’s comments follow on from the UK Climate Change Risk Assessment 2022 being presented to parliament earlier this week. The report said: “The evidence shows that we must do more to build climate change into any decisions that have long-term effects, such as in new housing or infrastructure, to avoid often costly remedial actions in the future.”
Howard Boyd pointed to the Treasury commissioned review on the economics of biodiversity and called for a similar review to assess the true cost of climate impacts and the value of investing in resilience.
“The Coalition for Climate Resilient Investment (CCRI) – which I co-chair – can help,” she said. “The CCRI currently has 120 members, featuring both governments and investors, with over US$20trillion in assets.
“By pricing climate risks, particularly for infrastructure, and including them in upfront financial decision-making, the CCRI is showing how to incentivise a shift towards greater climate resilience.”
Howard Boyd concluded by saying that 2022 must become the year of climate adaptation in order to ensure the success of the UK’s COP26 presidency and drive the ambition of the Green Industrial Revolution.
Wind and solar are now as cheap as the cheapest fossil fuel power, if not cheaper. And these price comparisons typically do not include the costs of climate change, air pollution, and price variability from fossil fuels. Those costs represent an enormous subsidy for fossil fuels and, if you include them, fossil fuels become far more expensive than renewable energy. Andrew Dessler, a climate scientist who studies both the science and politics of climate change, explains how greed and politics are slowing the switch to renewable energy.
The image above is a Photo by Dan Meyers/Unsplash
January 17, 2022
It is (with apologies to Charles Dickens) the best of times; it is the worst of times.
Thanks to fossil fuels, billions of people in 2022 enjoy lives of wealth, comfort, and material possessions unimaginable before the industrial revolution.
But fossil fuels have their dark side. You might think you understand that, but it’s likely fossil fuels are even worse for the world than you think. Let’s start with climate change. Contrary to what you might hear listening to Fox News, the scientific understanding of climate change is good and it is progressing at exactly the rate predicted decades ago by Exxon.
What you probably don’t realize is how massive these changes may be. In the depths of the last ice age 20,000 years ago, the Earth was only 6 degrees Celsius colder than it is today. That world—with thousands of feet of ice sitting over much of North America, sea level 300 feet lower, and completely different ecosystems—would be unrecognizable to those living on today’s Earth.
This helps us put predictions of future warming into context. The chart below shows predictions for the twenty-first century, but instead of units of temperature, I have plotted units of ice ages, where one ice age unit equals 6 degrees Celsius. Business-as-usual emissions gives us about 3 degrees Celsius of warming in 2100—about half of one ice-age unit. Given how much the Earth has changed since the last ice age, 3 degrees Celsius of warming may well remake the planet, leading to an Earth in 2100 as unrecognizable to us today as the world of the last ice age.
The earth is presently about 1.1 degrees Celsius above preindustrial temperatures, so we have already warmed about 17 percent of an ice age, and the impacts are clear. For example, there is widespread agreement in the scientific community that climate change contributed to the unprecedented rainfall during Hurricane Harvey in 2017, and that the massive heatwave in the Pacific Northwest last year could not have occurred without global warming.
But fossil fuels are even worse than that. As commodities whose price is set on the world market, international politics can cause the price to whipsaw. Oil price spikes associated with Middle East conflicts, oil embargoes, and other political events have often been followed by painful economic recessions. In 2020, the price of oil dropped significantly because of the coronavirus pandemic combined with a price war between Russia and Saudi Arabia. This laid waste to the US oil industry, bankrupted oil producers, and increased unemployment.
As a consequence, US foreign policy over the last 70 years has been hyper focused on maintaining stability in the world energy market. This has led the United States, for example, to invade Iraq twice, first in 1990 and then again in 2003, starting wars that cost the United States trillions of dollars; hundreds of thousands of lives of people of many nationalities were lost.
Putting everything together, one conclusion is clear: Fossil fuels are terrible. While many people in 2022 are living much better lives because of fossil fuels, people in 2100 will be much worse off because of them.
The story doesn’t end there. The world needs power. People need it so much, in fact, that as bad as fossil fuels are, people would continue to use them if there were no alternatives. But we do have an alternative: renewable energy. This means primarily wind and solar energy, although other energy sources (e.g., geothermal) will also play a role. Non-renewable energy sources such as nuclear could provide another source of climate-safe energy.
The amount of renewable energy available is almost unfathomable. Human society consumes about 15 terawatts of power. Sunlight falling on the earth provides more than 100,000 terawatts, enough to power 7,000 human civilizations. There are obviously issues with the intermittency of solar and wind. The sun is not always shining everywhere, not at night nor when it is cloudy. Similarly, the wind does not always blow.RELATED:Climate scientist: “It’s already worse than what I imagined”
However, a hugeamount of research has gone into how to build a reliable energy system that relies predominantly on intermittent renewable energy. First, wind and solar power tend to be uncorrelated, so a system combining these energy sources will have more consistent power than a system that is solar- or wind-only. Thus, diversifying your energy portfolio solves a lot of the intermittency problems.
Second, we need to be able to transport power. While the sun may not be shining or the wind blowing where you are, the sun is always shining and the wind is always blowing somewhere. By enhancing our electrical grids, power can be shifted regionally from where it’s generated to where it’s needed, further reducing the impact of intermittency of solar and wind power.
Third, intermittency becomes an even smaller problem if part of the energy mix is dispatchable climate-safe energy. This means power sources that are available at any time and can be dispatched at the request of electric grid operators, including always-on energy sources such as hydroelectric, geothermal, nuclear, or natural gas with carbon capture.
Fourth, we need demand response. At times when supply simply cannot keep up with demand, we need to be able to reduce demand. This can be as simple as asking large industrial consumers to reduce their consumption. Or utilities can change consumption patterns by making power cheaper when it’s abundant and more expensive at times when it’s not. Smart appliances in homes can automatically delay running the dishwasher or drying clothes for a few hours until the utility signals that the supply of power is tight; in return for this, consumers get a break on their electricity bill.
The upshot of this is that we can largely run our economy on renewable energy. There are some edge cases where decarbonization might be hard (e.g., international airline flights), but this should not stop us from gathering the low-hanging fruit.
This leads me to the other piece of misinformation you’ll often hear: A renewable energy grid will be expensive.
There was a time when that was the case, but today the picture is quite different. Wind and solar are now as cheap as the cheapest fossil fuel power, if not cheaper. And these price comparisons typically do not include the costs of climate change, air pollution, and price variability from fossil fuels. Those costs represent an enormous subsidy for fossil fuels and, if you include them, fossil fuels become far more expensive than renewable energy.
In response to this, the market is decisively moving away from fossil fuels. In Texas, for example, 95 percent of the energy connections to the electrical grid planned for the next four years are for renewable energy (60 percent solar, 16 percent wind, 18 percent battery).
It’s great news that our electricity system is already switching over to renewable energy. But it’s not happening fast enough. On our present trajectory, we will continue to use fossil fuels well into this century, leading to warming of 3 degrees Celsius above pre-industrial temperatures by 2100, well above the target that the world has agreed upon, 1.5-2 degrees Celsius. Given that our present warming of 1.1 degrees Celsius is already causing severe and expensive impacts, 3 degrees Celsius would be a planetary disaster.
The transition has been sluggish because the price of fossil fuels is kept artificially low. Consumers and businesses do not pay the full cost of the climate, health, and other related costs of fossil fuel use. This could be largely solved by making consumers pay the full cost of their energy through a carbon tax or cap and trade system. If society had to pay the full costs of energy, fossil fuels would quickly disappear from the energy market.
The climate problem is therefore quite simple: Fossil fuels are terrible for humanity, and we can switch at relatively low cost to an economy largely powered by renewable energy. So why aren’t we doing that?
The blame, in my view, lies with economists. Not all economists, mind you, but a group of influential thinkers in the mid-20th century who pushed governments towards implementing an extreme view of free markets. They also said that the social responsibility of corporations was to make as much money as possible. One of the most influential of these thinkers, Milton Friedman, called this the Friedman Doctrine. It was immortalized by Oliver Stone in the movie Wall Street, when one of the main characters proudly declares, “Greed is good!”
Beginning in the 1970s and 1980s, the United States saw government oversight shrink while corporations became laser-focused on profits. This deregulation effort delivered benefits like cheaper airline tickets for consumers. But the lack of government oversight combined with the imperative to make profits as large as possible also resulted in some terrible outcomes. These include climate change and the skyrocketing price of lifesaving drugs like insulin.
The fundamental problem is that free markets can’t solve environmental problems. Most environmental problems are externalities, or costs imposed on people who are not part of the transaction. Climate change is a classic externality—if you consume a gallon of gas or a kilowatt of electricity, the resulting carbon dioxide causes climate change everywhere, thereby imposing costs on everyone in the world. The costs of this climate change are not paid by the consumer, so this is a hidden subsidy of fossil fuels.
To corporations, externalities are terrific! If the goal of a corporation is to make as much money as possible, then it wants to push as many of the costs onto society as possible, which increases corporate profit. Because externalities benefit corporations, solving problems that arise from them, like climate change, requires government regulation. If the government is unwilling to regulate in some fashion, then climate change will never be fixed.
Fossil fuel corporations have also tried to stifle regulation by spending millions of dollars over the last few decades casting doubt on the science of climate change, despite their own researchers accurately assessing the risk. This closely paralleled what tobacco corporations did decades earlier. This shows the true problem with our version of free-market, profit-maximizing economics: Today’s economy does not create wealth that makes everyone better off, but rather generates enormous benefits for corporations while generating few benefits or even net harms for everyone else.
In the end, climate change is not a scientific or technical problem. The scientific community understands how fossil fuels cause climate change, and technology to solve the problem exists. Rather, climate change is a political problem. We need to return to the 1970s, a time when Republicans and Democrats overwhelmingly passed legislation forming the EPA. We need to understand that a world in which corporations care only about maximizing profits demands that the government protect the interest of the people.
Trying to catch a bus at the Maliya station in Kuwait City can be unbearable in the summer. About two-thirds of the city’s buses pass through the hub, and schedules are unreliable. Fumes from bumper-to-bumper traffic fill the air. Small shelters offer refuge to a handful of people, if they squeeze. Dozens end up standing in the sun, sometimes using umbrellas to shield themselves.
Here is the story as told by Fiona MacDonald (Bloomberg) as published by gCaptain on 16 January 2022.
Kuwait, One Of The World’s Wealthiest Oil Exporters Is Becoming Unlivable
Global warming is smashing temperature records all over the world, but Kuwait — one of the hottest countries on the planet — is fast becoming unlivable. In 2016, thermometers hit 54C, the highest reading on Earth in the last 76 years. Last year, for the first time, they breached 50 degrees Celsius (122 Fahrenheit) in June, weeks ahead of usual peak weather. Parts of Kuwait could get as much as 4.5C hotter from 2071 to 2100 compared with the historical average, according to the Environment Public Authority, making large areas of the country uninhabitable.
For wildlife, it almost is. Dead birds appear on rooftops in the brutal summer months, unable to find shade or water. Vets are inundated with stray cats, brought in by people who’ve found them near death from heat exhaustion and dehydration. Even wild foxes are abandoning a desert that no longer blooms after the rains for what small patches of green remain in the city, where they’re treated as pests.
“This is why we are seeing less and less wildlife in Kuwait, it’s because most of them aren’t making it through the seasons,” said Tamara Qabazard, a Kuwaiti zoo and wildlife veterinarian. “Last year, we had three to four days at the end of July that were incredibly humid and very hot, and it was hard to even walk outside your house, and there was no wind. A lot of the animals started having respiratory problems.”
Unlike countries from Bangladesh to Brazil that are struggling to balance environmental challenges with teeming populations and widespread poverty, Kuwait is OPEC’s number 4 oil-exporter. Home to the world’s third-largest sovereign wealth fund and just over 4.5 million people, it’s not a lack of resources that stands in the way of cutting greenhouse gases and adapting to a warmer planet, but rather political inaction.
Even Kuwait’s neighbors, also dependent on crude exports, have pledged to take stronger climate action. Saudi Arabia last year said it would target net-zero emissions by 2060. The United Arab Emirates has set a goal of 2050. Though they remain among the biggest producers of fossil fuels, both say they are working to diversify their economies and investing in renewables and cleaner energy. The next two United Nations climate conferences will take place in Egypt and the UAE, as Middle East governments acknowledge they also stand to lose from rising temperatures and sea levels.
Kuwait, by contrast, pledged at the COP26 summit in November to reduce greenhouse gas emissions 7.4% by 2035, a target that falls far short of the 45% reduction needed to meet the Paris Agreement’s stretch goal of limiting global warming to 1.5C by 2030. The nation’s $700 billion sovereign wealth fund invests with the specific aim of hedging against oil, but has said that returns remain a priority as it shifts to more sustainable investing.
“Compared with the rest of the Middle East, Kuwait lags in its climate action,” said Manal Shehabi, an academic visitor at Oxford University who studies the Gulf nations. In a region that’s far from doing enough to avoid catastrophic global warming, “climate pledges in Kuwait are [still] significantly lower.”
Sheikh Abdullah Al-Ahmed Al-Sabah, head of the EPA, told COP26 that his country was keen to support international initiatives to stabilize the climate. Kuwait also pledged to adopt a “national low carbon strategy” by mid-century, but it hasn’t said what this will involve and there is little evidence of action on the ground.
That prompted one Twitter user to post pictures of wilted palm trees, asking how his government had the nerve to show up.
Jassim Al-Awadhi is part of a younger generation of Kuwaitis increasingly worried about their country’s future. The 32-year-old former banker quit his job to push for a change that experts argue could be Kuwait’s key to addressing global warming: revamping attitudes toward transportation. His goal is to get Kuwaitis to embrace public transport, which today consists only of the buses that are mostly used by migrant workers with low-paying jobs who have no choice but to put up with the heat.
It’s an uphill struggle. Though Kuwait has among the world’s highest carbon-dioxide emissions per capita, the idea of ditching their cars is completely foreign to most residents in a country where petrol is cheaper than Coca Cola and cities are designed for automobiles.
The London School of Economics, which conducted the only comprehensive survey of climate opinions in Kuwait, found older residents remain skeptical of the urgency, with some speaking of a conspiracy to hobble Gulf economies. In a public consultation, everyone over 50-years-old opposed plans to build a metro network like those already operating in Riyadh and Dubai. And the private sector sees climate change as a problem that requires government leadership to solve.
“When I tell companies let’s do something, they say it’s not their business,’’ Al-Awadhi said. “They make me feel I’m the only one who has problems with transport.”
That’s partly because most Kuwaitis and wealthy residents are shielded from the effects of rising temperatures. Homes, shopping malls and cars are air-conditioned, and those who can afford it often spend summers in Europe. Yet, the heavy reliance on cooling systems also increases the use of fossil fuels, leading to ever hotter temperatures.
The situation is much worse for those who can’t escape the heat, mainly laborers from developing countries. Though the government prohibits peak afternoon outdoor work during the hottest summer months, migrant workers are often seen toiling in the sun. A study published in Science Direct last year found that on extremely hot days, the overall number of deaths doubles, but it triples for non-Kuwaiti men, more likely to take on low-paid work.
It’s a cycle that’s all too clear to Saleh Khaled Al-Misbah. Born in 1959, he remembers growing up when homes rarely had air conditioners, yet felt cool and shaded, even in the hottest months. As a child, he played outside through months of cooler weather and slept on the roof in the summers; it’s too hot for that now. Children spend most of the year indoors to protect them from either burning sun or hazardous pollution, something that’s contributed to deficiencies in vitamin D — which humans generate when exposed to the sun — and respiratory ailments.
Temperature changes in the 2040s and 2050s will have an increasingly negative impact on Kuwait’s creditworthiness, according to Fitch Ratings. Yet despite the growing risks, squabbling between the Gulf’s only elected parliament and a government appointed by the ruling family has made it difficult to push through reforms, on climate or anything else.
“The political deadlock in Kuwait just sucks the oxygen out of the air,” said Samia Alduaij, a Kuwaiti environmental consultant who works with the U.K.’s Centre for Environment, Fisheries and Aquaculture Science and UNDP. “This is a very rich country, with a very small population, so it could be so much better.”
So far, there’s been little progress on plans to produce 15% of Kuwait’s power from renewable sources by 2030, from a maximum of 1% now. Oil is so abundant that it’s burned to generate electricity, as well as fuel the 2 million cars on the road, contributing to air pollution. Some power plants have switched to gas, another fossil fuel that’s relatively cleaner but can leak methane, a powerful greenhouse gas. Consumption of electricity and water, heavily subsidized by the government, is among the world’s highest per capita, and it’s proven politically toxic to even hint at cutting those benefits.
“That obviously leads to a lot of waste,” said Tarek Sultan, vice chairman of Agility Public Warehousing Co. When fossil-fuel powered electricity “is subsidized, solar technologies that can provide viable solutions get priced out of the competition,” he said.
Even if the world manages to cut emissions quickly enough to stave off catastrophic global warming, countries will have to adapt to more extreme weather. As it stands, experts say Kuwait’s plan is nowhere near enough to keep the country livable.
If it starts now, said Nadim Farajalla, director of the climate change and environment program at University of Beirut, a lot can be done in the coming decades, but that would need to include protection against rising sea levels, making cities greener and buildings less energy intensive. It also needs to focus on transport, a leading cause of CO2 emissions.
Khaled Mahdi, secretary general of Kuwait’s Supreme Council for Planning and Development, said the government’s adaptation plan is aligned with international policies. “We clearly identify roles and responsibilities, and all the challenges in the country,” he said, though he admitted that “implementation is the usual challenging issue.”
If the government is dragging its feet, young Kuwaitis like Al-Awadhi aren’t.
His advocacy group Kuwait Commute is starting small by campaigning for bus stop shelters to protect passengers from the sun. National Bank of Kuwait, the country’s biggest lender, recently sponsored a bus stop designed by three female graduates. Still, like much of the private sector, they remain outside the decision-making process.
“I think I’m finally making progress,” said Al-Awadhi, who hopes that getting more Kuwaitis to ride buses will fuel enough demand to improve the service. But “it has to be driven by the government. It’s the chicken before the egg.”
–With assistance from Akshat Rathi and Hayley Warren.
The above image is for illustration and is of Finance Magnates by Daily Advent.
In an exclusive interview with Finance Magnates, Achraf Drid, Managing Director of XTB MENA, recently discussed the global growth in trading volumes across the FX and CFD market. Drid believes that the MENA region holds a special place in the global financial services industry.
XTB is one of the largest financial brokerages in the world. Listed on Warsaw Stock Exchange, the financial trading services provider witnessed rapid growth in 2021.
It’s a pleasure having you with us Mr. Drid, for our readers, can you please introduce yourself?
Thank you for having me; it is my pleasure. I am the Managing Director of XTB MENA DIFC in Dubai, and XTB is one of the world’s leading brokerage companies. In my role, I’m actively involved in the company’s business development, legal processes, and all compliance aspects. I am also deeply involved in the company’s financial strength in investing in Fintech since we provide our customers not only the highest level of customer support but also the highest level of technology. Since XTB entered the MENA region, I have focused mainly on setting up and managing the company’s core sales and risk management processes. I’m also involved in the regulatory framework of the company to lead XTB into the future with integrity and transparency.
We are new to the MENA region, but we have been around since 2005 when XTB was founded in Warsaw as a company. We are one of the biggest brokerages in Europe and are also listed on the Warsaw Stock Exchange. Worldwide, we have been offering CFDs, Forex, commodities and indices for years, and then we saw an opportunity in the MENA region to cater to the increasing demand for a reliable and trustworthy broker in this part of the world.
What differentiates us from other brokers? First, we are not just a financial company, we are a fintech firm, since we employ more than 200 IT developers in our headquarters, and we keep improving our offering and services every month. We are not looking to be compared with other brokers; our goal is to be the Amazon or Netflix of trading.
Secondly, many brokers rely on the MetaTrader 4 platform, but we also offer our proprietary platform called xStation, which has won numerous awards. We have a large IT team responsible for keeping it up-to-date and who ensure it’s always working at top efficiency. I’m proud of our GUI platform and honestly believe it’s one of the best in the market.
Finally, we place a significant focus on education. I believe we’re one of the most education-focused brokerages in the world. Many resources are found on our platform, including various educational videos and reading material. The content recorded hasn’t only been produced by us and by some of the world’s most famous traders. We heavily focus on education when we present our platforms to the clients virtually and when we meet them in person.
Trading volumes across the FX and CFD industry jumped substantially in 2020 due to the lockdown, while the industry sustained growth levels in 2021, do you think the trend will continue into 2022?
The actual gross market value of OTC FX and CFDs has been rising; the Covid-19-induced market turmoil and strong policy responses drove developments in FX markets throughout 2020. This increase coincided with the significant depreciation of the US dollar against other major currencies. Acting as the primary vehicle currency, the US dollar was on one side of more than 80% of all currency pairs (measured by both notional amount and gross market value). Sizeable US dollar exchange rate movements can lead to more trading in FX and CFDs in the current year (2022).
Additionally, if you look back into the last ten years, forex trading has grown exponentially. Looking at the forex market in 2008, there were about US$48 trillion traded, and today that number is closer to US$80 trillion, which shows a growth of over 50%. I believe that the volume will continue to grow in 2022 at a steady rate, with forex trading making up 40% of the world’s total market.
In terms of financial services, the MENA region is one of the fastest-growing regions in the world, what makes MENA different from other locations?
The Middle East’s importance is rapidly growing in the global forex market, especially with its retail segment, compared to a relative slowdown and decline in other international markets.
It is driven by increased investor awareness of the opportunities available in global trading and the region’s strategic location between Asia and Europe as a hub. The local time zone enables it to capture market opening hours in the Far East and the US…and closing hours in the same working day, giving it better access to the broader global market, particularly the G7 currencies.
As we are based out of Dubai and regulated by the DIFC, we have experienced substantial growth of the UAE economy and the increasing number of ex-pats coming to live and work here; we have seen FX transactional flows rising, both in and out of the country.
Going forward into 2022, how is XTB MENA planning to expand its presence in the region?
The MENA region did go through significant challenges during the last two years, (with) the COVID-19 pandemic having an impact on the regional economy, like the rest of the world. However, some countries have adopted rapid, decisive and innovative measures to contain the virus, such as the smooth crisis management developed by regional governments.
MENA countries have responded rapidly to mitigate the economic consequences of the crisis on the private sectors and households and keep the financial market functioning. On average, 2.7% of GDP was allocated to fiscal measures, while 3.4% of GDP (over USD 47 billion) in liquidity injection was activated by Central Banks across the region during the first few weeks of the crisis.
The MENA market is estimated to witness significant growth, and at XTB, we feel very confident. The reason we decided to establish XTB regional office in the UAE is part of our strategic growth plan to support our customers locally, not only in FX but across other asset classes under our portfolio, including oil, gas and bullion.
Sponsorships played an important role in global brand awareness of financial trading platforms, how is XTB planning to use sports sponsorships for its global growth?
In the past, we had a partnership with McLaren Mercedes, then with Hollywood actor Mads Mikkelsen, and now we have a partnership with Jose Mourinho, and we have other plans for the future – for obvious reasons; we would like to keep this as a surprise!
Originally posted on Politicsblog.net: The latest monitoring report on the economic situation in Algeria by the World Bank proved controversial. Government representatives and media outlets objected to the findings published on December 22, writes our correspondent. In the report, the World Bank depicts a gloomy situation of the economy in Algeria, which not only…
Originally posted on books touched by Africa: Forget about 1984?Forget about George Orwell? Read 2084!Remember Boualem Sansal! Do you want to know what can happen later on in this century? Maybe during your lifetime? Or just a few years after your death? Read this fascinating novel by the Algerian writer Boualem Sansal. Let us travel…
Originally posted on I Lust for Travel: White domes of Sidi Bou Makhlouf Mausoleum in El Kef, Tunisia
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