Economy Middle East - July 2023

July 2023

Telecom Egypt

Leading Egypt's ICT Industry to Growth

Exclusive interview with Mohamed Nasr Managing Director & CEO of Telecom Egypt

Exclusive insights from Dr. Hala Elsaid

Egypt’s minister of planning and economic development

EFG Holding: Diversification for sustainable growth

CFI drives financial inclusion in Egypt

An inside look into Telecom Egypt's operations and future plans

Economy Banking & Finance

Unlocking remedies to economic malaise

Institutional

Interview with Dr. Hala Elsaid, Egypt‘s minister of planning and economic development

By Damian Bunce, chief customer officer, Exness

Interview with Karim Awad, group CEO and chairman of the executive committee, EFG Holding

Challenging global financial order

Egypt's reforms boost development and citizen well-being

structures drive crypto adoption and store of value

EFG Holding: Diversification for sustainable growth

Cover story with Managing Director and CEO of Telecom Egypt, Mohamed Nasr

Interview with Hisham Mansour, managing director and co-founder, CFI

CFI drives financial inclusion and diversification in Egyptian market

Nissan Middle East

Interview with Leila Serhan, country manager & senior vice president NALP, Visa Group

A world-class dispute resolution center

Interview with H.E. Dr. Tariq Humaid Al Tayer, chairman of the board, DIAC

Publisher . JOSEPH CHIDIAC

EDITORIAL

Managing Editor . HADI KHATIB

Senior Editor . ANTHON GARCIA

Editor-at-large, Automotive & Lifestyle . ALP SARPER

Economy Contributor . HALA SAGHBINI

Energy Contributor . KATE DOURIAN

Digital Editor & Translator . ELIAS AL HELOU

Multimedia Editor . SERENE ABDUL BAKI

Social Media Editor . AYA ABOU DIAB

CONTRIBUTORS

DAMIAN BUNCE, ELSELOT HASSELAAR, THIERRY SABBAGH

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Egypt's spirit endures as the "Mother of the World"

From our earliest years, we’ve heard the saying, “Masr, umm l dunya,” or “Egypt is the mother of the world.” This age-old phrase encapsulates the profound role Egypt has played as the cradle of ancient civilizations, leaving an indelible mark on human history.

Yet today, Egypt finds itself grappling with an economic crisis, the roots of which can be traced back to the war between Russia and Ukraine – a conflict that has reverberated across the globe, impacting economies far and wide.

This is not Egypt’s first encounter with economic downturn; it has weathered storms in recent years, navigating the treacherous waters of global inflation and the deadly COVID-19 pandemic. However, the current predicament presents a distinct set of challenges, requiring Egypt to undertake critical reforms that are pivotal in reviewing a substantial $3 billion loan procured from the International Monetary Fund.

These reforms serve a twofold purpose: securing the IMF loans and reigniting the flow of investment opportunities that had waned following the outbreak of the RussianUkraine conflict. Moreover, they hold the potential to invigorate the private sector, serving as a driving force for

the desired economic growth and recovery.

In this intricate dance of economic revival, Egypt’s sovereign fund assumes a pivotal role, overseeing the management of the nation’s assets. It aspires to become the optimal investment partner for the private sector, solidifying its status as the beacon of Egypt’s economic prosperity and development. According to its official definition, this fund is likened to a modern-day temple, serving as a center of investments, where economic pillars stand strongest, tirelessly driving economic development.

While Egypt focuses on sectors capable of generating high growth rates and employment opportunities for its youth, it must also set its sights on more audacious endeavors. The Egyptian economy yearns for a shift toward tradable sectors, stimulating exports and ushering in the inflow of vital foreign currency. This, in turn, curtails the burden of imports and mitigates the outflow of currency from the nation – a critical step in alleviating the debt burden that looms overhead. Egypt’s Minister of Finance Mohamed Maait exudes optimism, expressing his unwavering belief in the country’s capacity to surmount this crisis before the year’s end. His resolute stance reflects the unwavering determination and confidence of the Egyptian people, serving as a testament to Egypt’s enduring spirit as “the mother of the world.”

Chief Executive Officer – Publisher

Rising demand for ownership to shape Egypt's real estate future

Residential, mixed-use sectors recorded 522 projects worth $310 billion

Property Finder has released its latest Egypt Market Watch Report for Q1 2023, revealing significant insights. The residential and mixed-use real estate sector in Egypt has showcased remarkable growth, featuring 522 ongoing projects valued at $309.9 billion. These ongoing projects constituted approximately 50 percent of the total number of projects and accounted for roughly 83 percent of the total investments.

These ongoing real estate endeavors span across 21 governorates and have achieved advanced stages of development, with over 52 percent of them surpassing the halfway mark. Noteworthy investment destinations included Cairo, which attracted 59 percent of residential real estate

investments, closely followed by the Giza Governorate with 15 percent. During Q1 2023, eight developers commenced construction on nine projects across four governorates, with an estimated total cost of $1 billion. This figure is expected to increase to 15 projects in the upcoming quarter. Among the newly initiated projects, the majority, comprising 44 percent, are situated in Cairo, while the Giza Governorate accommodates 33 percent of the projects, primarily concentrated in New Zayed City. During Q1 2023, Egypt witnessed the delivery of 17 projects with a combined value of $1.304 billion. This represents a 31 percent increase in volume and a 32 percent hike in value compared to Q1 2022. Around 24 percent of these projects are located in Cairo with New Cairo emerging as the primary hub of development, accounting for 50 percent of the city’s delivered projects and contributing an impressive 92 percent to their total value.

Qatar could own up to 30 percent in seven historic Egypt hotels as ties deepen

Last year the two countries celebrated 50 years of diplomatic relations

Qatar Investment Authority (QIA) is reportedly exploring potential investments in seven of Egypt’s most renowned hotels, including the historic Sofitel Legend Old Cataract in Aswan and the Sofitel Winter Palace in Luxor. This development could mark a significant milestone in the relations between the two countries, which restored diplomatic ties two years ago. It is said that the QIA is considering acquiring a stake of up to 30 percent in these hotels.

In recent times, Egypt and Qatar have been actively strengthening their relationship through high-level visits and exchanges. Notably, in December 2022, both nations celebrated the 50th anniversary of their diplomatic

relations, with numerous ministers, officials, and foreign ambassadors participating in a commemorative event held in Cairo.

Moreover, Qatar demonstrated its commitment to supporting the Egyptian economy by pledging a substantial $5 billion investment last year. Currently, Qatar stands as the third-largest Arab state investor in Egypt, with approximately 160 companies having invested nearly $2 billion in the country, as affirmed by Cabinet Spokesperson Nader Saad.

In March, Qatar announced its intent to invest over $4.5 billion in Egypt. At the same time, Qatar Energy entered into an agreement with ExxonMobil, securing a 40 percent stake in an exploration field situated in the Mediterranean off the Egyptian coast.

Kingdom allocates budget of $7.3 billion for global event.

Saudi Crown Prince Mohammed bin Salman was keen to personally participate in the Kingdom’s official reception for Riyadh’s bid to host Expo 2030, sending a message about the importance Saudi Arabia is giving to organizing the world’s most prominent trade event.

According to the candidacy proposal published by local media, Saudi Arabia has allocated a budget of about $7.3 billion to host Expo 2030 in the capital Riyadh. Out of this amount, $5.85 billion has been designated for capital expenditures, while $1.47 billion will cover operating expenses. Italy, South Korea, and Ukraine are also competing with Saudi Arabia to host the exhibition, with Rome, Busan, and Odessa as their respective candidate cities.

Riyadh anticipates that Expo 2030 will draw around 21.7 million visitors, with approximately 11.7 million requiring accommodations in hotels and furnished units.

Expo Riyadh will span an expansive area of 6 million square meters, conveniently located just five minutes away from King Khalid International Airport. Riyadh is actively developing six metro lines that will cover the city and connect the Expo site with the airport. Additionally, efforts are underway to increase the capacity of King Salman International Airport to accommodate 150 million passengers by 2030.

Also supporting the city is the establishment of Riyad Air with the aim of connecting 100 destinations worldwide by 2030. Furthermore, 68 initiatives have been launched with investments totaling $92 billion to transform Riyadh into one of the most sustainable cities globally.

By coinciding with the United Nations Agenda 2030 and the Sustainable Development Goals, Expo 2030 in Riyadh will provide an opportunity to assess the plan’s impact on achieving global objectives over the next two decades.

Country aims to produce at least 1 million tons of renewable hydrogen by 2030

The International Energy Agency predicts that Oman will be one of the world’s largest green hydrogen producers by 2030, and the largest in the Middle East. Along with the development of solar and wind power on their lands, Oman aims to produce 3.8 GW of clean energy, powered by renewables, by 2028.

Oman’s oil and gas production comprises 60 percent of its export income and powers over 95 percent of its domestic electricity.

With an expected $300 billion investment by 2030,

hydrogen is expected to become a critical source of fuel in the coming years. Green hydrogen is a large contender in the search for renewable energies and can enhance sustainable practices in many industries. The independent, government-established entity, Hydrogen Oman, also known as HYDROM, will lead and manage its hydrogen production. In December of last year, Oman’s OQ energy company teamed up with Acwa Power and Air Products to begin the production of hydrogen-based ammonia.

Oman’s Minister of Energy and Minerals H.E. Eng. Salim Nasser Al Aufi said, “The most economically rational action for us is to embark on using this as the most viable and sustainable energy of tomorrow, including decarbonizing the power generation, local industry and hydrogen production for export.”

Oman is aiming to produce at least 1 million tons of renewable hydrogen by 2030, which would require an investment of around $ 33 billion. The Sultanate hopes to achieve net zero emissions by 2050 and has already begun reducing its fossil fuel use.

Oman shaping up to be Middle East's biggest green hydrogen producer

Saudi Crown Prince participates in Riyadh's bid ceremony to host Expo 2030

Qatar, Iraq to build power plants, manage hospitals, develop cities in $9.5B deals

3 Qatari companies

and Iraq’s National

Three Qatari companies and Iraq’s National Investment Commission have agreed to develop $9.5 billion worth of projects in Iraq, including the construction of a pair of power plants that will generate a total of 2,400 megawatts.

UCC Holding and the investment commission signed a 25-year, public-private partnership linked to the two power plants, which will cost $2.5 billion to build, according to a statement issued by UCC Holding. The power plants will help reduce Iraq’s reliance on neighboring Iran for its energy needs. Iraq relies on imports of electricity and gas from Iran,

Investment Commission agree which constitute approximately one-third to 40 percent of its power supply. This is particularly crucial during the scorching summer months, when temperatures can soar above 50 degrees Celsius (122 degrees Fahrenheit), and power consumption reaches its peak.

Iraq’s investment commission and Doha-based Estithmar Holding also signed deals worth $7 billion to manage hospitals, develop two “new comprehensive cities” and build a series of new five-star hotels totaling 10,000 rooms, a statement issued by Estithmar said.

“The cities … will include residential complexes, villas, schools, commercial complexes, entertainment centers, and other facilities and services, in addition to all the infrastructure needed to build these cities,” said Estithmar Vice Chairman Ramez Al-Khayyat in the statement.

These agreements were finalized during a visit to Baghdad by Qatar’s Emir, Sheikh Tamim bin Hamad Al Thani, on June 15. During his visit, the Emir pledged a significant $5 billion investment in Iraq.

Bahrain awards golden licenses to companies in investment projects worth over $1.4 billion

Country aims to create over 20,000 jobs annually for citizens by 2024

Bahrain has granted its first “golden licenses,” offering incentives and streamlined services to foreign and local companies that have invested in large-scale projects in the country worth more than $1.4 billion.

Citi, Eagle Hills Diyar, Infracorp, Saudi Telecommunication Company (stc) and Whampoa Group were recipients of the license awards.

Bahrain’s Economic Development Board said companies eligible to obtain golden licenses created openings for over 500 local jobs or pledged investments of more than $50 million in their first years in Bahrain.

“The golden license scheme is a pivotal step toward successfully achieving the objectives of Bahrain’s Economic Recovery Plan, which aims to attract $2.5 billion in foreign investment by the end of 2023,” said Industry and Commerce Minister Adel Fakhro. Khalid Humaidan, CEO of Bahrain EDB, said: “New investment projects are expected to create over 1,400 new job opportunities across Bahrain’s financial services, tourism and technology sectors, cementing the country’s position on an international playing field.”

Bahrain’s economic recovery plan, launched in October 2021, aims to create over 20,000 jobs annually for citizens by 2024. Higher oil prices and real gross domestic product growth of 4.9 percent in 2022 provided needed financial support for the country. Its non-oil GDP growth was 6.2 percent in 2022, above the 5 percent target the recovery plan had set for the year.

Dubai unveils fifth phase of world's largest solar park to power 270,000 homes

Project boasts planned capacity of 5,000 MW by 2030

The fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park, the world’s largest single-site solar park, was inaugurated by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. With a planned capacity of 5,000 MW by 2030, the Solar Park’s latest addition will generate 900 MW of clean energy, benefiting around 270,000 households in Dubai and reducing 1.18 million tons of carbon emissions each year.

The Solar Park was built with a total investment of AED 50 billion ($13.6 billion), based on the Independent Power Producer model. Upon its completion, the Solar Park is projected to reduce 6.5 million tons of carbon

emissions each year.

The Year of Sustainability in 2023, which coincides with the UAE hosting COP28, highlights the country’s continued focus on sustainability and environmentally-friendly economic development.

Sheikh Mohammed bin Rashid further noted that Dubai has a clearly defined strategy and plan to attain its renewable energy targets of generating 25 percent of its energy needs from renewable sources by 2030 and 100 percent by 2050, in line with the UAE’s vision.

DIFC aims to attract

500+ companies with Dubai AI and Web 3.0 Campus plan

Ambitious initiative to bring $300 million in collective funds

The Dubai International Financial Centre has revealed plans to construct the “Dubai AI & Web 3.0 Campus.”

The Dubai AI & Web 3.0 Campus will be situated within the DIFC Innovation One premise and is set to expand into a campus covering more than 100,000 sq. ft. over the next five years. The primary focus of the campus will be on implementing AI and Web 3.0 within the financial services sector. This project aims to cultivate a community of tech pioneers, innovators, and engineers who are enthusiastic about emerging technologies. With state-of-the-art

physical and digital infrastructure, including R&D centers, accelerator programs, and collaborative workspaces, the Dubai AI & Web 3.0 Campus is designed to attract, develop and scale AI companies on a global scale.

The integration of AI in the UAE economy is anticipated to infuse AED 103 billion by 2035 and contribute 14 percent to the country’s GDP by the end of this decade. The proposed Dubai AI & Web 3.0 Campus will serve as a global center for R&D, investment and innovation and will attract over $300 million in collective funds, along with 500+ global AI and Web 3.0 start-ups. Furthermore, it is expected to create 3,000+ employment opportunities by the year 2028, thereby significantly contributing to the growth of the UAE economy.

The proposed Dubai AI & Web 3.0 Campus is expected to act as a catalyst for growth by drawing in global innovators, startups, venture capitalists, and industry leaders.

An inside look into Telecom Egypt's operations and future plans

Egypt’s top ICT provider and telecom operator walks digitalization, sustained growth path

Mohamed Nasr Managing Director and CEO, Telecom Egypt

The following article is based on an interview conducted by Economy Middle East with Telecom Egypt’s Managing Director and CEO Mohamed Nasr, who shed light on the factors influencing the current state and future outlook of Egypt’s leading ICT provider. Under his leadership, the company is “Gearing up for tomorrow today” and is cementing its position as a key player in Egypt’s transition into a global data hub and the primary telecom gateway to Africa, the world’s next center of growth.

The current state of Egypt’s telecom industry and future outlook

Egypt’s telecommunications market, one of the largest in Africa and the Arab world, is characterized by intense competition in the mobile and broadband sectors. Additionally, Egypt boasts an emerging and innovative digital sector that has pioneered business models for digital content distribution. Consequently, the country’s mobile and fixed penetration rates are comfortably higher than the African and Arab nation averages. In recent years, the Egyptian telecom industry has undergone significant changes, experiencing high growth rates in both the mobile and internet markets.

Telecom Egypt, a leading player in the industry, has successfully connected over 93 percent of households with fiber-to-the-curb (FTTC) technology. Moreover, they have

expanded their fiber-to-the-home (FTTH) services in all new-build areas across Egypt. These initiatives are part of the company’s ongoing efforts to improve the quality of fixed broadband services. Telecom Egypt has made substantial investments in upgrading Egypt’s ICT infrastructure, exemplified by their “Fixed Broadband Enhancement Project in Egypt.”

Thanks to Telecom Egypt’s endeavors, fixed internet speeds have increased eightfold in just three years. These improvements have bolstered the infrastructure’s capacity to accommodate the unprecedented surge in data traffic and have contributed significantly to the ongoing digital transformation in Egypt.

Looking ahead, under the Ministry of Communications and Information Technology’s “Digital Egypt” strategy, Telecom Egypt aims to transform all areas into FTTH networks, aligning with Egypt’s Vision 2030 for a digitally transformed society and a robust digital economy. To realize this vision, the company is implementing two digital transformation programs. Firstly, in urban areas, it is installing fiber optic cables and upgrading and optimizing telecom exchanges. Secondly, in rural villages, Telecom Egypt is participating in the “Decent Life” presidential initiative, which focuses on enhancing infrastructure, including telecommunications, in rural Egyptian areas. The company is responsible for deploying fiber optic cables in over 4,500 villages, thereby improving internet access for 3.5 million households and serving a large portion of Egypt’s population.

Moreover, as part of the Ministry’s “Digital Egypt” initiative, Telecom Egypt is addressing the government sector’s digitalization requirements. It is actively working to connect 33,000 government buildings nationwide through a fiber optic network, aiming to enhance communication and maintain

a more resilient service. As of now, it has successfully connected 18,000 government buildings, with the remaining buildings scheduled for connection in subsequent phases. Telecom Egypt is also lending support to other national digital transformation projects. This includes equipping schools with fiber optic cables and providing access to all of the Ministry of Education’s e-learning websites. Furthermore, the company has played a pivotal role in supporting the healthcare sector by delivering stable broadband connections to hospitals and healthcare units throughout the country. Through continuous investment in network upgrades and development, Telecom Egypt has been instrumental in facilitating these transformational efforts.

Regarding 5G, it is worth noting that its development in the Egyptian market is still in its early stages. Nonetheless, telecom operators are currently investing in preparation for the new era. As the country’s wholesale infrastructure provider, Telecom Egypt is actively gearing up for secure and widespread 5G-based services. The company is also paving the way for the application of IoT, AI, and other next-generation technologies by upgrading networks and deploying fiber-backed mobile sites across the domestic mobile market.

The upcoming smart city projects throughout the country will serve as the primary catalyst for the launch of the 5G network. This will unlock transformative IoT applications across various industries, offering a plethora of innovative use cases.

Leading Telecom Egypt’s growth aspirations

Nasr, who takes pride in his role as head of Telecom Egypt, has been dedicated to steering the company’s strategies to deliver exceptional services that prioritize customer needs and provide a seamless customer experience. “I am excited to be at the helm during this transformative era in the industry and to deliver on the company’s vision of shaping the future of ICT,” he says. Through the adoption of superior services, Telecom Egypt is making remarkable progress in enhancing fixed-mobile convergence services for its users, taking the services to new heights. Additionally, the company places significant emphasis on the enterprise sector, aiming to expand and connect its service portfolio to become the leading digital ICT provider for enterprise, SOHOs, and SMEs.

Nasr firmly believes that achieving these goals requires expanding the company’s capabilities and corporate agility, as well as building a future-proof organization that facilitates growth and fosters a seamless customer journey.

Egypt is the most reliable and trusted hub connecting Africa, Europe, and Asia since the early deployment of subsea telegraph cables over 150 years ago. Telecom Egypt’s

international strategy focuses on delivering a cutting-edge infrastructure footprint through its expanding network of subsea cables and diversified terrestrial networks.

“Leveraging Egypt’s strategic location at the crossroads of the three continents, as well as its extensive coastlines along the Red Sea and the Mediterranean Sea (1,941 km and 995 km, respectively), the company enjoys a competitive advantage in establishing multiple widespread subsea landing points separated by considerable distances to deliver the required geodiversity to its global customers,” Nasr says. Currently, Telecom Egypt provides the subsea industry with 10 landing stations, 10 crossing routes, and supports the landing of 14 subsea cable systems. Over several decades, the company has closely collaborated with global telecom carriers and hyperscalers, sharing a common understanding and commitment to their development and prosperity.

Impact of divestment on Telecom Egypt’s operations and plans

Following the government’s announcement regarding the state ownership policy and its objective to optimize resources, the Ministry of Finance, Telecom Egypt’s primary shareholder, has divested 10 percent of the company’s total outstanding shares. It’s important to note that this divestment has no impact on the company’s operations and strategies, as the Ministry of Finance remains the main shareholder with a 70 percent ownership stake, and the board representation remains unchanged.

According to Nasr, Telecom Egypt’s management team possesses a clear vision and strategy that has evolved and strengthened in recent years, and will continue to work tirelessly to solidify the company’s position as a regional telecom leader, always looking to maximize Telecom Egypt’s shareholder value.

"Telecom Egypt is making remarkable progress in enhancing fixed-mobile convergence services for its users."

Influence of currency devaluation on Telecom Egypt

The devaluation of the Egyptian pound, inflation, and global financial and banking challenges are circumstances that significantly impact the overall economy, including the telecom sector. These inflationary pressures have influenced customer behavior, causing them to prioritize their consumption objectives. Despite these challenges, Nasr notes that there has not been a substantial change in the demand for telecom services thus far.

The full impact of these economic factors is expected to become apparent in the near future, coinciding with the company’s network expansion. Since a significant portion of Telecom Egypt’s capital expenditure (CapEx) and some operational expenditure (OpEx) items are denominated in hard currency, the company has managed to mitigate the effects of inflationary pressures resulting from the devaluation of the Egyptian pound by securing about 25 percent of its top line in U.S. dollars. Nevertheless, Telecom Egypt aims to grow and diversify its revenue streams, particularly those denominated in the greenback, to hedge against any currency fluctuations.

As a telecom market leader, the company encourages international manufacturers in the telecom industry’s supply chain to establish production lines in Egypt. The government has implemented several initiatives to support such endeavors, which will not only reduce Telecom Egypt’s reliance on foreign currency but also benefit the country as a whole.

Overview of the landmark 2Africa subsea cable project

Saudi MCIT and Huawei sign ICT MOU

2Africa’s subsea cable system is specifically designed to enhance international connectivity and bolster internet access, connecting Africa with the rest of the world. In addition, it strengthens Egypt’s role as a vital international hub for global communication networks. As one of the world’s longest cable systems, 2Africa addresses the growing demand for capacity in the Middle East and supports the expansion of 4G, 5G, and fixed broadband access.

According to Nasr, embarking on such largescale projects always carries the possibility of challenges. “However, most of these challenges can be managed due to our pioneering efforts, well-established infrastructure, and global partnerships. We promptly address any obstacles or threats to ensure the satisfaction of our customers,” he says.

2Africa was launched in May 2020 right after the breakout of the COVID-19 pandemic and the associated lockdown restrictions. The main challenge at the time was securing the necessary human resources, equipment and associated permits for the installation of the new subsea cable landing stations and crossing routes for this mega project.

However, the company was able to overcome these

challenges by diligently working with the relevant authorities and stakeholders to secure the requirements. In addition, a team of top-notch experts worked around the clock to make sure everything ran smoothly and efficiently. This paved the way for the successful completion of the end-to-end testing and delivery of 2Africa’s Egypt brand-new seamless optical terrestrial crossings ahead of schedule, making it the first segment of the project in operation by December 2020. Subsea cables play a critical role in global connectivity and serve as the backbone of the world’s economy, carrying 99 percent of internet traffic. Their economic impact stems from the immense capacity they provide, the speed at which data travels, and the growing reliance on data-intensive applications integrated into various aspects of life. Egypt is no exception to the opportunities presented by a massive cable like 2Africa, particularly for its telecom sector and overall economy. By offering reliable and affordable internet access, 2Africa, along with other major subsea cables, will contribute to job creation, stimulate economic growth, and improve education and healthcare. 2Africa’s reach will extend to 3 billion people, which accounts for 36 percent of the global population. Consequently, the project aims to realize more of its potential by pursuing new subsea cable initiatives and introducing cutting-edge products that will propel the ICT industry to new heights.

Telecom Egypt’s sustainability agenda

“Telecom Egypt fully recognizes the importance of operating in a sustainable manner, as part of its responsibility towards the community, investors, customers, and the world at large,” Nasr says. The company acknowledges that climate change poses a significant threat to humanity and all life on Earth. Therefore, urgent collective action is necessary to address this crisis and secure a sustainable future for generations to come.

As a pioneer in sustainability and eco-friendly practices, Telecom Egypt has taken the lead in sparking climate action ahead of COP27. It has achieved this by transforming its cellular base stations in Sharm El Sheikh into solar-powered stations, demonstrating its dedication to environmental-

"Telecom Egypt aims to become a leader in corporate sustainability by harnessing the power of digitalization."

friendly solutions. Additionally, the company has deployed electric, eco-friendly cars and buses in the city, showcasing its commitment to combating climate change through various projects and initiatives.

Telecom Egypt aims to become a leader in corporate sustainability by harnessing the power of digitalization to tackle the climate crisis and mitigate its impact. To achieve this, the company is developing a comprehensive carbon reduction strategy and focusing its efforts on high-impact activities. For example, it is replacing copper with fiber and adopting FTTH technology in all greenfield areas.

A recent milestone on Telecom Egypt’s sustainability agenda is the partnership with Egypt’s New and Renewable Energy Authority. The company has inked a deal to procure all of its low voltage power from renewable sources. This commitment makes Telecom Egypt one of the largest and most environmentally friendly telecommunications companies in the region. Furthermore, Telecom Egypt strives to adopt eco-friendly business practices to the best of its ability. This includes promoting optimal resource utilization, recycling, and adopting sustainable and green supply chains whenever possible. The company also emphasizes the importance of corporate governance, risk management, and compliance, as well as business ethics, data privacy, cyber security, and maintaining excellent customer service.

Diversity and inclusivity a key focus for Telecom Egypt

Within its commitment to sustainability, Telecom Egypt actively promotes diversity and inclusion, ensuring equal opportunities for all employees throughout the recruitment process, career development, training, and promotions. The company places significant emphasis on key areas such as women empowerment, youth engagement, health and safety, employee wellbeing, and training and development. Nasr highlights that Telecom Egypt plays a pivotal role in supporting the implementation of impactful social

responsibility initiatives. To ensure effective execution, the company has established a dedicated Social Responsibility Committee which is entrusted with the role of formulating and executing the company’s corporate responsibility strategy in alignment with Telecom Egypt’s mission. Additionally, the committee takes the lead in identifying and recommending projects, initiatives and donations that contribute to the overall social welfare.

Turning Egypt into a global data hub gateway to Africa

Nasr highlights “Gearing up for tomorrow today” as Telecom Egypt’s slogan, reflecting the company’s response to the unprecedented changes brought about by the growing digital economy, which have caused disruptive shifts in the ICT ecosystem. Taking their strategy to the next level, Telecom Egypt has positioned itself as a key facilitator of digitization by establishing the renowned Regional Data Hub (RDH) as part of their data center expansion plan.

Telecom Egypt already operates seven data centers, with RDH standing out as the first facility in Egypt to receive certifications from the Uptime Institute in the categories of Design, Constructed Facility, and Operational Sustainability. RDH benefits from its strategic connectivity to the Mediterranean Sea and Red Sea landing stations, granting it access to over 60 countries worldwide. The initial phase of RDH, consisting of 400 racks, is already operating at full capacity, prompting the company to prepare for the next expansion phase, which will be slightly bigger.

Telecom Egypt currently boasts a transit capacity of over 165Tbps between the Red Sea and Mediterranean Sea, a figure set to double with the installation of new cables. This vast capacity and connectivity offer tremendous opportunities for other data center developers to leverage when delivering services to hyperscalers and content providers. Furthermore, Telecom Egypt adopts an open access model, allowing potential data center customers seeking global reach to connect to their subsea stations. To maintain its leading position and stay aligned with cuttingedge technologies and connectivity solutions, Telecom Egypt has established partnerships with prominent global ICT players.

Telecom Egypt is excited about the opportunities that lie ahead and will continue to prioritize customer-centricity and maximize shareholder value as it exerts its utmost efforts to become a global data hub.

"Telecom Egypt has a transit capacity of over 165Tbps, set to double with new cable installation."

Egypt's ambitious reforms foster development and citizen well-being

Sovereign wealth fund tightens reins, drives economic stability

Egypt is embarking on an ambitious structural reform program aimed at developing the economy and enhancing the well-being of its citizens. Spearheading these efforts is Dr. Hala Elsaid, Egypt’s minister of planning and economic development as well as chairperson of Egypt’s Sovereign Wealth Fund. The current reforms place significant emphasis on national benefit, with a direct focus on improving the economic welfare of the Egyptian people.

The tightening of screws on Egypt’s Sovereign Wealth Fund signifies the ongoing reforms, which prioritize investments from both local and foreign funds. This strategic approach aims to ensure a stable and secure economy for future generations, moving away from the currency shortage crisis that has recently affected the nation’s economic landscape.

Elsaid’s notable accomplishments include receiving recognition as the Best Arab Minister by the Arab Government Excellence Award in November 2020. Additionally, she currently serves as the chairperson of Egypt’s Sovereign Wealth Fund, building upon her prior experience as the minister of planning, monitoring, and administrative reform from February 2017 to December 2019.

Given the current state of Egypt’s economy, the following interview with Elsaid sheds light on the economic strategies and frameworks being implemented, as well as the opportunities and challenges that lie ahead.

What mechanisms are being implemented to increase private sector participation?

One of the key objectives of the National Structural Reform Program is to enhance private sector participation, serving as a fundamental pillar. The State Ownership Policy document complements this program by offering a diverse set of tools designed to facilitate collaboration with the private sector. These tools include the provision of specific assets or corporations, thereby stimulating the circulation of capital. In some cases, the private sector may assume management responsibilities, possess utilization rights or acquire a partial stake in state-owned companies or assets. Egypt’s Sovereign Wealth Fund operates as the investment arm of the state, with the primary goal of

promoting increased involvement from both local and foreign private sectors, while maximizing returns from state-owned assets. It is important to emphasize that the Sovereign Wealth Fund is owned by the Egyptian people and is dedicated to preserving the nation’s wealth for future generations. The growing interest among Egyptian investors in the Initial Public Offering (IPO) program sends a positive message and serves as evidence of significant Egyptian entities capable of attracting foreign capital. Moreover, the increasing influx of foreign capital serves as a clear indicator of confidence in the Egyptian economy, demonstrating the trust that local investors have in its potential. Currently, the government’s foremost focus is on optimizing returns from state assets. This objective can

be achieved through extensive cooperation with the private sector, fostering a mutually beneficial partnership that paves the way for success.

In recent times, what specific efforts has the Egyptian government made regarding the IPO program? Additionally, could you provide us with information regarding the hotel group that was awarded to ICON?

Recently, Egypt achieved a significant milestone by generating $1.9 billion through the successful sale of shares in state-owned companies. As part of its ongoing efforts to promote investment opportunities, the government has appointed an international financial advisor, with a particular focus on historical heritage sites, including the old ministry buildings in Cairo.

Dr. Hala Elsaid, Egypt’s minister of planning and economic development

In line with these initiatives, a company that owns multiple hotels recently presented itself to a group of investors, seeking to raise capital for a minority stake in these establishments. Following multiple offers, the ICON Group emerged as the chosen partner, securing a 37 percent increase in capital amounting to $700 million. This strategic partnership combines the expertise of local and foreign investors, with the primary objective of enhancing operational efficiency and facilitating the development of hotels, thereby attracting a larger number of tourists. These endeavors are aligned with the government’s ambitious goal of welcoming 30 million tourists annually.

Furthermore, the Abu Dhabi Developmental Holding Company (ADQ) has acquired minority stakes ranging from 25 to 30 percent in three prominent corporations: Ethydco, Egyptian Drilling, and Egyptian Linear Alkyl Benzene (Elab).

Can you tell us about the government’s divestment from Al Ezz Dekheila Steel Co. (EZDK)?

During the recent period, the government has made its third offering involving the divestment of EZDK, a prominent private sector investor in Egypt, along with their expressed interest in acquiring the remaining state shares. The National Investment Bank (NIB) has been entrusted with overseeing the public offering process for approximately eight entities. As part of this undertaking, around 31 percent of public sector shareholders were divested, resulting in a substantial sum of $241 million. This strategic move was undertaken to empower the company to carry out its investment expansion plans and facilitate the localization of additional industries associated with the steel sector.

What about the reforms that the government is currently working on? What specific procedures are being followed?

The government is currently engaged in the process of issuing an IPO related to the Gabal El Zeit wind farm. To select the most suitable investor, a competitive bidding process was conducted by the sovereign fund. Various non-binding offers were received and thoroughly evaluated, leading to negotiations with prospective investors to determine the highest offer. In June 2023, the investor who presented the most favorable offer was chosen. It is important

to mention that this investor has been granted a 60-day exclusivity period to conduct due diligence. The final decision is scheduled to be announced in October, with the anticipated value of the wind farm exceeding $300 million. In regard to the national company, the opening of its data center took place in late February, generating significant interest. Six non-binding offers were received, and progress has been made with three qualified applicants. The due diligence process has already commenced, and the announcement of the award is expected to take place between October and November of this year.

Gabal El Zeit

What initiatives are being carried out in regard to water desalination plants?

The government is currently working on a new proposal regarding water desalination plants. As part of a comprehensive five-year plan developed by the Egyptian government and the Ministry of Housing, a total of 21 stations with a combined capacity of 3.3 million cubic meters per day are set to be established. The initiative, which has a target date of 2025 to become fully operational, involves initial investments exceeding $3 billion.

To facilitate this initiative, the Sovereign Fund is collaborating with the Ministry of Housing, along with committees from the Ministry of Finance and the Prime Minister’s office, to conduct a thorough study. During the prequalification stage, over 90 investors from 30 countries expressed their interest, and after careful evaluation, the committee and the fund have qualified 17 coalitions of investors. The initial offering will include four stations and is scheduled to take place in the fourth quarter of 2023. Additionally, Siemens is working on a separate station that is expected to be completed in the first quarter of 2024.

Are any new projects excluded from the investment plan? And why are these exclusions made?

The Cabinet has taken a decision to streamline capital expenditure in the state’s investment plan for the upcoming fiscal year. Consequently, all new projects that have not yet been implemented will be excluded unless they are deemed absolutely necessary. The plan prioritizes ongoing projects, aiming for a 70 percent execution rate.

Moreover, projects involving a financial component will also be excluded. This decision highlights the significance of directing state resources toward the most vulnerable groups and social protection programs. The total value of the excluded and deferred projects amounts to approximately 247 billion Egyptian pounds. These projects encompass various sectors, including housing and utilities, transportation and roads, as well as communications and information technology.

A new proposal of water desalination plants

Egypt reform treatment unlocking remedies to economic malaise

Egypt’s ailing economy and its impact on the lives of the country’s citizens have been consistently making headlines. With a population exceeding 105 million, the nation has faced significant challenges in the past year due to the Russian-Ukrainian conflict. This led to a steep depreciation of the Egyptian pound, a shortage of foreign currency and soaring inflation rates, all of which greatly impacted the living standards of Egyptians.

In an effort to address these issues, Egypt entered into a deal with the International Monetary Fund in December of last year. The agreement secured a $3 billion loan, contingent upon the implementation of a series of reforms and conditions. However, Egypt faced difficulties in meeting all the required conditions, causing a delay in the initial program review by the IMF. This review was crucial for the release of the second tranche of the loan, valued at approximately $347 million, originally scheduled for March.

IMF Deputy Managing Director Antoinette Sayeh, during her recent visit to Egypt, emphasized that the program review would be based on the government’s progress. The successful completion of the required steps and demonstrable progress would instill confidence and enable the program to move forward.

The reforms primarily focus on two key conditions: introducing real flexibility in the Egyptian currency and privatizing state

assets. Despite the government’s commitment to currency liberalization, the Egyptian pound has remained stagnant against the dollar for some time. Although Egypt previously implemented currency liberalization three times between March 2022 and January of this year, the Egyptian pound’s value declined by approximately 25 percent during the first quarter of 2023 and by about 50 percent since the start of the Russian-Ukrainian crisis in March of the previous year. The privatization of government-owned companies, another important reform, has encountered obstacles. Egypt was expected to generate $2 billion in revenue from the sale of shares in these companies, a crucial aspect of meeting the financing goals outlined in the IMF program for the fiscal year 2023, which ends in June. However, by the end of June, the government had only managed to accumulate a small sum, raising concerns about the future of the IMF agreement. On February 9, Egyptian Prime Minister Mostafa Madbouly announced plans to sell shares in 32 companies by the end of March 2024. This strategy aligns with Egypt’s active pursuit of attracting investments and increasing foreign currency reserves by offering government-owned enterprises for privatization. The aim is twofold: to encourage investments and broaden the ownership base while simultaneously strengthening the stock exchange and enhancing the liquidity of listed stocks, fostering a dynamic trading environment.

A hard mission

The Egyptian government faces a challenging task of collecting the necessary funds to repay its foreign debts while also providing cash liquidity, financing infrastructure projects, and supporting the local currency. By December 2022, Egypt’s foreign loans had skyrocketed to $162.9 billion from less than $40 billion in 2015, with a borrowing increase of $8 billion in the last quarter of 2022 alone. This situation would have been less daunting if Egypt had been experiencing robust economic growth. Unfortunately, the decline in growth rates coincided with a significant outflow of hot money, estimated at around $22 billion. This development raised concerns among investors about the government’s ability to fulfill its financial obligations, especially considering that a considerable portion of the borrowed funds is allocated to long-term projects that may not generate the urgently needed foreign currency in a timely manner.

The IMF has called on the Egyptian government to “reduce the pace of large national projects that put pressure on the exchange rate and transition to a flexible exchange rate regime.” Moody’s, in a recent report, highlighted that Egypt’s substantial external debt obligations have become an increasingly challenging issue. In the current fiscal year 2022-2023 (between July 2022 and June 2023), Egypt’s total obligations amounted to approximately $20.2 billion, of which $8.7 billion were due in the first half ending in December 2022. According to data from the Central Bank, the payments due include $2.49 billion in short-term debt in June, $3.86 billion in the second half of 2023 as short-term loans, and $11.38 billion in long-term debt. Additionally, there are obligations to less flexible lenders such as the IMF, with $2.95 billion due by the end of 2023, and foreign bondholders who are owed $1.58 billion.

Analysts suggest that Egypt’s focus

should be on reducing the debt ratio over the medium term. They emphasize that maintaining primary surpluses exceeding 2.5 percent of GDP is the path to achieving this goal. Additional revenue generation and expenditure cuts are necessary to accomplish this. In late May, the Egyptian Parliament passed a bill aimed at raising fees to prevent further government borrowing.

Egyptian pound

Egypt is currently under significant pressure to liberalize its currency exchange rate due to concerns raised by international banks. The disparity between the official exchange rate of the Egyptian pound and its value in the parallel market, as well as differences observed in future contracts, have become focal points for these banks. Moreover, potential investors are reluctant to commit their funds without assurance that the pound will not face further devaluation, which could result in financial losses. The Gulf countries, particularly Saudi Arabia, the UAE and Qatar, are emblematic of this situation. In 2022, when Egypt experienced a crisis, these nations demonstrated their willingness to support Egypt by depositing $13 billion into the country’s central bank. However, they are now awaiting clearer indications of the stability of the Egyptian pound, tangible evidence of substantial economic reforms, and confirmation that Egypt is adhering to the conditions outlined by the International Monetary Fund (IMF) before considering largescale investments. Conversely, Egypt aims to accumulate a significant reserve of foreign currency prior to liberalizing its exchange rate. This strategy seeks to ensure an adequate supply of dollars to meet market

demand, prevent a further drastic depreciation of the pound, and address the alarming levels of inflation, which have reached their highest point in decades. In May, inflation figures rose to record levels, with a 32.7 percent increase compared to April’s 30.6 percent, primarily driven by the government’s decision to raise diesel prices.

By increasing diesel prices, the Egyptian government hopes to generate over half a billion dollars annually for the treasury. It is worth noting that this is the first time that diesel prices have been raised since July 2022. In light of these developments, the IMF advises the Central Bank of Egypt to remain prepared to address the mounting inflationary pressures.

Although Egypt faces significant challenges, escaping this precarious situation is not an insurmountable task. The solution lies in implementing comprehensive reforms and expediting measures to rescue the Egyptian economy from further decline.

Central banks revise inflation outlook, struggle to regain control

Optimism dashed as phenomenon lingers, demanding swift actions

It has grown increasingly evident that central banks worldwide downplayed the threat of inflation as they persisted in implementing exceptionally low interest rates and engaging in extensive asset purchases throughout 2021 and early 2022.

However, a significant shift in monetary policy took place in mid-2022, resulting in substantial interest rate hikes. Within a year, the European Central Bank raised rates by 375 basis points, while the Federal Reserve implemented a 500-basispoint increase. Nevertheless, monetary policymakers around the globe are now facing greater challenges than anticipated. They have come to recognize that inflation is not merely a “transitory” issue, as previously suggested by Federal Reserve Chair Jerome Powell, but rather a persisting problem that may prove difficult to control. This is the current situation the world finds itself in.

While there were discussions regarding the potential pause

in tightening measures by certain central banks, the recent actions of the Canadian and Australian central banks caught the markets off guard. The Canadian central bank, due to ongoing inflationary pressures, decided to impose limitations on monetary tightening and announced a 25-basis-point increase in interest rates after a five-month hiatus. On the other hand, the Australian central bank raised interest rates by 25 basis points, reaching their highest level in 11 years, and cautioned that additional tightening might be necessary to achieve the desired inflation target.

The Federal Reserve’s recent decision to adopt a “hawkish pause” and the possibility of raising rates later in the year has left investors disappointed. However, the central bank also announced that a reversal of rate hikes would not occur for at least two years, leading to further frustration. In contrast, the European Central Bank approved a 25-basis-point increase, pushing the deposit rate to its highest level since 2001.

When the Federal Reserve initially began raising interest rates in March 2022, their primary objective was to curb inflation. This sparked discussions among economists, policymakers, and investors about the feasibility of achieving a soft landing for the economy. A soft landing refers to a scenario where the economy slows down enough to control prices without triggering a significant rise in unemployment.

Despite a year-long decrease in inflation, the ongoing debate persists regarding whether the US economy can achieve a soft landing with confidence.

The primary concern lies in the challenges faced by central banks, including the Federal Reserve, as they strive to determine the optimal duration for maintaining a tight monetary policy and identifying the appropriate timing for transitioning to an easing path.

In May, core inflation in the United States, the preferred measure for central banks, registered at 5.3 percent annually. While this figure is lower than the 7 percent recorded in June 2022, it remains more than double the Federal Reserve’s inflation target of 2 percent.

It is important to note that inflation rates are declining at varying rates across different regions, posing distinct challenges in each case. In the United States, inflation dipped below 5 percent after peaking at 9.1 percent.

In the Eurozone, inflation has decelerated from its peak of 10.6 percent in the previous year to 6.1 percent in May.

In the United Kingdom, inflation reached 8.7 percent in April, prompting the Bank of England to postpone potential interest rate hikes. In Latin America, inflation has started to recede, but central bank leaders remain cautious following the implementation of double-digit interest rate increases. The disruptions encountered in the banking sector, originating in the United States and spreading to Switzerland, have presented central banks with arduous decisions on whether to continue raising interest rates, temporarily halt them, or even reverse their course. Central banks are compelled to adopt an even more cautious approach, as they fear that a subsequent credit crisis could plunge the U.S. economy, and consequently the global economy, into a recession.

Inflation in the GCC

In 2022, central banks responded to inflationary pressures by implementing tighter monetary policies and raising interest rates, following the lead of the Federal Reserve. However, the current situation presents a notable contrast as Gulf countries’ governments have demonstrated their adeptness in managing inflationary pressures and minimizing their impact on their respective economies. This positive development has garnered recognition from the International Monetary Fund (IMF), which recently projected a decline in the inflation rate for Gulf Cooperation Council (GCC) countries. The IMF anticipates a drop to 2.3 percent in the upcoming year, compared to the projected 2.9 percent for the current year.

Regarding Saudi Arabia specifically, the IMF highlighted that despite robust economic activity, inflation remains low and is currently displaying signs of decline. This observation was made following the conclusion of the IMF’s Article IV mission to the Kingdom.

As of April, the inflation rate in Saudi Arabia has maintained a steady level of 2.7 percent on an annual basis, comparable to the year-on-year change in March.

The highest inflation rate recorded in the Kingdom within the past 12 months was observed in January, with a yearon-year increase of 3.4 percent. However, it has gradually decreased since February.

The financial stability report of the Saudi Arabian Monetary Authority (SAMA) also indicates an expected decline in the inflation rate within the Kingdom.

SAMA’s report highlights that inflation in Saudi Arabia has remained relatively low and is projected to remain stable. It emphasizes several factors that contribute to this stability, including the stability of essential goods, global food prices, and the strengthening of the US dollar, which helps alleviate upward pressures on imported goods within the country. In the United Arab Emirates, the central bank anticipates inflation to reach 3.2 percent in 2023. Meanwhile, inflation in Dubai reached its lowest levels since the beginning of the year, standing at 3.05 percent in May, compared to 3.27 percent in April.

PwC (PricewaterhouseCoopers), in its bulletin, underscores the ongoing efforts of Gulf countries to diversify their economies and their economic resilience as they work towards achieving their national visions. These visions encompass various areas such as economic diversification, infrastructure improvement, digital transformation, fostering competitive work environments, and promoting workforce localization in the private sector. The economies of the Gulf Cooperation Council (GCC) countries have demonstrated notable flexibility and resilience in the face of global challenges. Through the growth of non-oil sectors and a heightened focus on sustainability, they have effectively pursued comprehensive transformation agendas.

It is evident that central banks worldwide face formidable challenges, which have been further compounded by diminishing confidence in the performance of monetary policymakers. This situation has the potential to negatively impact the trajectories of economic recovery in these countries.

CFI drives financial inclusion and diversification in Egyptian market

Expansion promises positive transformation in face of economic challenges

Amid the prevailing economic challenges, CFI’s recent expansion into Egypt holds significant promise as it introduces 25 years of invaluable experience in the field of trade and a strong commitment to fostering diversification for traders and investors in the country. In a recent interview with Economy Middle East, Hisham Mansour, the managing director and co-founder of CFI, shares his expert insights on the industry and provides compelling forecasts for the future of trade conditions, along with the evolving role of artificial intelligence (AI). With CFI’s entry into the Egyptian market, there is a palpable anticipation of positive transformation and enhanced opportunities, as the company brings its wealth of expertise and a vision for empowering local businesses and market participants.

What prompted the launch of CFI Egypt during a period of Egyptian pound devaluation and subsequent outflows of hard currency?

We had long envisioned launching in Egypt, driven by the increasing interest in trading within the country, which aligned perfectly with CFI’s objective to expand across the MENA region. The launch of CFI Egypt proved to be a resounding success, allowing us to bring our expertise to an exciting new region and strengthen our presence in MENA.

Undoubtedly, Egypt, like the rest of the global economy, faces economic challenges. However, despite these temporary issues, the country’s sizable population and growing interest in global markets presented an ideal opportunity for our expansion. Trading and investing revolve around leveraging market knowledge to capitalize on market movements. Interestingly, difficult economic conditions and uncertainty can spur the demand for market access, as individuals seek to benefit from trading opportunities. This trend was evident during the global pandemic and is applicable whenever economic uncertainty arises.

We take pride in our position as a leading global trading provider with over 25 years of industry experience. Although Egypt is currently grappling with strong inflation and a weakening currency, CFI aims to provide traders and investors with alternative investment options and value. This includes access to more than 200 popular local Egyptian stocks.

Do you think EGX-listed stocks attract investors as trade opportunities in these conditions?

Any investment opportunity’s attractiveness depends on various factors that vary from trader to trader, whether it involves local Egyptian stocks or any of the 23+ global markets available at CFI. Investors need to consider several aspects, such as their understanding of specific market areas, their risk appetite, budget, and how the economic climate influences their personal finances. The financial markets present opportunities regardless of whether the overall economy is thriving or experiencing a downturn. Throughout history, stocks have tended to trade at discounted prices during times of uncertainty, only to rise as the economy recovers. Furthermore, stock investing is a long-term endeavor, meaning that shortterm volatility or weaker economic conditions should not dictate investment decisions. Many renowned investors emphasize the importance of buying and holding investments, which yields benefits over the long term. Adopting this mindset is key to success for all investors. However, it is crucial to stress that traders and investors should only invest amounts they can afford to lose, irrespective of whether the overall economy is expanding or contracting.

Considering these factors, our strategic decision to launch in Egypt remains unaffected by the economic challenges in the region. We are effectively addressing

a significant gap in the Egyptian market by offering over 200 local EGX-listed stocks, along with highly competitive trading conditions, expert market research and analysis, and personalized local support.

CFI offers highly competitive trading conditions with spreads from ultra-low trading costs, fast execution and no minimum deposit on 15,000+ stocks, forex, commodities, indices, ETFs and cryptocurrencies from 23+ global markets. Which of the above-mentioned conditions truly differentiate you and give you a competitive edge in the region, specifically in Egypt?

All of the factors mentioned above are crucial for traders, each contributing to CFI’s competitive advantage. Over the course of 25 years, we have dedicated ourselves to refining our product offerings and trading conditions to meet the specific requirements of the markets we operate in. Simultaneously, we have embraced innovation to align with the latest technologies and industry trends. As a result, CFI has emerged as the foremost industry leader in Jordan, Lebanon, the UAE and the entire MENA region.

Our trading costs are highly competitive, boasting ultra-low spreads and commissions. We emphasize this aspect because we recognize that cost is a paramount consideration for traders worldwide. Additionally, our unparalleled trading execution speed is made possible through cutting-edge platforms and technologies. This serves as a testament to CFI’s advanced trading infrastructure and bestows a significant advantage upon our clients. Furthermore, CFI’s professional team caters to each customer’s unique needs, ensuring a seamless trading experience. These factors collectively establish CFI as the preferred choice over any other provider. CFI’s exclusive feature of no minimum deposit requirement is a highly competitive offering, particularly rare in the MENA region. At CFI, we believe in democratizing the financial markets, enabling traders of all capital sizes to participate. By eliminating the

Hisham Mansour, co-founder and managing director, CFI

need for a substantial initial investment, we remove entry barriers and attract a wider range of traders. This inclusive approach bolsters our competitiveness in the market and resonates with our commitment to making financial services accessible. By incorporating these distinguishing attributes, we not only deliver superior trading experiences to our clients but also solidify our position as a leading financial services provider in Egypt, catering to the diverse needs of traders and investors in the region.

Given your extensive background and experience in the global financial markets, what trends do you currently observe in terms of technology and AI adoption by trading platforms and clients? What is the next innovation in trading platforms?

AI has undeniably become a prominent topic of discussion in the industry lately. It is evident that the ongoing advancements in AI and automation will have a profound impact on the future of trading, benefiting both brokers and traders.

Observing the current trends, traders are increasingly relying on popular applications like ChatGPT and AutoGPT. These tools enable the automation of algorithmic trading and facilitate well-informed investment decisions. We are steadily progressing toward code-free automation, with technologies capable of accessing and analyzing vast amounts of data points during trading. While it is important to note that past price movements do not always predict future outcomes, the continuous development and increasing intelligence of these AI tools could potentially outperform even the most skilled investors consistently in the near future. CFI is at the forefront of incorporating AI trading technologies for our clients. Recently, we formed a partnership with Capitalise.ai, a tool that empowers traders and investors to plan and automate their trading strategies without requiring technical coding skills. As one of the pioneering brokers in the Middle East and North Africa (MENA) region, we are implementing this technology for our traders and will continue to embrace new and valuable AI technologies as they emerge. As a company, CFI aims to leverage AI and automation to enhance productivity and streamline our business processes. There are numerous untapped applications

of AI, including fraud detection, lead generation, market research and analysis, among others, which we are eager to explore.

How do you evaluate today’s equity markets, FX and crypto volatility given the state of global economic affairs? What do you advise investors in these conditions?

There are currently several noteworthy trends to discuss. In terms of equity markets, many major markets, particularly in the U.S., are experiencing significant growth. Investor optimism is increasing as the U.S. rate hiking cycle nears its end and the debt ceiling crisis subsides. Consequently, the probability of a US recession in the next 12 months is now below 30 percent, compared to over 60 percent just a few months ago. Mega-cap tech stocks have notably surged, with the technology sector gaining over 30 percent this year alone. However, the outlook for countries like the U.K. and China is less clear, as they continue to grapple with sub-par growth, leading to substantial capital outflows from their markets. It is crucial for investors to carefully evaluate the fundamentals of potential investment companies to make informed decisions. Diversifying across different sectors and regions can also help mitigate risks associated with market volatility.

Turning to the FX markets, interest rates remain a

significant factor influencing global currency markets, and this trend is likely to persist until prices move closer to central banks’ inflation targets. Overall, there seems to be a more favorable attitude towards risk as the U.S. dollar loses momentum from its peak in 2022, creating opportunities for other currencies like the British pound and the euro to gain traction. Traders interested in these volatile markets should always assess economic factors, comprehend the relationship between different currency pairs, and stay updated on the latest global economic and political news. Implementing appropriate risk management strategies is also crucial to mitigate potential risks associated with FX volatility. Regarding cryptocurrencies, the prevailing sentiment appears to be more risk-averse. Bitcoin and other cryptocurrencies are currently experiencing a decline after a brief but intense rally in April, triggered by contagion fears stemming from the U.S. banking crisis. Regulation appears to be the primary driver of volatility at present, as entities like the SEC and global regulators tighten their oversight of digital assets. Regulators worldwide are actively developing new rules to govern crypto trading, which creates uncertainty for the future of digital assets and crypto traders, potentially leading to increased volatility. I would recommend that anyone seeking to enter this market conducts thorough research on individual cryptocurrencies, understands their use cases, and invests only what they can afford to lose.

EFG Holding embraces diversification as driving force behind sustainable growth

Group explores growth potential, client personalization, financial inclusion

EFG Holding is actively pursuing diverse strategies across three verticals, with a special emphasis on promoting financial inclusion among the Egyptians, a population of over 100 million people. In a recent interview with Economy Middle East, Karim Awad, the group CEO and chairman of the executive committee at EFG Holding, shares insights into the decision-making process behind their efforts to diversify and digitize the financial sector. Awad recognizes that the primary driving force behind the holding’s diversification is the Egyptian people themselves. Let’s delve into the dynamic nature of EFG Holding and explore its vision for achieving sustainable growth in the constantly evolving economy of the Middle East.

What were the three primary factors that led to the diversification of the MENA-based investment bank into three distinct verticals? Are there any potential dilutions risks associated with deviating from core branded activities?

I would say the three main drivers of the diversification strategy we adopted some years ago were, a) enhancing our products suite by offering our clients complimentary financing services that go along with our traditional investment banking services, b) providing better visibility to our shareholders through the less volatile earnings outlook associated with the NBFI and commercial banking business, and creating shareholders’ value by enhancing our return on equity, and c) playing an active role in the financial inclusion drive for Egypt, which is core to our ESG policy.

The risk of dilution is minimal because we consider our investment banking operations to be the vital foundation and main driving force behind our business. We are constantly expanding in this area, with a particular focus on the Gulf region, where we have established a strong reputation,

whether on the sell-side or buy-side of the business. One of our primary objectives for the investment bank is to increase our market share, especially in our key target markets of the UAE and KSA. Just as important are the complementary lines of business we have strategically added over the past eight years which synergize well with our core operations and play a crucial role in our commitment to providing superior services for our clients.

How does EFG Hermes plan to maintain its leadership as an investment bank platform offering a comprehensive range of advisory and capital management services in FEM? Can you elaborate on your competitive advantage in investment banking, securities brokerage, research, private equity and asset management within these markets?

Our edge comes from our people. I firmly believe that over the years we have assembled an unmatched team of professionals who are always there to provide clients with the right advice, whether in brokerage, banking, research, asset management or private equity. Although we primarily focus on Egypt, UAE, KSA, and Kuwait, we have carefully and selectively expanded in FEM where we believe we can carve a niche and a top-five positioning in terms of market share. Regardless of the market, hiring the best people who embody the operational principles of EFG Holding and who provide their clients with honest, best-in-class advice will be vital in maintaining our leadership position as the investment bank of choice in all the markets in which we operate.

Is EFG Finance, the non-bank financial institutions platform, exclusively based in Egypt or does it also have a presence in FEM? Among the various services offered by EFG Corp-Solutions (leasing and factoring), Tanmeyah (microfinance), valU (lifestyleenabling fintech), Bedaya (mortgage), PayTabs Egypt (e-payments), and Kaf (insurance), which three services do you believe have significant growth potential within your coverage area(s) and why?

Currently, the platform is entirely focused on Egypt which in itself is a huge market given its 100 million plus population and relatively low penetration, making our services in high demand. However, we believe that certain services we offer, particularly our lifestyle-enabling fintech platform valU, are quite exportable, and we are currently exploring potential markets as a starting point for this. I am optimistic about the growth prospects of valU, not only within Egypt but also beyond. Our microfinance business, Tanmeyah, is another area that will drive the future growth of EFG Finance, especially as it upgrades its tech capabilities and enhance its operational efficiencies under a newly hired senior management team. Finally, we are currently waiting for the Egyptian FRA to grant us

a license to start our SME lending business which is a third line for which I have very high hopes given the size of the market in Egypt, the synergies that it has with other existing business lines that we already operate in, and the ongoing government drive for financial inclusion.

What factors have contributed to the expansion of retail, corporate and Islamic banking offerings at aiBANK, and how does EFG Holding plan to sustain this growth? Furthermore, does the term “ai” in aiBANK refer to artificial intelligence, and if so, what role does this technology play in the bank’s operations?

In November 2021, we acquired a 51 percent stake in aiBANK, making it a part of our group for less than two years. Since then, we helped bring on a young and dynamic management team that has been driving growth, especially in terms of retail offering, which is a key focus for the bank going forward. We are also working with its management on a five-year strategy that should see the bank transform not only its product offering but, hopefully, its overall positioning in the Egyptian market as well. However, it should be noted that our role as EFG Holding is twofold: Firstly, we actively participate as board members. Secondly, and more significantly, we act as drivers of cross-selling opportunities between the products that we offer on the EFG Hermes (the Investment Bank) or the EFG Finance (the NBFI) platform) side and aiBANK (the Commercial Bank). The “ai” in aiBANK stands for Arab Investment, rather than Artificial Intelligence. However, we are currently looking at re-branding options to align the bank’s name with its new growth phase and future strategy.

How is EFG Holding utilizing technology to personalize the user experience (UX) across its three verticals and various contact points? This includes improving communication with clients, ensuring complete satisfaction with products and response time, enabling contactless journeys and more.

Technology is a key driver of our growth as a firm and the main consumer of our annual capital expenditure budget. User experience is becoming paramount in what we do, not just on relatively newly launched products like valU but also on the more traditional ones like our securities brokerage, where we upgraded our online trading app, EFG Hermes One, to cater to the needs of our clients who want to trade the regional markets through us or the international markets through our partner Saxobank. The new SME company will bring another tech-based product to our clients in that segment. Ultimately, I hope that one day EFG will become a super app where retail or institutional clients can perform all their financial activities. Today, we have all the physical components in our group, but the next phase should see us harnessing technology to bring everything together in one seamless experience for our clients.

Karim Awad, the group CEO & chairman of the executive committee, EFG Holding

Institutional structures drive crypto adoption and store of value

By Damian Bunce

The cryptocurrency industry has overturned convention. A younger generation of retail (non-professional) traders and technologists have defined a product, market structure and a need for this new asset – and it has caught the world’s attention. The institutional community is also paying close attention, as are the regulators. Much like the evolution of equity market structures over the past two decades, the crypto market requires a significant restructuring to establish itself as a mainstream investment product. There are numerous challenges on its path to universal adoption, but two prominent criticisms it faces today are its perceived lack of a reliable “store of value” and its association with illicit activities aimed at circumventing regulations.

The “store of value” argument is very subjective – although Bitcoin lacks physical collateral like gold or fiat currency, its value is inherently tied to the strength of its holders. If the majority of holders are younger, tech-savvy individuals with limited financial resources, they are more likely to sell the asset swiftly during a downturn, causing its price to plummet further.

Conversely, institutional asset managers and pension funds, responsible for managing trillions of dollars, allocate a small percentage of their portfolios to Bitcoin for diversification purposes, much like they do with other assets such as gold, private equity, and real estate. These institutional investors do not hastily sell their holdings at the first sign of trouble, as they can afford to hold onto the asset at its buying price, thus

establishing a store of value, creating a natural floor for the product that can withstand market downturns. As more longterm institutional investment flows into the asset, its foundations strengthen, further solidifying its store of value. Bitcoin’s limited supply also contributes significantly to its valuation. The concern that crypto is used to conduct illegal activities is, of course, indubitable, and will persist as long as regulation remains weak, disjointed and confused. However, it is common for new industries to face challenges from bad actors, ultimately leading to improvements in their offerings and assisting regulators and law enforcement agencies in devising corrective measures.

Crypto is at this stage of its evolution. While fiat currencies still face their fair share of illegal activities, they benefit from robust regulations and extensive collaboration within the global banking sector, ensuring stronger safeguards. In contrast, crypto was initially developed with the interests of retail traders and investors in mind and has only recently gained approval from institutional markets. On the other hand, equity markets were originally designed by and for institutions, with accessibility for retail investors being introduced in later years.

During the early days of equity markets, trading was predominantly limited to a select group of operators, primarily conducted through “open outcry” market makers. Over time, exchanges emerged, facilitating trading among institutions. Subsequently, institutions established phonebased stock broking firms, granting retail investors the

opportunity to trade equities via authorized brokers. The late 90s witnessed a rapid evolution with the emergence of electronic equity trading companies like Instinet (now owned by Nomura).

The advent of Microsoft Windows-based platforms enabled individuals to conveniently trade stocks from the comfort of their home computers. By the turn of the century, the trading process became even more streamlined and inclusive, with the ability to trade equities and various asset classes from anywhere in the world, often at no cost, even via mobile devices such as phones or Apple watches. Foreign exchange (Forex or FX) trading has followed a trajectory similar to equities. Initially conducted over the phone between banks, it gradually transitioned to electronic trading exclusively among banks. Eventually, a version with wider spreads emerged, targeting retail traders. Today the global FX market boasts a daily trading volume of around $7.5 trillion, with approximately $1 trillion contributed by retail trades. Spreads in this market are exceptionally tight. The success and widespread adoption of Foreign Exchange trading can be attributed to its institutional origins. As it evolved from within institutions to cater to retail traders, regulations were ingrained into the system from the outset. Consequently, most issues were resolved between institutions long before the market was made accessible to retail traders.

In contrast, cryptocurrencies originated in the retail sector, which explains the persistent concerns surrounding weak regulation. Without institutional scaffolding, cryptocurrencies simply drew inspiration from the frontends and trading screens of other asset classes, without a comprehensive understanding of the infrastructure’s fundamental requirements.

The labyrinthine structure of the now-bankrupt cryptocurrency exchange FTX, where a single entity controlled all aspects of the client journey including the platform, custody, coin currency, lending services, and liquidity, would not have been allowed to flourish in today’s equities markets.

Although it appeared to offer an appealing end-to-end business proposition for the exchange, it posed significant risks for clients due to the inability to monitor and ensure the absence of conflicts of interest. The collapse of FTX last year had far-reaching consequences and is likely connected to the ongoing legal actions taken by the U.S. Securities and Exchange Commission against Coinbase and Binance. For the crypto trading market to thrive, its market structure needs to emulate institutional frameworks. This will incentivize institutional participants to enter the market and allocate tangible capital to its assets. The introduction of EDX markets, a new non-custodial digital exchange supported by prominent institutional market makers such as Citadel and Virtu, represents a significant step in the right direction.

Blackrock’s application for a Bitcoin Spot ETF is exactly the sort of news that can propel the cryptocurrency market forward. Considering that approximately 20 percent of Americans currently hold crypto, the introduction of such an

ETF could play a crucial role in triggering mass adoption. Laser Digital, the crypto investment arm of Nomura, recently conducted a poll involving 300 institutions with a combined asset value of $4.9 trillion. The results were overwhelmingly positive, with 96 percent of participants recognizing crypto as a valuable diversification measure and 82 percent expressing optimism about its performance in the upcoming 12 months.

Today, regulatory bodies, especially in the United States, find themselves in a reactive position when dealing with the structural implications of cryptocurrencies. It would be more advantageous for them to proactively listen to and promptly address the concerns of the institutional community. This approach would yield immediate results, as institutional support, akin to that enjoyed by equities and foreign exchange, would significantly boost trust and interest in the crypto market.

We are already starting to see a few key crypto companies taking the institutional route. Typically led by executives with backgrounds in traditional finance, these firms possess a deep understanding of institutional market structures. By offering specialized services like trading and matching, separate from custody of assets, crypto trading venues and infrastructure providers like Finery Markets and Crossover Markets are actively facilitating institutional adoption. Meanwhile, companies such as London-based Copper. co and Komainu specialize in crypto storage and custody, deliberately avoiding involvement in trading services. These enterprises recognize that domain-specific expertise is crucial for fortifying the crypto industry and fostering institutional adoption.

Damian Bunce, chief customer officer, Exness

Visa spearheads Egypt's digital transformation toward a cashless society Company puts financial inclusion at center of growth strategy

In an insightful interview with Economy Middle East, Leila Serhan, the senior vice president and group country manager for North Africa, Levant and Pakistan at Visa, shares exciting updates about Visa’s expanding presence in Egypt amid a rapidly evolving digital landscape. With a keen focus on innovation, Visa has recently achieved remarkable growth by expanding operations in Africa by an impressive 50 percent, and as a result their Egypt office has tripled in size. “Visa has always strived to be at the forefront of innovation in its aim to build the largest, most dynamic, global and open network of technology, partnerships and people,” Serhan says.

Egypt’s thriving fintech ecosystem

Egypt, a vibrant and promising market in the North Africa, Levant, and Pakistan region, presents an exciting landscape for start-ups, a flourishing fintech sector, and a tech-savvy young population. However, the nation also faces economic challenges, underscoring the urgency for financial inclusion and a rapid transition toward a digital society.

Serhan firmly believes in the potential of transforming Egypt’s cash-driven economy into a cashless society that embraces financial inclusion. In particular, Visa envisions a future where a digital economy is within reach for all, with a particular emphasis on empowering underserved segments of the population.

How is Visa innovating

In this ever-expanding era of digital banking and cashless transactions, Visa takes the lead in shaping the future of commerce and revolutionizing the way money moves, and their digital solutions and innovative offerings have become instrumental in driving this transformative trend. With solutions such as Click to Pay, Tap to Phone, and the Visa Acceptance Cloud, Visa has successfully redefined payment technologies across various sectors, including urban transit, unattended retail, and mobile phones. Collaborating with 50 fintech providers in the NALP region alone, Visa empowers these providers to offer seamless payment experiences to their customers.

“With the aim of advancing resilient, innovative and inclusive economies across the African continent, Visa recently pledged to invest $1 billion by 2027. This investment will focus on strengthening the payment ecosystem through new innovations and technologies, supporting digitization of economies, and investing in upskilling, talent development and capacity building,” Serhan says. For Visa, innovation is a driving force for growth, and in Egypt’s current economic climate, growth is key.

Collaborations are fundamental

Recognizing the pivotal role of education in the transition toward a cashless society, Visa has placed a strong emphasis on fostering digital literacy for all. To bring this vision to life, Visa has joined forces with INJAZ Egypt to create impactful programs such as “Personal Economics” and the “San3ety Schools” that would offer young girls access to necessary financial skills. Visa is also collaborating with partners to advance financial literacy education in several languages, including the first Arabic version of Visa’s video-series, “Practical Money Skills,” released in Egypt and Morocco. As part of their commitment to nurturing inclusivity and contributing to the country’s future growth, Visa launched the global “She’s Next” campaign in Egypt during 2022, empowering local women entrepreneurs and small and medium enterprise owners with funding, business coaching and networking opportunities. Following the success of the 2022 program, Visa is pleased to bring back “She’s Next” to Egypt shortly. Through extensive collaborations, Visa promotes financial literacy, and ultimately, financial inclusion. In Egypt, Visa’s strategy aligns with the efforts of the Egyptian government and the Central Bank of Egypt in providing seamless and secure transactions between financial institutions, merchants and consumers.

Financial inclusion on the rise

Tech-based disruption is not isolated from awareness and education. Recognizing this, Visa collaborated with Meeza to educate consumers on the importance of security in their everyday online payments through

the Stay Secure initiative. Egypt’s financial inclusion rate reached an impressive 64.8 percent by the end of last year, a milestone that Serhan attributes to the ongoing advancements in digital banking and payment systems. “We have expanded our efforts to include digital banks, wallets, fintech companies, governmental and nongovernmental institutions. Low-cost acceptance solutions such as QR and Tap to Phone are game-changing for SMEs to expand their reach,” she says. As a pioneering payment company in the market, Visa recognizes the significant role of fintech companies and other payment innovators in making digital payments accessible to both consumers and businesses. In 2022, Visa collaborated with Fintech Egypt and the Central Bank of Egypt to launch the Visa Everywhere Initiative, providing fintech and payment startups with opportunities to connect with key stakeholders, and fostering growth and collaboration within the fintech industry. By empowering fintechs and facilitating partnerships with banks, Visa aligns with its ‘network of networks’ strategy, which aims to bring innovation, trust, reliability, and industry standards to the broader payments ecosystem.

Leila Serhan, country manager & senior vice president NALP, Visa Group

Navigating the future of jobs in the Gulf and beyond

By Elselot Hasselaar

Global supply chains – and the countries at their center – find themselves at a crossroad in a rapidly changing world as they face mounting geopolitical volatility, economic uncertainty, and high inflation and commodity prices.

At the same time, the confluence of the Fourth Industrial Revolution, shifting worker and consumer expectations, and the urgent need for a more sustainable economy are triggering significant changes in the labor market and propelling demand for novel occupations and skills.

Globally, around 23 percent of jobs are expected to change in the next five years, with 69 million new jobs created and 83 million

eliminated. In the MENA region a slight net increase is expected in the same period, approximately 21 percent of jobs will undergo changes, with 11 percent experiencing growth and 10 percent facing decline.

While the world is at a critical juncture of disruptive change, this period also offers an opportunity for policymakers to shape these transformations and ensure that they translate into better jobs and opportunities for all.

The World Economic Forum’s Future of Jobs Report 2023 sheds light on the jobs and skills outlook. Its findings can help prepare leaders for the disruptions and opportunities to come, empowering them to navigate these geopolitical, environmental and technological transitions.

Shifting global supply chains

Geopolitical tensions are introducing uncertainty and volatility to global supply chains. Both the United Arab Emirates and Saudi Arabia are among the top 10 countries that expect supply shortages and related rising input costs to transform their economies. Some 80 percent and 85 percent of respondents in the two nations respectively expect these forces to drive business transformation –compared to 69 percent globally – and a net 25 percent and 10 percent expect these trends to drive job decline. Nevertheless, the reconfiguration of global supply chains can present an opportunity. The UAE tops the global rankings of countries that expect the localization of supply chains to drive business transformation, with 77 percent of respondents expecting this to be the case compared to 60 percent globally, while a net 50 percent expect this to drive job creation.

The green transition

The urgent need to shift toward a carbon-neutral and more sustainable global economy paints a comparable picture of challenges and opportunities. Leading producers of fossil fuels may see their traditional industries disrupted and substantial investments will be needed to adapt to these changes and further diversify their economies.

At the same time, investments in the green transition, as well as increasing consumer interest in sustainability, will create new opportunities. Businesses expect roles from renewable energy to sustainability specialists and environmental protection professionals to be in high demand. A case in point is Saudi Arabia, the world’s second leading oil producer, where investments to facilitate the green transition are expected to increase jobs in the Kingdom, with a net 65 percent of businesses expecting it to have a positive impact on jobs. In the UAE, a broader application of ESG standards is expected to create jobs, with a net 52 percent of businesses expecting it will increase jobs.

The rise of new technologies

The rise of new technologies may be the most transformative driver of workforce change. Tech innovations are expected to create structural churn in the job market, with a quarter of companies globally expecting this to drive job decline and more than half expecting to see job growth. While expectations of the replacement of physical jobs by machines have slowed, tasks requiring traits with a comparative advantage for humans – such as reasoning, communication and coordination – now suddenly seem more automatable given the growth of artificial intelligence. In the future, interpersonal skills and life-long learning will become even more important.

In this rapidly evolving landscape, several Gulf Cooperation Council states are positioning themselves to harness the potential of AI and big data. Saudi Arabia leads the way, with 52 percent of businesses surveyed already focusing their reskilling on AI and big data, while the UAE and Bahrain also exceed the global average at 43 percent and 45 percent. In addition, all three countries anticipate that AI adoption will drive substantial job growth, surpassing the global average expectation.

Changing skills for a changing world

In this rapidly evolving global environment, acquiring new skills will be imperative for individuals to navigate the shifting job market. Globally, we found that on average almost half of an individual’s skills will have to change in the coming years.

Investing in comprehensive re-skilling or upskilling programs today will not only equip workers with the tools needed for emerging job opportunities but also enable these countries to thrive in the sustainable and diverse economies of tomorrow.

According to our findings, GCC countries rate skills gaps in the local labor market – UAE at 74 percent, Saudi Arabia at 68 percent and Bahrain at 66 percent – as the top barrier to industry transformation by a significantly higher proportion than the global average of 60 percent. All three countries rate funding for reskilling and upskilling as the top policy practice to increase talent availability.

Adapting to these changing demands will be crucial for individuals and economies alike. Countries that embrace the potential of emerging technologies and the green transition, while prioritizing continuous learning of their workforces, can position themselves at the forefront of the global workforce transformation, leading to sustained growth and prosperity in the uncertain years to come.

Elselot Hasselaar, head of mission on work, wages and job creation, the World Economic Forum

Metaverse looks set to reshape business and society by 2040-2030

Digital space teases new existence where virtual & reality converge

By Hadi Khatib

Imagine a future in which the boundaries between the real and the virtual blur so dramatically that we find ourselves enthralled by the wonders of the metaverse, oblivious to the crises that once consumed our attention. Picture a world where the threats of pandemics and climate change fade into the background as we immerse ourselves in serene and flawlessly constructed digital realms. But what if this digital obsession extends far beyond mere escapism? What if our desire for physical possessions diminishes drastically as we increasingly inhabit virtual spaces, rendering realworld objects obsolete?

And what if, in this metaverse-driven future, we witness the birth of hybrid species – creations born from the fusion of genetic engineering, artificial intelligence, cryptocurrencies and metaverse avatars? The future of the metaverse holds promises that extend far beyond our current comprehension. We will journey through the cosmos, even at the subatomic level. Extraterrestrial trips on virtual planetary voyages will become a reality, transcending the limitations of time and space. We may even embark on virtual journeys within the human body, the minds of animals or even machines. Now, let us venture forward and catch a glimpse of the metaverse as envisioned by experts for the years 2030 and 2040.

Metaverse growth

Enter the realm of the metaverse. Is it a gaming paradise, a futuristic marketplace, or a virtual training ground? Some see it as the internet’s next evolutionary phase, Web3, while others regard it as a gateway to uncharted digital territories. As we ponder the impact of the metaverse on our future, it remains shrouded in mystery. Yet, one thing is certain: the metaverse is on the rise. According to Citi’s projections, this amalgamation of physical and digital realms could burgeon into a staggering $8 trillion to $13 trillion economy by 2030, captivating a staggering 5 billion users worldwide. Imagine, five-eighths of the global population venturing into this fantastical domain. However, some take a more measured stance, envisioning a still significant 500 million users by 2040.

The metaverse by 2030

In the near future, gaming is poised to be the driving force behind the metaverse, thanks to its immersive and multiplayer capabilities that transcend device limitations. However, the metaverse’s potential extends far beyond gaming. It is set to become a 24/7 platform encompassing commerce, media, healthcare, education, manufacturing and more. Enterprises will collaborate, network, hold events and conferences, conduct training sessions, and even design and engineer products within this realm.

The integration of AI will revolutionize user experiences within the metaverse. Generative AI and AutoGPT have already demonstrated their ability to self-generate virtual worlds with minimal input data. As the metaverse evolves, decentralized technologies like Blockchain will ensure heightened security and transparency. However, the emergence of cryptocurrencies, central bank digital currencies (CBDCs), and stablecoins may invite scrutiny from global regulators, raising concerns related to antimoney laundering and property rights. Additionally, the metaverse will prompt debates surrounding health and privacy issues as we approach 2030.

A significant surge in digital goods sales is expected, with a strong emphasis on personalized customer experiences within the immersive XR environment. The concept of virtual real estate and virtual identities (Avatars) will gain substantial value and be regarded as genuine assets.

The lines between the virtual and real worlds will blur. In fact, by 2030, some estimates suggest that at least 50 percent of our leisure time will be dedicated to these transformative Internet platforms.

Infrastructure investments

The content streaming environment of the metaverse will require significantly higher computational efficiency by 2030, at least 1,000 times greater than today’s standards, according to a statement by Intel’s Senior Vice-President Raja Koduri in late 2022. This will require investments in computing power, data storage and consumer hardware.

The metaverse in 2040

Can the metaverse become one of the most significant platforms for wealth and value creation that we have ever designed by 2040? The Pew Research Center and Elon University’s Imagining the Internet Center sought the perspectives of numerous technology experts regarding the trajectory and impact of the metaverse by 2040.

A considerable number of experts believe that by 2040, extended reality (XR) – encompassing augmented reality and mixed reality tools – will play a more prominent role in people’s daily lives compared to fully immersive virtual reality worlds.

Some experts, however, express concerns that the future metaverse may limit human potential by confining individuals to pre-programmed capacities within these platforms. They worry about the rise of addiction to fantasy experiences, leading to increased isolation for many individuals.

Laurence Lannom, vice-president at the Corporation for National Research Initiatives, suggests that virtual entities could be used for practicing complex physical tasks such as surgery.

Eric Burger, a computer science faculty member at

Georgetown University, holds a more pessimistic view, saying: “The use cases for fully immersive experiences have a small niche that, for economic reasons, is unlikely to grow into a global phenomenon for decades to come.”

Numerous experts predict that by 2035 the augmented metaverse will supplant mobile phones as the primary gateway to digital content. Many people are expected to don AR wearables throughout the day, similar to current mobile phone usage.

According to some, the metaverse can achieve success if it ensures decentralized data ownership, preventing manipulation and weaponization of personal data that could consume us as individuals.

Metaverse for business

The metaverse has the potential to revolutionize various aspects of business, including employee engagement, customer experiences, omnichannel sales and marketing, and product innovation.

According to McKinsey, there is significant interest from large technology companies, venture capital firms, private equity investors, start-ups and established brands in seizing the opportunities presented by the metaverse. In fact, these entities allocated more than $120 billion toward metaverse investments in the just first five months of 2022, surpassing the $57 billion invested throughout 2021. Notably, Microsoft’s planned acquisition of Activision for $69 billion has played a major role in driving this investment surge.

A recent survey conducted by McKinsey revealed that 60 percent of consumers who have experienced the early versions of the metaverse express excitement about transitioning their everyday activities to this immersive digital realm. Among the top factors contributing to this enthusiasm are networking opportunities and the potential to explore diverse digital worlds.

McKinsey, a global management consultancy firm, predicts that the metaverse could have a profound impact on various industries by 2030. For instance, it is estimated to generate a market impact of approximately $2 trillion to $2.6 trillion on e-commerce. Additionally, the academic virtual learning market could experience an impact ranging from $180 billion to $270 billion, while the advertising market could see a shift of $144 billion to $206 billion. Furthermore, the gaming market may witness an impact of $108 billion to $125 billion. However, there are challenges that need to be addressed to fully realize the potential of the metaverse. The workforce will require reskilling and upskilling to stay competitive in a global talent market and attract investment. Moreover, the metaverse must prioritize ethical considerations and strive to provide safe and inclusive experiences. Guidelines pertaining to data privacy, security, and regulatory compliance will also be crucial for the metaverse’s success.

DIAC emerges as world class dispute resolution center

New tech becomes central to arbitration proceedings

H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, and Deputy Prime Minister and Minister of Finance of the UAE, reviewed on June 8 the results of Dubai International Arbitration Center’s 2022 Annual Report. The largest alternative dispute resolution center in the Middle East has achieved a significant milestone in its transformative journey to provide a robust, world-class legal infrastructure that strengthens business confidence, in accordance with the vision of H.H. Sheikh Mohammed bin Rashid Al Maktoum. Key accomplishments in 2022 included the registration of 340 new cases, marking a 23 percent increase from 2021. The total value of registered cases reached AED 11.2 billion in 2022. Among these cases, the construction sector accounted for the largest proportion at 49 percent, followed by the commercial sector at 27 percent, and the real estate sector at 16 percent.

“Arbitration is a cornerstone of modern global commerce, providing an efficient, private and tailored dispute resolution mechanism. In comparison to litigation, arbitration is often quicker, more cost-effective, and allows businesses to choose their adjudicators,” H.E. Dr. Tariq Humaid Al Tayer, chairman of the board at DIAC, told Economy Middle East during an exclusive interview. “This flexibility is particularly appealing in a vibrant and cosmopolitan business hub like Dubai,” he added.

DIAC plays a crucial role in promoting and facilitating arbitration. Through awareness programs, collaborations and the implementation of updated Arbitration Rules that reflect global best practices, the center strives to advocate for the advantages of arbitration. The continuous enhancements to arbitration processes align with Dubai’s ambition of becoming a global hub for dispute resolution.

Changes made at DIAC

Significant changes have shaped DIAC over the past two years.

“Our new Arbitration Rules, which became effective in March 2022, embrace modern communication means and technology, improving the efficiency of proceedings, and catering to the complexities of an interconnected business world,” Al Tayer said.

“The reform of the DIAC Arbitration Court and the appointment of our first Emirati woman executive director, Jehad Abdulrazzaq Kazim, are further testament to our dynamic approach. With a reinforced casework team of global experts, we are better equipped to handle cases effectively and efficiently,” he added. Looking ahead, DIAC aims to establish itself as a leading global arbitration institution.

By continuously innovating and aligning its practices with international standards, DIAC strives to maintain its reputation as a reliable platform for dispute resolution.

“Our upcoming Metaverse platform for dispute resolution represents our commitment to harnessing technology and delivering more accessible and efficient services,” Al Tayer said.

Adjudicating disputes impartially and effectively

The reform of the DIAC Arbitration Court stands as a remarkable accomplishment. “With a panel consisting of 13 distinguished arbitration experts from 11 different nationalities, we embrace diversity and global representation. Each member brings a unique perspective and extensive experience in various sectors and regions, greatly enhancing our ability to handle a wide range of disputes,” Al Tayer said.

“In today’s interconnected business world, disputes often transcend cultural and national boundaries. The diverse expertise of our court members provides a nuanced understanding of different legal systems, customs, and business

practices. This diversity empowers us to adjudicate disputes more effectively, ensuring fairness and fostering trust in our institution,” the minister added.

DIAC’s achievements

In 2022, DIAC experienced substantial growth, registering 340 cases with a total value surpassing AED 11.2 billion, equivalent to $3.1 billion.

“This achievement underscores our growth and firmly establishes us as the leading arbitral institution in the region. Our cases spanned various industries and sectors, involving parties from 48 different countries. This highlights our international reach, reflecting the trust that businesses worldwide place in our services,” Al Tayer said.

Strategic plans for DIAC

DIAC’s strategic plans revolve around continuously refining services and rules to meet and exceed international best practices.

“Jehad Abdulrazzaq Kazim, our new executive director, will play a crucial role in guiding DIAC’s strategic direction and ensuring our services remain aligned with the highest international standards. Furthermore,

our strengthened casework team, comprised of diverse international experts, will greatly enhance our arbitration services,” Al Tayer said. “Embracing innovation is another essential facet of our strategy. We recently announced the launch of our Metaverse for dispute resolution. This revolutionary platform exemplifies our commitment to leveraging technology and promising more accessible and efficient services to our users,” Al Tayer added.

DIAC and AI

DIAC is committed to leveraging the power of technology to streamline arbitration processes and improve efficiency. The metaverse platform for dispute resolution represents a significant stride in this direction. “We recognize the vast potential of artificial intelligence in improving our services, and are exploring ways to integrate AI into our processes. While we can’t divulge specifics at this stage, our commitment to staying at the forefront of technological advancements is unwavering. As we continue to innovate, we aim to offer the most advanced and efficient dispute resolution services to our users,” Al Tayer said.

Egypt's renewable energy sector draws massive investment

Solar and wind energy capacity poised to surpass 5 gigawatts by 2025

By Kate Dourian

Egypt’s renewable energy sector shines brightly amid an otherwise bleak economic outlook for the country. Despite grappling with persistently high inflation, a foreign currency shortage, and a hefty import bill, Cairo has successfully attracted significant foreign investments, both institutional and bilateral, into its burgeoning clean energy industry. As new projects progress towards implementation, Egypt’s solar and wind energy capacity is poised to surpass 5 gigawatts by 2025.

Egypt’s offshore energy sector is fast

becoming an East Mediterranean gas hub, but its gas output has declined, and it faces challenges in meeting growing domestic power demand. Access to Israeli gas was crucial for resuming liquefied natural gas (LNG) exports, highlighting the need to expand renewable energy capacity. This expansion would alleviate domestic consumption and enable profitable LNG exports, enhancing Egypt’s financial outlook. Egypt leads Africa in renewable energy adoption, and this trend is set to continue with ongoing construction projects. According to

the International Renewable Energy Agency (IRENA), Egypt, Morocco, and South Africa possess the largest share of renewable energy capacity on the continent. Egypt’s wind capacity alone reached an impressive 1.64 gigawatts by the end of 2022, surpassing the entire Middle East region. The Gulf of Suez, with its wind speeds exceeding 10 meters per second, has been instrumental in powering turbines and facilitating this achievement. In total, Egypt’s renewable energy capacity stood at 6.3 gigawatts by the close of 2022, with hydropower contributing 2.83

gigawatts, as per IRENA’s report. Infinity Power, a joint venture between Masdar and Egypt’s Infinity, and Hassan Allam Utilities has achieved a significant milestone in capacity expansion. They have signed a land agreement with Egypt for the construction of a massive $10 billion wind farm with a capacity of 10 gigawatts that is set to become Africa’s largest and one of the world’s largest projects of its kind. The surge in renewable energy ambitions in the Middle East and North Africa coincided with declining regional wind auction prices. The International Energy Agency (IEA) reports that onshore wind auction costs in the Middle East dropped from $120/MWh in 2019 to $28/MWh in 2022, surpassing the European average of $36/MWh.

Egypt’s Minister of Electricity and Renewable Energy, Mohamed Shaker Al-Markabi, highlighted the significance of the new wind farm during the signing ceremony. It will greatly optimize Egypt’s renewable energy utilization, aligning with the country’s strategy to achieve 42 percent of its energy mix from renewables by 2030, five years ahead of schedule.

The proposed wind farm aims to generate 47,790 gigawatt hours of clean energy annually, resulting in a 9 percent reduction in Egypt’s greenhouse gas emissions. Additionally, the project is expected to save $5 billion per year in natural gas costs, as stated by the collaborating companies. The momentum toward decarbonization accelerated leading up to the COP27 climate summit, with numerous deals announced before and after the December 2022 meeting held in Egypt. These projects are progressing swiftly, and Cairo’s immediate renewable energy plans signal a capacity of 5 gigawatts by 2025, surpassing the current 3.15 gigawatts (excluding hydropower). Construction for the 500-megawatt ‘Red Sea Wind Energy’ wind farm, located on Egypt’s Gulf of Suez, will begin later this year. Alongside two other projects that achieved

financial close in 2022, these initiatives will have a combined capacity of 1.5 gigawatts, requiring a $1.7 billion investment, and are expected to be operational by the mid-2020s.

Private Saudi power firm Acwa secured $123 million in financing on April 25 for a 200-megawatt solar PV plant in southern Egypt’s Kom Ombo. The project, funded by organizations such as the Green Climate Fund, African Development Bank, Arab Bank, OPEC Fund for International Development, and European Bank for Reconstruction and Development (EBRD), is scheduled to begin operations in 2024.

The EBRD has played a key role in financing Egypt’s renewable energy projects, including the massive 1.465-gigawatt Benban Solar Park. Initial funding of $500 million was secured from Germany and the United States at COP27. Through Egypt’s Nexus of Water, Food, and Energy (NWFE) Program, the EBRD expects to attract at least $10 billion in private investments, leading to the addition of 10 gigawatts of solar and wind capacity by 2028. The program also aims to retire 5 gigawatts of inefficient fossil-fuel capacity by 2025.

Egypt’s current installed solar photovoltaic capacity stands at an estimated 1.724 gigawatts, and an additional 2.26 gigawatts of solar capacity is expected by 2025. Egypt is diversifying its energy portfolio through green hydrogen production, opening up new opportunities for domestic use and export. Multiple Memoranda of Understanding for green hydrogen projects were signed prior to and during COP27. A consortium comprising Masdar, Infinity Power, and Hassan Allam Utilities entered a framework agreement with leading Egyptian state-backed organizations to develop a 2-gigawatt green hydrogen project in the Suez Canal Economic Zone. Initial production is slated for 2026, with a target of achieving 4 gigawatts of green hydrogen capacity by 2030, resulting in an annual output of 480,000 tons.

Despite Egypt’s thriving renewable energy sector, it’s oil and gas production has declined. However, recent onshore discoveries may reverse this trend. Ministry of Oil figures indicate a 7 percent year-onyear decline in gas output in April, primarily due to water incursion, including at the significant offshore Zohr field operated by Italy’s Eni, which initially held great promise upon its discovery in 2013. Record imports of 800 million cubic feet per day from Israel have enabled Egypt to resume liquefied natural gas (LNG) exports from its Mediterranean terminals. The Ukraine war prompted the EU to sign a memorandum of understanding with Egypt and Israel to facilitate Israel’s gas exports to Europe through Egypt. This was influenced by the EU’s decision to phase out Russian gas imports by 2030. Economically, the Ukraine crisis revived Cairo’s LNG export potential, enabling it to benefit from higher LNG demand. This surge in demand, coupled with increased traffic through the Suez Canal from Russian oil, Gulf Arab region LNG, and US LNG, resulted in record revenues of $7.9 billion in 2022, a 25 percent year-onyear increase.

Offshore asset integration in the East Mediterranean is also under consideration as new reserves are developed near Cyprus. U.S. energy major Chevron, the operator of Cyprus’ Aphrodite gas field, has submitted an updated development plan that includes potential connections to Egypt’s existing processing and production facilities. Egypt’s gas export infrastructure and pipeline links to Israel, Jordan and Lebanon provide it with an advantage, positioning the country as a central processing hub for Mediterranean gas While its two gas liquefaction terminals have resumed operations, they are currently operating below capacity due to previous gas supply constraints. To realize its ambition of becoming a regional gas hub, Egypt needs to secure additional gas supplies.

Egypt battles for growth, economic stability amid water shortages

Costly development ambitions face multiple challenges

By Hadi Khatib

The year 2023 has been quite challenging for economies worldwide. Many countries have experienced significant setbacks, including rising inflation, sluggish growth and the devastating Russian-Ukraine war, which has disrupted global supply chains and caused food shortages. In addition, the United States has faced bank closures, debt ceiling issues and the looming threat of a recession.

While some regions, like the Gulf Cooperation Council countries, have managed to mitigate the impact through sound economic policies and high oil prices, Egypt has not been so fortunate. The country has been grappling with a high inflation rate, which reached 32.7 percent in May. As a result, Egypt finds itself in a delicate balancing act, aiming to halt the devaluation of its currency while aggressively listing

publicly owned companies to improve its fiscal position and meet the requirements of a 46-month $3 billion loan arrangement with the International Monetary Fund.

The country is also dealing with water shortages and, to make matters worse, Egypt and Ethiopia have been at loggerheads in a years-long dispute over the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile, a tributary of the Nile River, over operation, electricity production and irrigation. Undeterred despite these adversities, Egypt is currently undertaking two major projects: the Delta project and the Green River. The latter is part of a $58 billion initiative covering an area of 714 square kilometers in the desert known as the New Administrative City, which aims to drive extensive development and growth in the region.

Water is life for Egypt

Egypt has recently implemented a significant plan known as the National Water Resources Plan (NWRP 2037), with a budget of $50 billion. This plan aims to optimize the utilization of the country’s water resources, but it is currently facing major challenges due to the devaluation of the local currency.

In order to safeguard the water and food security of the nation, the Ministry of Water Resources and Irrigation in Egypt is constructing the longest man-made artificial river, which will serve as a crucial water source for irrigating and cultivating a little over 1 million acres within the New Delta project.

Egypt is grappling with water scarcity, with a per capita water share of less than 560 cubic meters per year. The artificial river, spanning approximately 114 kilometers, is expected to generate approximately 10 million cubic meters of water. Twelve 12 stations will be constructed along its to facilitate the transportation of agricultural drainage water from the western region of the Nile River to the primary elHammam station. The water will be treated at el-Hammam station and subsequently used for irrigation purposes, at an estimated cost of around $2 billion.

Although the Nile River meets 97 percent of the country’s water requirements, it is insufficient for agricultural expansion projects. Consequently, Egypt has initiated various wastewater treatment projects. For instance, the Bahr el-Baqar project, which costs approximately $740 million, aims to reclaim around 473,000 acres of land. Similarly, the al-Mahsama water reclamation plant, with a cost of $113 million, transports nearly 1 million cubic meters of treated wastewater a day to Sinai.

These projects have become essential as the Nile River can no longer adequately support the growing population, which has surpassed 100 million people. It is estimated that Egypt’s population is increasing at a rate of one person every 19 seconds, necessitating approximately 114 billion cubic meters of water annually.

To address this challenge, Egypt claims to be working on improving irrigation methods and implementing efficient farming techniques. Furthermore, the country is taking steps to restrict the cultivation of water-intensive crops like rice.

Green River

In the newly constructed urban area of NAC, a remarkable collection of tall buildings will offer breathtaking views of the “Green River.” This remarkable belt of lakes and parks stretches across the desert and runs through the heart of the city, much like the Nile River flows through Cairo. The development is designed to accommodate over 46 residential districts, providing homes for a staggering 6.5 million people. Spanning an impressive 10,000 kilometers, the smart green city will boast an extensive network of streets, 2,000 educational institutions, 600 hospitals and clinics, a technology and innovation park, and a colossal theme park that will even dwarf Disneyland.

The Green River project was initiated in January 2019 and involves the creation of a 35-kilometer-long canal, connecting various neighborhoods within NAC. Interestingly, state media reported that the project will use water treatment plants within the city rather than relying on fresh water from the Nile.

Tatiana Antonelli Abella, co-chair of MENA Oceans Summit and founder of Goumbook, expressed skepticism about the Green River project’s ambition to construct an artificial system of interconnected rivers, lakes and gardens spanning 35 kilometers in the urban desert landscape.

“The source of the required water in this extremely waterstressed country remains unclear. Water poverty and water equality are serious social concerns in Egypt. Furthermore, the project appears to be pricey with the first phase estimated at $500 million, according to state media reporting in 2019, and will likely end up being much higher,” she said.

Developers eye "greener pastures" in sustainable properties

Green real estate on growth track as investors, homeowners embrace sustainability

By Anthon Garcia

Are property developers finding lucrative opportunities in sustainable real estate? There seems to be a growing trend among real estate companies in the GCC, and the broader Middle East and North Africa region to undertake projects that incorporate environmentally-friendly features.

Two years ago, Majid Al Futtaim signed a AED 5.5 billion credit facility that is linked to the retail behemoth’s ability to meet its environmental, social, and governance (ESG) targets. Similarly, Abu Dhabi’s Aldar entered into an agreement early last year that ensures all their owned and managed operating assets are powered by clean energy sources from the Emirates Water and Electricity Company for a period of up to five years.

In the UAE, other property developers have also managed to secure green financing, as adherence to

ESG principles gains traction not only in general business practices but particularly in the real estate sector. Shifting our focus to Egypt, the country attracted over $3.5 billion in foreign direct investment for renewable energy projects in 2021-2022 to help achieve its Net Zero emissions targets within the real estate sector. Notably, a substantial portion of this investment will be channeled into the National Social Housing Program, a large-scale initiative that exemplifies Egypt’s dedication to constructing sustainable buildings.

Experts view these initiatives as positive steps towards addressing the substantial carbon emissions generated by the global real estate sector. According to McKinsey’s ‘Climate Risk and the Opportunity for Real Estate’ report, these emissions account for a staggering 40% of the world’s total.

Dubai Reefs renewable energy

Putting things in perspective

“With the Dubai 2040 Urban Masterplan aiming to double the size of green areas by 105 percent and UAE Net Zero 2050 mandating the elimination of carbon emissions altogether, sustainable change is required from all industries, especially the real estate sector,” said Madhav Dhar, co-founder and COO of ZāZEN Properties. As a company dedicated to sustainable community living, ZāZEN Properties has taken a proactive approach, evident in their real estate projects such as ZāZEN One in Jumeirah Village Triangle.

“The UAE’s sustainable objectives, as well as the current and detrimental contributions of real estate toward global warming, were considered when planning and constructing ZāZEN One to spearhead positive change for the country and beyond. To achieve these ambitious targets and to provide a prosperous future for future residents of the planet, we believe that this is progress toward creating a sustainable reality for all,” Dhar added.

From a developer’s perspective, Dhar believes that property developments with sustainable features are a commercially viable undertaking, saying, “Interest in sustainable real estate is growing, with research showing that 80 percent of investors in the UAE’s real estate sector are now prioritizing sustainability. Moreover, a recent survey of 1,000 respondents found that 61 percent are ready to pay more for everyday products made from recycled materials, and 63 percent of people showed a willingness to pay a little more for properties that emit fewer carbon emissions.”

Homeowners and investors worldwide are increasingly showing a strong inclination toward “green real estate,” as indicated by a Knight Frank study conducted in October 2021 which revealed that 50 percent of prospective homebuyers prioritize energy efficiency when choosing a property. Additionally, factors like proximity to green spaces and good air quality, each accounting for 18 percent, have emerged as significant considerations for potential buyers. Moreover, in a subsequent report published one year later, the global real estate and commercial property consultancy highlighted that commercial buyers and tenants are also emphasizing the importance of sustainable office spaces as a crucial element in addressing climate change.

Sustainable developments going mainstream

Another sustainability-focused project Recently was announced by URB in Dubai, dubbed as the world’s largest ocean restoration project. Called Dubai Reefs, the development consists of a sustainable floating community for marine research, regeneration and ecotourism, and includes residential, hospitality, retail, educational and research facilities.

“URB is already engaged in various sustainable cities and sustainable developments,” said Baharash Bagherian, the company’s chief executive officer. “Yet for such projects to become mainstream, there needs to be more awareness of the commercial viability of such projects and the opportunities they provide for investors. This requires more knowledge sharing and more transparency during the

operational stage. The capital and operational costs are also another factor that will drive their growth as technology is becoming more efficient and attainable, thus the payback is becoming even shorter. Ultimately, the know-how becomes a key driver to promote growth of such projects in the sector.”

Way forward for green real estate

As the highly anticipated COP 28 approaches, set to be held in the UAE this November, the world’s attention is once again turning towards sustainability, and naturally the discussions surrounding sustainable real estate are taking center stage. According to Bagherian, if the real estate industry plans to push green development forward, stakeholders must bear in mind these three important things:

Resilience

We need more zero-mile utilities, ensuring that developments can meet the energy, water, and food requirements of their communities. By doing so, we can accelerate the transition towards clean energy and bolster food and water security.

Reinvention

We need to disrupt the real estate sector with innovation. It is imperative that we re-evaluate the types of assets we construct and the underlying businesses. Only by reinventing ourselves as individuals and organizations can we bring about rapid and meaningful change.

Mandatory auditing

The time has come to establish mandatory carbon audits for every development on an annual basis. Such audits will enhance transparency and provide essential data to support informed decision-making. In addition, this measure can incentivize more developments to prioritize sustainability, as future buyers will increasingly consider this metric.

ZāZEN One

Simplifying design complexity with practiced flair

Italian firm crafts and shapes the brand image and reputation of countless entities

During an interview with Economy Middle East, Santino Saguto, the general manager of Inarea, recalls his experiences as a leading consultant and sheds light on his connection with the Middle East. Furthermore, he shares valuable insights into the industry of design, identity, and imaging and delves into the unique challenges and opportunities within the field, offering a genuine glimpse into his professional world.

An industry leader

Saguto is not just your ordinary entrepreneur, but a true leader in the industry. Throughout his extensive career as a Global Business Executive, he has collaborated with renowned organizations such as Deloitte & Touche, Strategy&, and A.T. Kearney, leaving his mark in the business world through an experience spanning over 60 countries and multiple continents.

As a consultant, Saguto’s primary focus is on promoting startups across the MENA region. This involves establishing local teams and crafting compelling brand strategies and value propositions for both the startups themselves and their clients and partners. His ultimate

goal has always been “leading and being part of an international team of consultants and exceptional people driven by principles such as value, growth, ethics and collaboration.”

According to Saguto, the Middle East and MENA region offer an exciting opportunity for businesses due to its significant role in a highly interconnected world. “The UAE and MENA have always been the scene where globalization truly happens, as East meets with West, and North with South. I have been able to work with companies from Europe, China, India, Levant, South and North Africa, and the Americas in successfully developing new business models through local presence.” His experience has allowed him to witness the tangible

growth and expansion of these models at both regional and global levels. Moreover, Saguto’s enduring personal and professional relationships, nurtured over decades, continue to serve as a constant source of inspiration in this dynamic environment.

Simplifying complexity

Inarea, an Italian design firm established in 1980, has made a name for itself by embracing the concept of “design in the plural” and creating identity systems. Their expertise lies in crafting and shaping the brand image and reputation of various entities such as companies, institutions, retail spaces, cities, and even entire regions. With a comprehensive range of services including brand architecture, product design, packaging, editorial work, and video design, they cater to clients from diverse sectors and industries. Some notable brands they have collaborated with include AC Milan, Al Masa Group, Musei Vatican, New Cairo’s City of Arts and Culture, Pompeii, and Telecom Italia Mobile, among others.

Saguto, currently, the general manager of Inarea, is actively involved in expanding the firm’s commercial footprint and bolstering the local team. So, what drives the management approach at Inarea? Both in business and design, Saguto strongly believes in the power of simplicity. This philosophy is clearly evident in Inarea’s own brand identity, as their website boldly states, “Even the most complex identity can be designed with simplicity.”

He expands on this by saying, “The complexity of the world we live in has dramatically increased in the last two decades. The convergence of quantity, as a consequence of the industrial era, and complexity, introduced by digital, have given rise to a significant rethinking of design … Simplicity more easily wins the adhesion and consent of the public.” By simplifying complexity, Saguto and the entire design firm deliver meaningful and reputable services to clients, enabling them to establish a connection with design, even if they may not come from a design background.

Inarea specializes in the creation and management of identity systems, catering to a broad range of identities. They uplift the identities of organizations, encompassing businesses, groups, communities, and institutions. They also focus on the identities of places, whether they are on a large or small scale, such as cities, regions, workplaces, and both public and commercial spaces. Lastly, they delve into the identities of both tangible and intangible entities. Distinguishing themselves from typical design firms, Inarea works on crafting an identity that seamlessly bridges the physical and non-physical realms.

What constitutes identity?

Inarea stands out in the realm of branding trends by embracing the art of storytelling and offering experiential journeys, their adaptability serving as a key factor contributing to their longevity. When discussing their

process, Saguto sheds light on their primary objectives, which involve engaging both themselves and their clients in a holistic approach that blends imagination and method. Or as Saguto likes to call it, “design in the plural.” By leaning toward a human-centered approach, Inarea is able to support any organization at any point in its journey of growth.

Ultimately, the goal of the firm under Saguto, aims to do is to create customer experiences that are perfectly aligned with the current state of the economy ¬–connected, immersive and interactive. He emphasizes on the importance of inspiring and exciting the customer, just enough to ensure an ongoing dialogue with the brand. And according to Saguto, the key lies in “the ability to formulate the right message, to the right person, at the right time.”

Inarea’s human-centered approach, coupled with their commitment to immersion and imagination, allows them to bring a distinct perspective to the industry of design, identity and imaging. Their ability to revolve around the concept of simplicity in an increasingly complex world serves as a testament to their versatility and ingenuity.

Santino Saguto, general manager, Inarea

Time for a digital detox

Too much ‘connectivity’ can be hazardous to our wellbeing

By Anthon Garcia

Taking a step back from our digital realms and embracing a digital detox can be an incredibly fulfilling journey. In a world where our lives revolve around constant connectivity, it’s easy to become engulfed in the toxicity that accompanies it. However, by breaking free from this cycle, we open ourselves up to a multitude of rewarding experiences.

Nowadays, being plugged into the digital sphere has become the standard. It’s woven into the very fabric of our daily routines, from the moment we wake up to the familiar chime of our alarm clocks, to winding down at night with soothing melodies from our favorite music apps, designed to lull us into a peaceful sleep.

Digital lifestyle

In between, digital connectivity plays a major role. From constantly checking work emails and messages, to squeezing in some time to watch the latest viral videos during breaks or even while having a meal, our digital lifestyle offers us incredible advantages. However, it’s important to recognize that it can also introduce stress and anxiety into our lives, often without us realizing it.

A recent survey conducted by GSMA, a global organization dedicated to unifying the mobile ecosystem, in collaboration with Ericsson, shows that the United Arab Emirates and Saudi Arabia rank among the top 20 countries where smartphone users spend the most time engrossed in their devices. Specifically, the UAE and Saudi Arabia share the 11th spot in the overall rankings, with smartphone users in these countries spending an average of 4 hours and 35 minutes per day glued to their mobile screens. It’s worth mentioning that this figure excludes the time spent on other digital devices. Another report published by the Telecommunications and Digital Government Regulatory Authority (TDRA) in the UAE reveals that country’s residents spend approximately 8.36 hours online each day. This is nearly two hours more than the global average of 6.58 hours. When we consider that this amount of screen time is equivalent to the recommended hours for a restful night’s sleep, it becomes apparent just how significant this digital consumption is. Experts warn that excessive internet use can lead to unhealthy habits, such as neglecting proper eating and sleeping routines. Moreover, the anxiety stemming from managing numerous messages and the uncertainty of receiving timely replies can contribute to various mental and emotional health problems, including feelings of loneliness and depression.

Growing trend

Luckily, there is a solution to this “addiction,” as experts call it. It’s known as a digital detox, a process that allows individuals to disconnect from their digital devices, ranging from laptops to smartphones and tablets. Interestingly, this practice is gaining popularity as a growing trend.

A global survey conducted by Acxiom, a customer intelligence firm based in the U.K., revealed that 25 percent of respondents from various countries around the world opted for a digital detox last year. While this percentage may not seem significant when considering the total global population, it’s worth noting that just a few years ago, the concept of a digital detox was scarcely on people’s minds.

The popularity of digital detoxes has led to the emergence of dedicated destinations in many cities worldwide. In fact, Dubai has been recognized as the 8th best digital detox destination in a study conducted by InsureMyTrip earlier this year.

Sarah Webber, the marketing director at InsureMyTrip, shared her thoughts, saying: “In a world where we feel the need to stay connected at all times, it’s good to take a break now and again. The hope is this study will encourage travelers to take a digital break and enjoy all that these destinations have to offer.”

The study highlighted Dubai as a prominent digital detox destination due to the wide range of relaxation options and activities available to travelers and even local residents seeking to detach themselves from their screens.

Digital reprieve

Digital detox offers a respite from the constant tether to electronic devices and the negative consequences that come along with it. Numerous studies support the idea that taking a break from technology can enhance sleep quality, improve relationships, and uplift one’s mood.

During a digital detox, disconnecting from digital devices goes hand in hand with disengaging from social media activities. While these platforms serve as valuable tools for connecting with others, they can also have detrimental effects on mental health, potentially triggering anxiety and depression. Instances of bashing and bullying online can even have a profound impact on individuals, eroding their self-esteem.

Therefore, carving out time away from technology can prove to be a worthwhile endeavor. Contrary to popular misconceptions, disconnecting from the digital realm from time to time can lead to increased productivity. Moreover, it can foster deeper connections with loved ones, strengthening bonds with family and friends. Furthermore, engaging in a digital detox can enhance focus, enabling the brain to concentrate on tasks without the constant interruption of email and message notifications. By detaching from screens, individuals can alleviate the burden of information overload, reducing stress levels in the process. Too much information can overwhelm us, and taking a step back from screens allows for a healthier intake of information, free from the stress it often brings.

So, what can you do?

In Dubai, many hotels now provide enticing packages for a digital detox staycation, designed to create the perfect atmosphere and offer the necessary support for your detox journey. Should you find yourself overwhelmed by your digital lifestyle, seeking assistance from a professional psychologist is always an option worth considering.

Nevertheless, there are simpler ways to embark on a digital detox that you can explore on your own, including:

• Dedicate a specific day or time for disconnecting from your devices and stepping away from social media. Use this time to immerse yourself in activities that bring you joy, such as reading a book or watching a play, either alone or with loved ones.

• Explore fun and creative endeavors. Begin a new hobby or reignite your interest in an old one. Engage in sports, go bowling, or play tennis. Take a hike or venture into unexplored places. While it may be tempting to rely on Google Maps or capture every moment with photos, consider embracing the adventure of asking for traditional directions. It could be a rewarding experience worth trying.

• Rediscover the joy of reading a book, a timeless pleasure. Visit a local library or bookstore to find a book that aligns with your interests or passions. Just remember to consider the time spent doing your digital detox a sacred time and commit to tracking your progress to get the most out of the benefits offered by digital detox.

The Peninsula Istanbul is the embodiment of ultra-luxury

By Alp Sarper

There is no shortage of world-famous luxury hotels on the shores of the magnificent Bosporus Strait. In fact, over the past decade, an impressive surge of ultra-luxury properties has emerged along the coast, enhancing the allure of the city for discerning travelers who seek beyond the ordinary 5-star experience.

Among these remarkable establishments, The Peninsula Istanbul stands as the latest and most awe-inspiring addition to the city’s ultra-luxury hotel scene. As a proud subsidiary of the Hong Kong and Shanghai Hotels Limited, the Peninsula hotels trace their origins back to 1866 when the parent company was incorporated. In 1928, they unveiled their flagship property, The Peninsula Hong Kong, which has since become an icon of opulence, hosting distinguished guests including royalty, James Bond, and many other illustrious personalities. Notably, The Peninsula Hong Kong holds the distinction of placing the largest-ever order of Rolls-Royce cars, all elegantly adorned in the signature peninsula green.

The Peninsula Istanbul

As part of the revitalization of Istanbul’s historic Karaköy area, The Peninsula Istanbul is situated at the edge of Galata Port, overlooking both the Bosporus and the Golden Horn. Managed by Jonathan Crook, an experienced leader who has overseen numerous properties within the group, the hotel opened its doors in February. The Peninsula occupies three remarkable historical buildings that once played a significant role in the passenger shipping industry, alongside a modern structure designed for banquets.

Constructed during the transition from the 19th to the early 20th century, each building showcases a unique architectural style. Over a span of seven years, the Peninsula Hotels group, in collaboration with their Turkish partners, diligently restored the buildings, emphasizing the utilization of local talent. The restoration process involved meticulous efforts, such as the removal of individual tiles, aimed at revitalizing the magnificent façade.

The Lobby

Yolcu Salonu, which translates to Passenger Terminal, serves as the Lobby and indoor restaurant of the Peninsula. Staying true to the brand’s traditional style, the lobby leaves a lasting impression on all who pass through it. The meticulously restored building retains its original charm while incorporating essential elements of the group’s identity. Located on the shores of the Bosporus, it offers breathtaking views of Saray Burnu, with the magnificent Topkapi Palace and Hagia Sophia adding a touch of mystique to the hotel’s surroundings. As the day progresses into the late afternoon, Peninsula Istanbul treats guests to an exceptional afternoon tea accompanied by live music that continues well into the early hours of the morning.

The dining experience at the hotel is exceptional. Guests can enjoy a delectable à la carte breakfast, while lunch and dinner feature a diverse selection of Turkish and international dishes. The hotel is also home to the signiture restaurant signature restaurant, Gallada helmed by Turkey’s first two Michelin-starred chef Fatih Tutak serving an enticing fusion of Turkish and Asian cuisine.

The Rooms

The Peninsula offers a premier experience with its selection of 177 rooms and suites, featuring a diverse range of over 20 room categories, with each space meticulously crafted to provide utmost comfort and luxury to discerning guests. In fact, the group’s chairman, renowned for his attention to detail, personally tests hotel room layouts to ensure that even the tiniest aspect is not overlooked.

In addition to the sweeping views of the Bosporus and the Golden Horn, the rooms are also equipped with state-of-the-art technology, seamlessly integrated

to cater to guests’ needs. Throughout the room, Peninsula-designed tablets are strategically placed, allowing control over various amenities such as curtains and the television, while also serving as a means of communication with dedicated hotel staff. Every detail has been finely tuned to perfection, including a dedicated tablet showcasing a video guide on how to use the espresso machine. Furthermore, to prioritize privacy, each room at the Peninsula Istanbul is furnished with a valet box, a discreet two-way door system that enables the delivery of any ordered items without inconveniencing guests.

The Peninsula Suite

At the Peninsula, it’s not referred to it as the presidential suite; it is, without exception, the Peninsula Suite. The one in Istanbul is perhaps one of the most impressive. Boasting a vast expanse of over 500 m2, this suite encompasses a variety of luxurious amenities. On the first floor alone, guests will discover a sophisticated study, a spacious living room, an elegant dining area, a private cinema room, a state-of-the-art gym, and a traditional Turkish Hamam. However, the magnificence of the Peninsula Suite extends beyond its first floor. The equally awe-inspiring rooftop terrace features a private deck, a personal swimming pool, and stunning panoramic views that encompass not only the Bosporus and Golden Horn but also the majestic Galata Tower. As expected, the entirety of the Peninsula Suite is equipped with state-of-the-art bulletproof windows, ensuring the utmost security and tranquility for its guests.

The Verdict

The Peninsula Istanbul is an exquisite masterpiece, meticulously crafted to perfection. From the fastidious restoration of its buildings to the singular attention to detail in hospitality, this project embodies true artistry. The service provided is impeccable, offering guests an unparalleled level of privacy. It is destined to become an iconic symbol of Istanbul, leaving indelible memories for all who step through its doors.

Personalized, Integrated Customer Experience - The Key to Transforming Automotive Retail

By Thierry Sabbagh

Over the past few years, there has been a noticeable shift with automotive brands in the Middle East increasing their presence in the online sphere and placing a larger focus on digitalizing customer journeys. This has resulted in creating more opportunities for frequent customer-brand interaction across the purchase cycle, from discovery and finance options, to onboarding, ownership, aftersales, and re-purchase. As an industry, the automotive sector has come a long way from when customers could merely visualize and configure their cars on a brand’s website. Today, we are looking at a much more immersive and digitally enabled interaction where omnichannel integration and personalization of the customer experience are key differentiators in driving brand loyalty, playing a key role in creating lifelong customers. The numbers speak for themselves – a report by Accenture discovered that 84% of customers are willing to pay more for a personalized experience in the automotive industry. Supporting this view, a recent McKinsey study found that 71% of customers expect personalization from brands and businesses they choose, with 76% of those getting frustrated if they don’t find it.

Having invested heavily into digitization and digitally enabled services, including our Shop@Home platform, Nissan has seen the results firsthand. We have witnessed a year-on-year increase in customer satisfaction, a 36% increase in session duration and heightened online engagement that led to more than doubling digital sales leads across the region in 2022.

Multichannel vs. Online: How Do Customers Prefer to Buy Cars?

It’s commonly known that after purchasing a property or a home, buying a car is the next biggest investment most households make. However, a vehicle is much more than a means of getting from point A to point B – it serves as a reflection of customer personalities and a conscious choice made to accommodate their lifestyles. This means that the decision to buy a car is not made lightheartedly. In the past, there were a large number of customers who opted for a complete inperson experience. While this is now supported by online channels, particularly in the discovery phase of ownership, most customers still value a multichannel experience with the showroom and seasoned sales representatives continuing to be a vital part of the overall process.

Customer-centricity and catering to the changing needs of buyers is of utmost importance to us at Nissan. The on-ground reality is that customers in the Middle East still prefer a hybrid experience when purchasing a new vehicle – one that involves a combination of digital and physical touchpoints – leading brands to focus efforts on digitalization tools that enhance the customer journey. While digitalization continues to play an important role for customers in the purchase of new and used vehicles, there is a noticeable increase in appetite in the Middle East to purchase used vehicles online. The sheer number of used car aggregators setting up shop in the region is a true testament to this evolving need. At Nissan, we have started offering customers a full range of Nissan Intelligent Choice-certified pre-owned vehicles online and aim to evolve this in the near future with the option to reserve and complete purchases virtually.

Data-Driven Personalization: Key to a Tailor-Made Car Buying Experience

Data-driven customization serves as the basis of personalized experiences and is becoming increasingly important in today’s business landscape. While data collection is the first part of the equation, customer consent and the right to utilize data is equally important when looking to offer personalized experiences and communications.

What is important to remember, however, is that a personalization strategy alone is not enough and needs to be enabled by the appropriate data, technology, and architecture. Businesses that master this approach stand to gain, with a recent report from Deloitte revealing that customers expect brands to adapt and cater to their evolving needs. At Nissan, we continue to work closely with our partners across the region to assess customer satisfaction through digital surveys that cover multiple touchpoints. The feedback from these surveys has enabled us to offer tailor-made solutions to customers in real-time, while also building into wider customer-centric initiatives rolled out in the region.

Thierry Sabbagh, president, Nissan Saudi Arabia, INFINITI Middle East and managing director, Nissan Middle East

The Future of Automotive Retail: The Need for the Automotive Industry to Adapt to Hyper-Personalization

As customer preferences continue to evolve, brands are looking to take their personalization efforts to the next level, relying more heavily on real-time data and artificial intelligence (AI) to provide solutions that are hyper-personalized and gain a competitive advantage. This can take many forms, from personalized car recommendations and targeted marketing campaigns, through to offering customers tailored, over-the-air (OTA) in-car experiences.

By offering hyper-personalized experiences, pre- and post-purchase, automotive companies will be able to build stronger relationships with their customers and set themselves apart from their competitors with solutions that are truly customized to their individual needs. What is certain then is that the future of the automotive industry is connected, personalized, and consumer-led.