Very few countries can lay claim to a GDP not far off $800 billion, a logistical portfolio that contains some of the world’s busiest waterways and ports, a vast young and educated population and natural resources as diverse as oil and gas, gold, silica sand and renewable energy.
Yesterday, three countries in the Middle East, the UAE, Egypt and Jordan, came together as part of a new industrial strategy to pool such assets and create one of the most profitable multilateral frameworks to come out of the region in recent years, further integrating some of the most important alliances in the Middle East.
Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, said: “Industry is the backbone of large economies and we are confident that the UAE, with what it has from resources, active policies, a will for development and advanced technology and advanced logistical infrastructure, is capable of building a strong economic foundation to benefit from the industrial partnership between the countries of the region.” He stressed that this partnership presents promising opportunities for future generations in the region.
The Industrial Partnership for Sustainable Economic Growth includes a $10bn investment fund, which will help advance prosperity by focusing on priority industrial sectors, such as agriculture, pharmaceuticals and minerals, all of which have been chosen for their growth potential and ability to bolster a cross-border industrial base.
At the announcement of the initiative, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, drew on a number of examples. “In the field of agriculture and food, we have an opportunity to increase the production of wheat and corn in the three countries from 16.5 million tons to about 30 million tonnes annually.”
Highly profitable, agriculture also plays a key role in the very security of the region, which currently finds itself navigating one of the toughest food markets in decades caused in large part by the war in Ukraine. In the background, rising temperatures, water shortages and desertification make investment in agricultural technologies even more important. Egypt in particular has a historic farming tradition, which has sustained its economy for millennia. Now, new investment can help keep the country a farming power of the region. Egypt also has some of the region’s best universities, particularly when it comes to medicine and engineering.
Jordan has a young and increasingly resilient and competitive economy to contribute. Earlier this month, the country was praised by the IMF for its efforts to build a stronger economy, which has been rebounding steadily since the huge challenge of the pandemic - by 2.1 per cent in the first nine months of 2021 to be precise. Below ground, Jordan has a huge array of minerals, including phosphates, gypsum (a fertiliser), copper and stones such as marble and limestone. With such a young population, the IT sector has great potential, too, accounting for more than 80,000 jobs and 12 per cent of GDP.
For the UAE’s part, all these pieces of the puzzle and many more can come together in the region’s, and indeed one of the world’s, most diverse, competitive and tolerant societies. The logistical and supply chain contribution of the Emirates is vast, with key ports and airports offering quick access to much of the world. The government has also made preparation for future challenges and opportunities a priority for years, from its golden visas to bring in talent, government support for key future-focused industries, the emphasis on sustainability and the environment to even creating a museum dedicated to tomorrow, the Museum of the Future.
Industry, as much as it was responsible for raising living standards in past centuries, will be a crucial part of doing so for the Middle East going forward. At the heart of the new multilateral strategy is preparing for a changing idea of what industry entails in the 21st century. It is incumbent upon governments to prepare for these days ahead and build societies that are stable, prosperous and tolerant.
Mohammed bin Zayed Majlis
The biog
Name: Younis Al Balooshi
Nationality: Emirati
Education: Doctorate degree in forensic medicine at the University of Bonn
Hobbies: Drawing and reading books about graphic design
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.”
A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
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