Discontent in many parts of North Africa and Middle East has the same roots



With the strike of a match, Mohamed Bouazizi did more than take his own life - he ignited the dormant anger of a generation. The 26-year-old graduate, who died from self-inflicted burns on Wednesday, was beaten by police because he was selling fruit and vegetables on the street in Sidi Bouzid in central Tunisia without a permit. Since then, his desperate act has echoed across the region.

On Saturday, at least nine other people were killed, as the Tunisian president Zine el Abidine Ben Ali sent troops into the streets.

The Tunisian unrest has in turn inspired protests in Egypt and fierce rioting in Algeria in recent days. Yesterday Algiers reported that three had been killed and more than 1,000 arrested, mostly minors. Saudi graduates also took to the streets, protesting against the lack of opportunities available to them.

Many countries in the region share the same set of problems that have led to the unrest: high unemployment, rising food prices, little recourse to justice and a resounding absence of human rights. This popular uprising began in the streets in recent weeks, but the threads of opposition and grievances against these regimes are decades old. In Tunisia, in the 23 years since Mr Ben Ali took power, dissidents, journalists and activists have been repressed.

But this has been a month of unchecked challenge to Mr Ben Ali's continued presidency. If he were to go - he has three years left before he is constitutionally too old to stand for re-election - there will remain a serious vacuum of credibility. His son-in-law and probable successor, Mohammad Sakher el Materi, has his own problems; allegations that he lives a lavish lifestyle, in a country where so many are struggling, have damaged his standing.

Riots in Tunisia and Algeria may have very different outcomes, but there is a common lesson. The growing number of young people and rising unemployment across the region mean that tensions are likely to persist. One tool Gulf states can use to help quell the tensions is to increase their trade links with North African nations, helping to buttress their economic growth and create opportunities.

But countries in the Gulf, and really any outside influence, can only do so much to address what are internal and systemic problems for nations such as Tunisia and Algeria. More protests and more lost lives may be on the horizon since problems in these countries will take time to address. If citizens have political options besides taking to the streets, their grievances are less likely to result in violence and the senseless bloodshed of recent days.

Election pledges on migration

CDU: "Now is the time to control the German borders and enforce strict border rejections" 

SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom" 

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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.”