With the dust still to settle after the chaos of the Arab Spring, many foreign investors are thinking twice about sinking their cash into the region.
The International Finance Corporation (IFC), the private investment arm of the World Bank Group, is seeking to help make up the shortfall, however. It aims over the next three to four years to increase its investment to between US$5 billion (Dh18.4bn) and $6bn in an effort to create jobs, free up cash for small businesses and drive economic growth. The National spoke to Khawaja Aftab Ahmed, the IFC associate director of financial markets for Europe, Central Asia, the Middle East and North Africa, about the institution's role in the region and the outlook for the year ahead.
To what extent is the UAE an investment haven from the turbulence in the region and globally?
The fundamentals of the UAE are very strong and there are very [few] opportunities for investors to park their money globally. There are very few options for investors globally, especially in my own region, Europe and Central Asia, which used to attract a lot of foreign investment. I see the UAE will attract a lot of foreign investment in the future.
What is your strategy in the Middle East and North Africa?
The biggest issue and opportunity in this region is the demographics. Fifty or 60 per cent of the region is under the age of 25, so every year a large number of youngsters is coming to the labour market, which is creating unemployment. One of the reasons for the Arab Spring was this lack of jobs. To try to address that, we have raised the amount we invest in the region by five times from $100 million to $200m a year five or six years ago. So far this year we have invested about $900m in financial markets and we expect to raise that to $1.5bn by the end of the financial year until June.
What about the post-revolution economies of Egypt, Tunisia and Libya? Are you waiting until the governments stabilise to invest?
In Tunisia, we are looking to invest now. We are in discussion with a number of financial institutions and looking at a number of opportunities in infrastructure and manufacturing. Of course, it's a difficult market as there's still political uncertainty but it's a role we have to play. In Libya, it's still too early but we are in discussion about possible investment. Usually, we start with the financial sector, and the first thing we look at providing is a trade facility line as banks are still often not comfortable about taking a letter of credit risk.
Can you give me an example of recent contrasting investments in the Middle East?
We made an investment into the equity of Bank of Palestine and then we partnered with them to make them a local champion and provide student loans, mortgage finance, developing their risk finance and improving their finance. Another example was partnering with Bank Muscat, which was a corporate bank and is the largest bank in Oman, to outreach to SMEs [small and medium enterprises] and improve mortgage financing. When we started with them, mortgage financing was non-existent, and when this bank came in, eight other banks joined the club. Now it's a much more varied, deeper mortgage market and Bank Muscat is the market leader in helping SMEs.
How can you invest in a country when other private investors are steering clear?
Whenever there's a crisis anywhere, we will be there. We do our due diligence, pick up the right partners and we set trends in those markets. What we try to do is show that investments intended to benefit as many people as possible are sustainable, so we are the first to move into countries where there's a need for us, and international investors shy away from countries like Armenia or Iraq and we make money. We do not compete with private investors, so if they feel comfortable investing, we do not invest. We prefer to act as a catalyst, and move in when we have a role to play.
You cover a very wide geographical market of 52 countries from the Baltic coast to the Gulf. Are there more similarities than differences between those markets?
Even with the Middle East and North Africa, it's very diverse. So you have somewhere like the UAE and Saudi Arabia, which are very sophisticated financial markets, and then you have countries like Yemen and Libya, which are new markets. In Eastern Europe you have smaller markets like Moldova, which share similarities with smaller countries in the Middle East that are opening up. Even in Western Europe, one of the biggest challenges is coming up with projects to create jobs, and it's the same in the Middle East.
What factors will drive financial markets globally this year?
The biggest one is the euro-zone crisis and how that unfolds. It will not have a big impact directly on Mena [Middle East and North Africa] as there's not a great deal of exposure. But European banks are among the biggest providers of finance in most of these markets, whether it's Europe, the Middle East or Africa. If these banks have a liquidity crunch, it will have an impact on banks here. There has been a slowdown in India and China but they are still holding on well, so if they manage that and GDP growth continues, that will balance what is happening in Europe.
tarnold@thenational.ae
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
F1 2020 calendar
March 15 - Australia, Melbourne; March 22 - Bahrain, Sakhir; April 5 - Vietnam, Hanoi; April 19 - China, Shanghai; May 3 - Netherlands, Zandvoort; May 20 - Spain, Barcelona; May 24 - Monaco, Monaco; June 7 - Azerbaijan, Baku; June 14 - Canada, Montreal; June 28 - France, Le Castellet; July 5 - Austria, Spielberg; July 19 - Great Britain, Silverstone; August 2 - Hungary, Budapest; August 30 - Belgium, Spa; September 6 - Italy, Monza; September 20 - Singapore, Singapore; September 27 - Russia, Sochi; October 11 - Japan, Suzuka; October 25 - United States, Austin; November 1 - Mexico City, Mexico City; November 15 - Brazil, Sao Paulo; November 29 - Abu Dhabi, Abu Dhabi.
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Monster Hunter: World
Capcom
PlayStation 4, Xbox One
UAE%20medallists%20at%20Asian%20Games%202023
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
COMPANY%20PROFILE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
MATCH INFO
Argentina 47 (Tries: Sanchez, Tuculet (2), Mallia (2), De La Fuente, Bertranou; Cons: Sanchez 5, Urdapilleta)
United States 17 (Tries: Scully (2), Lasike; Cons: MacGinty)
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
