Service Menu

We have 2948 guests and no members online

 Saudi Travel Services
Economics & Development | Global Arab Network
New beginnings – Unprecedented opportunities in MENA region
Global Arab Network - The Middle East Association
Wednesday, 24 March 2010 10:11
Away from the shock headlines and in ways often too subtle for traditional PR machines to explain, the Middle East and North Africa (MENA) region is undergoing a period of profound change, testing the region’s often ageing rulers, ambitious business leaders and predominantly youthful populations as never before. This is a globalising world that stays close to its enduring values where, from Morocco to the Gulf, female students are often outscoring the boys in the booming higher education sector; where an increasing number of energy producers are committed to raising value-added by developing downstream petrochemicals business and other industry, rather than just exporting their crude oil; where political systems are having to evolve quickly, as the main media consulted by their populations are satellite television and the internet, rather than state-owned newspapers and analogue radio and TV; and where everyone has an opinion on the latest consumer trends, and half the Saudi population (to cite just one case) has invested in shares.

Traditional trading partners and investment destinations such as the UK must take stock of this fast-evolving situation and in many cases, change the way they do business. British Energy Minister Malcolm Wicks observes that in his department, climate change and energy security – “a challenge we’re all learning more about” – have moved to the top of the agenda. This means new vistas for co-operation are opening, from carbon capture (in which BP is among companies working from Abu Dhabi to Algeria) and developing alternative technologies, to improving upstream operations in the world’s key oil-exporting region. In this dynamic situation, Wicks believes that “investment in Middle East energy is one of the greatest opportunities in the world today”.

Such views are echoed across the sectors, as policy-makers and business strategists accommodate new realities. Thus, according to Bill Rammell, UK Minister of State for Higher Education, who has placed high priority on developing relations with MENA, “in an era of globalised international relations... it is not only inevitable but desirable” for universities worldwide to co-operate and “to get the best talent spread across the world”. A globalised education environment is emerging in a “very dangerous geopolitical world”, Rammell says. “And without the role of higher education in creating mutual understanding, we will be in greater danger still.”

Trends and new realities
Unlike the earlier oil booms of the 1970s and 1980s, the leaderships of Saudi Arabia and the other Gulf States, plus other oil producers like reforming Libya, have sought to reinvest locally first rather than seeking the bulk of their investment opportunities overseas. Collectively, the current account surplus of the Gulf’s oil exporting states reached over $475 billion in the period 2003-06 and such numbers keep rising.

Funds are being invested to catch up with infrastructure investments that couldn’t be made, in some cases, for three decades. Algerians, for example, are marvelling at the construction of new roads – not only the much-vaunted east-west highway, but also urban motorways and much-improved north-south road links. All of a sudden, many Algerois are thinking about moving out of the Algerian capital’s congested centre to live in pleasant coastal towns along the littorale. Such examples are increasingly apparent across the MENA region, as new generations emerge and policy-makers refocus on critical domestic issues – such as creating jobs and ensuring a basic level of housing, education and healthcare for all.

Not that MENA-based investors have withdrawn from global markets – quite the contrary. Through the creation of sovereign wealth funds (SWFs), the Gulf States, along with their Asian counterparts, are now reaping rewards in strategic investments in US and European property and share holdings, as well as bolstering the liquidity of western banks, just when all these are facing a squeeze on capital. The SWFs’ response to the 2007/08 sub-prime crisis, where Gulf-based funds have bought further into Citigroup, Merrill Lynch, UBS and other giants, highlights their leading role in the global economy. This is expected to continue in coming years, with newcomers such as the Libyan Investment Authority emerging on the world stage to flex their financial muscles.

Regional hubs, global village
Europe remains a key trading partner for the region, physically linked to MENA by oil and gas pipelines, and long-established transport routes, all of which are

Newsletter Subscription

Newsletter & events update

Follow Global_Arab_Net on Twitter

© 2006-2014 Global Arab Network | Privacy Policy | Terms and Conditions