Over the past five years, companies in the region have come to terms with the fact that they must build strong digital strategies and transform the way they do business, or stand to lose business.
This mounting interest can be seen across sectors — from the banks that are releasing mobile apps and rushing to create communities on social media to retailers that are building out strong e-commerce platforms to advertising agencies that are acquiring or establishing new digital divisions.
The Middle East and North Africa (Mena) digital market is also seeing increasing interest from international powerhouses, all looking to establish a foothold in the region.
In the past 12 months, we've seen PayPal, LinkedIn and Facebook set up offices in Dubai. We've also seen the entrance of other Asian players, such as Yemeksepeti, Turkey's leading online food delivery company, which recently raised US$44 million and opened in Dubai as FoodOnClick. Similarly, India's leading restaurant review website, Zomato, started operating in Doha and Dubai just a few months ago.
The e-commerce opportunity in Mena alone could be as large as $15 billion by 2015, with companies such as MarkaVIP, Namshi and Souq raising tens of millions of dollars in investment to scale their operations and take advantage of this massive market potential.
This rapid growth has, of course, stimulated interest in digital start-ups across the board, with everyone trying to capture a piece of the action. Successful businessmen, from traditional sectors such as finance and real estate development, are getting involved with angel investing. New angel investor networks are appearing, including Tenmou in Bahrain or Oqal and Serb in Saudi Arabia.
Successful start-up accelerators are expanding, among them is Cairo-based Flat6Labs, which recently established a presence in Jeddah in partnership with Qotuf.
Co-working spaces are popping up across Mena: Cloud 5 and BDD in Beirut, The District in Cairo, MAKE Business Hub in Dubai and Zee Launch Pad in Amman just to name a few.
We've also seen major telecom operators and media companies establish investment arms and take a stake in this rapidly growing sector: MBC Ventures, STC Ventures and Vodafone Egypt's Xone have all been actively making investments.
Finally, we're seeing established professionals, with five to 10 or more years of business experience, leaving their corporate careers to become internet entrepreneurs: ex-consultants and bankers, with the skills, relationships, and financial resources that give them a much better chance of building successful online businesses.
Given all of these rapid transformations, if you haven't figured out your transition to digital, now is the time.
Omar Christidis is the founder and chief executive of ArabNet, which organises conferences for the digital sector
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
HWJN
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
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.”
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Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years-of-age
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his/her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30-years-old and able to support the child financially