P.16 COMEBACK TRAIL: President Ranil Wickremesinghe tells us how Sri Lanka is trying to bounce back P.20 RISKS AND
REWARDS: SAXO Bank CIO on the world’s economic dangers, opportunities for 2024
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LETTERS 2024
TOP CEOs IN THE GCC SPEAK ON THEIR OUTLOOK FOR THE YEAR AHEAD
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08 Getty images/sorbetto
The brief An insight into the news and trends shaping the region with perceptive commentary and analysis
43 Special Report: Power Letters 2024
Pic: Getty Images/Ryouchin
Some of the top CEOs in the GCC write for us as they outline several of the region’s top trends for the year ahead
Pic: Ahmed Abdelwahab
28
Just Transition Switching to clean energies is a priority for the world. But to get to this point, CEO of Crescent Petroleum, Majid Jafar, argues that gas will play a key role
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January 2024
3
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CONTENTS / JANUARY 2024
59
Pics: Supplied
Lifestyle
Engineered sportswear: Castore gives the inside take on their local stores p.60
Hydrogen future: We test drive the latest greenpowered vehicles p.64
Green mobility: Special interview with BMW exec Glenn Schmidt p.66
“COP28 delivered some serious strides forward. Tripling renewables and doubling energy efficiency. Operationalising the loss and damage fund. A framework for the Global Goal on Adaptation. The crucial years ahead must keep ramping up ambition and climate action.” Simon Stiell, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC)
69 Pic: Supplied
The SME Story Interviews with entrepreneurs and insights from experts on how the regional SME ecosystem is evolving
Editor-in-chief Obaid Humaid Al Tayer Managing partner and group editor Ian Fairservice Chief commercial officer Anthony Milne anthony@motivate.ae Publisher Manish Chopra manish.chopra@motivate.ae Group editor Gareth van Zyl Gareth.Vanzyl@motivate.ae Editor Neesha Salian neesha.salian@motivate.ae Digital editor Marisha Singh marisha.singh@motivate.ae Senior feature writer Kudakwashe Muzoriwa Kudakwashe.Muzoriwa@motivate.ae Senior art director Freddie N. Colinares freddie@motivate.ae Senior art director Olga Petroff olga.petroff@motivate.ae
General manager – production S Sunil Kumar Production manager Binu Purandaran Production supervisor Venita Pinto Senior sales manager Sangeetha J S Sangeetha.js@motivate.ae Group marketing manager Joelle AlBeaino joelle.albeaino@motivate.ae
Cover: Freddie N Colinares
Follow us on social media: Linkedin: Gulf Business Facebook: GulfBusiness Twitter: @GulfBusiness Instagram: @GulfBusiness
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January 2024
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5
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JAN 2024
FROM THE EDITOR’S DESK
RETURNING TO THE GCC AFTER A DECADE’S BREAK HAS REMINDED ME ABOUT HOW IMPORTANT IT IS TO BE AMBITIOUS AND A RISK-TAKER.”
T
he greatest entrepreneur to have ever walked this planet, Steve Jobs, once famously quipped: “The people who are crazy enough to think they can change the world are the ones who do.” I turned to this quote for inspiration as I sat down to write this new editor’s note. The word “crazy” in Steve Jobs’ famous quote resonates quite strongly with me at the moment, especially as I now find myself living through my second expatriate stint in Dubai.
Being back here has made me wonder what Steve Jobs would have to say about the fast rate of development in the GCC today. The UAE has evolved so much in the last decade, and this could only have happened in an environment where ambition and free enterprise have been allowed to operate in an unfettered way. For me, therefore, it is a privilege and not a right to be in this role. And I’m hoping that my unique insights and experience will give you, the reader, the additional ability to acquire the knowledge that you need to have in order to get ahead. Because if you’re reading this magazine and my column, you probably are one of the crazy ones — or at least aspiring to be.
When I left Dubai in early 2012 — after a four year period working as a business and technology journalist in the emirate— I never really thought that I would find myself being back here. But life has a funny way of twisting and turning, and in November 2023, I returned to take up this exciting mantle of group editor here at Gulf Business .
gulfbusiness.com
Gareth van Zyl, Group editor
January 2024
7
ILLUSTRATION: GETTY IMAGES/ DRAFTER123
Digital inclusion AI-led banking Decarbonisation Sri Lanka Global economy
09 10 12 16 20
JAN
24
Employment – financial and business service Year-on-year change (%)
600 Persons in Thousands
The Brief
DUBAI EMPLOYMENT IN FINANCIAL AND BUSINESS SERVICES, 2015 TO 2022(F)
15%
500 400 300
3%
10% 8%
12%
10% 1% 3% 5% -0%
200
-5%
100
-10% -10% -15% 2015 2016 2017 2018 2019 2020 2021 2022f
0
SOURCE: OXFORD ECONOMICS
NOTE: f:forecast
Human intervention in learning Artificial intelligence is playing an ever-greater role in the world of learning technologies, but humans still have a crucial place p.22
8
January 2024
gulfbusiness.com
ILLUSTRATION: GETTY IMAGES/ DRAFTER123
The Brief / Digital Inclusion
Top marks for GCC in digital connectivity Gulf nations are ranking among the highest in the world when it comes to the state of their digital connectivity BY GARETH VAN ZYL
G
ulf countries are advancing at a rapid rate in terms of their ICT development, with the region’s countries scoring among the highest in the world when it comes to digital connectivity. The International Telecommunication Union’s latest 2023 ICT Development Index (IDI) monitors 169 countries’ progress in ICT services through ‘universal connectivity’ and ‘meaningful connectivity’. The report is designed as a tool for policy makers to advance their countries’ digital connectivity efforts. Aspects that the report looks at include, for example, the overall percentage of individuals in a country using the internet, the population covered by a 4G/LTE mobile network as well as the affordability of fixed and mobile data prices.
gulfbusiness.com
And in this year’s report, several GCC countries have scored among the highest in this index, highlighting the region’s significant advancements in terms of driving ICT development in the region. For example, Saudi Arabia this year scored 94.9 points overall, meaning the country ranks much higher than the global average of 72.8. Meanwhile, the UAE scored 96.4 on this IDI metric, while Qatar notched up 97.3. For other GCC countries, their standings this year are as follows: Oman (90.5), Kuwait (98.2) and Bahrain (96.5). Putting these figures into context, the US this year scored 96.6, the UK (92.8), Japan (92) and Germany (87.3). Singapore, meanwhile, scored 97.4 while Denmark has the world’s highest ranking at 98.2. Looking more broadly at the world’s state of connectivity, the authors of the ITU report state that while progress has been made in terms of digital access, there is still a long way to go. “The advent of mobile telephony and of the internet have transformed connectivity, and indeed humanity. Today, there are more mobile phone subscriptions than people on the planet. Twothirds of the world’s population use the internet. The internet is woven into the entire fabric of our daily lives. Yet, one-third of the world’s population remain offline, and even among the nominally online population, many are not meaningfully connected,” notes the ITU. “Multiple digital divides persist, across and within countries, between men and women, between youth and older persons, between cities and rural areas, and between those who enjoy an ultra-fast fixedbroadband connection and those who struggle on a shaky connection. Some 400 million people are entirely beyond the reach of a mobile broadband network,” the ITU adds.
SAUDI ARABIA THIS YEAR SCORED
94.9 POINTS OVERALL MEANING THE COUNTRY RANKS MUCH HIGHER THAN THE GLOBAL AVERAGE OF 72.8
January 2024
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COMMENT
ILLUSTRATION: GETTY IMAGES/ SORBETTO
WIDE RANGE OF BENEFITS Banking with its complexities and heavy reliance on data is especially suited to GenAI, allowing us to re-imagine the way we view data and resourceintensive processes. Potential benefits include higher client satisfaction and more revenue through personalised customer engagements, reduced errors, more efficient use of resources, identification of new opportunities, and better data-driven decision-making. Ultimately this will improve the way banks identify and manage risks, reduce losses and improve margins. Those that are quick to embrace and experiment with the technology could gain an advantage over slower rivals. GenAI is set to transform banks’ interactions with clients. Generative models based on voice and speech can detect emotions to match clients with the right agent or even propose targeted solutions for agents. AI models can also use behavioural data and other information to identify suitable products to recommend, helping to deepen relationships with existing clients or attract new ones.
Banks tap the power of GenAI How is GenAI reshaping the banking sector – and how should banks prepare to deploy this exciting technology to reap the biggest benefits?
B
anks are already starting to see rewards from generative AI (GenAI) as it raises efficiency, enables sharper actionable insights, and increases profitability. The wider use of GenAI is not a question of “if”, but “when” and “how”. GenAI could boost the banking sector’s annual revenue by $200-$340bn, or 9 per cent - 15 per cent of operating profits, according to a McKinsey study, presenting a huge opportunity. The industry already uses artificial intelligence (AI) and machine learning (ML) in areas such as marketing, fraud detection, and credit scoring. So, for many banks, GenAI will be an evolution rather than a revolution. 10
January 2024
THE GROWING APPLICATIONS OF GENAI Common use cases for GenAI include the efficiency gains that can be achieved in research, loan origination, portfolio monitoring, regulatory compliance, know your customer (KYC) workflows, early warning and more. GenAI is an excellent tool to improve research for faster processing of more data from a wider range of sources to support decision-making. Banks can gain a more holistic view of a company, a group of companies, or a sector by considering not only the credit quality, but also different types of risks that may become key drivers of financial performance and credit quality in the future, including climate risk, reputational standing and even cyber risk and vulnerability. Analysts can intuitively interact with chat-like user interfaces such as Moody’s Research Assistant, to query internally or externally available content, combine insights across market segments, and put together comprehensive reports or concise
ONE OF THE MOST COMMON USES OF GENAI IS TO STREAMLINE PROCESSES SUCH AS LOAN ORIGINATION. IT CAN ENHANCE AND SPEED ASSESSMENT STEPS WITHOUT LOSING ACCURACY OR COMPROMISING ON CUSTOMER DATA PROTECTION gulfbusiness.com
The Brief / AI-led Banking Dimitrios Papanastasiou, senior director at Moody’s Analytics and Yasman Moghaddam, director at Moody’s Analytics
informative than just a single rating or score and will also include a narrative and insights about the party in question.
GENAI IS SET TO TRANSFORM BANKS’ INTERACTIONS WITH CLIENTS. AI MODELS CAN ALSO USE BEHAVIOURAL DATA AND OTHER INFORMATION TO IDENTIFY SUITABLE PRODUCTS TO RECOMMEND, HELPING TO DEEPEN RELATIONSHIPS WITH EXISTING CLIENTS OR ATTRACT NEW ONES. summaries to present the research output. More specific applications cover macroeconomic research for risk, strategy, or investment purposes, equity and fixed income investment analysis and credit risk assessment for both investment and loan originationor monitoring. One of the most common uses of GenAI is to streamline processes such as loan origination. It can enhance and speed assessment steps without losing accuracy or compromising on customer data protection. We see increasing demand for GenAI to enhance such processes and move away from manual processes. Moody’s Smart Assistants will improve credit workflow by interacting with credit professionals through simple instructions for processes from credit pre-screening and KYC checks, to data collection, all the way to the credit assessment. Essentially preparing client memos in a fraction of time it took previously. Banks’ rating and scoring models have typically relied on financial statement information or bureau scores and affordability metrics. GenAI can augment those with rich information and analytics based on a much broader dataset, ranging from behavioural, compliance, and KYC-related information to news-based signals, outlooks, sustainability or climate assessments and even cyber risk and supply chain indicators. The output will be more gulfbusiness.com
IDENTIFYING AND HELPING AT-RISK BORROWERS Compliance and KYC checks are other key tasks for banks. AI and GenAI can work across a company’s entire ownership structure to identify compliance issues and generate full risk profiles for individuals and corporations. Furthermore, GenAI can completely transform the KYC and investigation process workflow by providing compliance officers with a chat-based interface to comb through the data. If an at-risk borrower is identified, AI models can suggest measures to prevent further deterioration such as adjusting credit limits, debt restructuring or consolidation, or connect customers with financial advisors. The models could also generate customised communications to borrowers via email, text, or phone with timely recommendations or warnings based on their situation. Many banks are already benefitting from the application of AI based processing based on complex combinations of deep learning (DL), optical character recognition (OCR), and natural language processing (NLP). Models that identify outliers and abnormal patterns in submitted financial statements can spot possible indications of misstatements. Customer information can also be sourced from accounting software, tax returns, credit bureau, or third-party master and financial entity databases. When properly integrated, GenAI can orchestrate the process and synthesise the information.
IF AN AT-RISK BORROWER IS IDENTIFIED, AI MODELS CAN SUGGEST MEASURES TO PREVENT FURTHER DETERIORATION
TIME TO EXPERIMENT The industry is quickly recognising the advantages of GenAI and its applications. Leading banks have already started integrating GenAI into their organisations’ DNA in the applications mentioned and there is much more to come. The potential is limitless. Still, for a highly regulated industry such as banking, there must be a balance between speed of deployment and the need for proper testing and governance to ensure robust, accurate, and unbiased input and results. Hence regulation is expected to drive the way many organisations leverage GenAI and ensure transparency. Now is the time for banks to invest in understanding the enormous potential of GenAI, and to experiment and develop systems within secure environments with an eye to subsequent wider deployment. Delay could potentially be costly if faster and more nimble competitors establish a lead as this revolutionary technology reshapes industries. January 2024
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The Brief / Decarbonisation COMMENT
DEEP ENERGY DECARBONISATION:
ILLUSTRATION: GETTY IMAGES/EVGENY GROMOV
Opportunities ahead for the industry
Lowering our carbon footprint through various decarbonisation strategies takes a concerted effort on the part of industry
S
ince the COP 21 Paris Summit, deep energy decarbonisation of the industrial sector has been a hotly debated topic at the climate gathering. The industrial sector, which heavily relies on fossil fuels and energyintensive processes, contributes around 29 per cent of the global emissions in a typical year, making deep energy decarbonisation a priority across this sector. Governments, business leaders, and industry experts have been collaborating to exchange strategies and initiatives to speed up decarbonisation efforts within this sector. To achieve deep energy decarbonisation in the industrial sector, we must significantly transform the industrial processes. CHALLENGES Achieving deep energy decarbonisation in industries involves various strategies, regional differences, and policy actions. Successful efforts necessitate cooperation among governments, industries, and the global 12
January 2024
community. Some of the challenges include: Technological constraints: Industries, notably steel and cement, face challenges with the lack of mature decarbonisation technologies. Emerging solutions are often costly and lack scalability. Economic hurdles: High upfront costs deter investors. Despite a lack of financial incentives, industries also worry about global competitiveness. Regulatory quandaries: Global regulatory inconsistencies can impede industry-wide decarbonisation. Organisational dilemmas: Entrenched practices and the absence of knowledge in low-carbon options compound challenges. Infrastructure issues: Existing infrastructure often doesn’t support emerging green technologies. Supply chain complexities: The transition to sustainability can cause disruptions. R&D Bottlenecks: R&D in decarbonisation technologies often faces funding issues and experience delay in applying lab-proven solutions to real-world scenarios. PATHWAYS FOR ADOPTION The industrial sector has multiple pathways to achieve deep energy decarbonisation. Each pathway presents its challenges and opportunities, requiring a combination of strategies to reduce emissions. Integration of renewable energy: Embracing renewable energy sources (RES) can significantly reduce the sector’s dependence on fossil fuels and emissions. Shifting from coal to biomass or natural gas can result in a 90 per cent decrease in carbon emissions. Implementation efficiency measures: Promoting energy efficiency measures is crucial for decarbonising industries as it can lower emissions by up to 40 per cent and energy consumption by up to 40 per cent. Key energy efficiency measures include energy management, waste heat recovery, efficient motors, and digitalisation for enhanced optimisation. Electrification: Industries heavily rely on fossil fuels for heat, especially high-temperature sectors like steel and cement. Electrification using RES reduces emissions and conserves energy, especially for high-temperature industries. Technologies like electric heat pumps reduce emissions. Carbon Capture and Storage (CCS): CCS technologies enable capturing CO2 emissions (up to 90 per cent) from energy-intensive sectors such as steel and gulfbusiness.com
Swagath Navin Manohar, senior industry analyst, Energy & Environment Growth Opportunity Analytics at Frost & Sullivan
cement and storing them underground. Advanced techniques even allow repurposing or utilisation of the stored CO2. Hydrogen and alternative fuels: Hydrogen becomes an environmentally friendly energy option for various industries when produced from clean energy sources. It can significantly reduce emissions by up to 70 per cent by substituting fossil fuels in heating systems and chemical processes. Chemicals and polymers derived from bio-based materials also offer alternatives to petroleum-based products, reducing carbon emissions. Circular economy: Circular economy emphasises reusing materials, remanufacturing goods, and recycling resources to minimise environmental impact. Implementing a circular economy approach can substantially reduce material consumption and energy usage by enhancing product design, reducing waste, and increasing recycling efforts.
EMBRACING RENEWABLE ENERGY SOURCES (RES) CAN SIGNIFICANTLY REDUCE THE SECTOR’S DEPENDENCE ON FOSSIL FUELS AND EMISSIONS. SHIFTING FROM COAL TO BIOMASS OR NATURAL GAS CAN RESULT IN A
90%
DECREASE CARBON EMISSIONS
PAVING THE ROAD The pathway towards achieving deep energy decarbonisation can be divided into three strategic phases. In the short term (2020-2030), the primary focus will be creating regulatory frameworks embracing renewable technologies and incorporating sustainable practices. Governments will prioritise R&D and initial implementation of Carbon Capture and Storage (CCS). In the mid-term (2030-2040), the key focus will be optimising existing practices, integrating grids, and expanding electrification efforts. Industries will widely adopt CCS technology as a critical option to reduce emissions. In the long term (2040-2050), it is envisioned that renewable energy sources will power the industrial sector, utilise circular economy technologies, and have widespread adoption of CCS. Thus, the road to deep energy decarbonisation relies on collaboration, technological advancements, and a solid commitment to implement suitable pathways.
KEY TECHNOLOGIES The industrial sector is driving deep energy decarbonisation through advanced technologies. AI and ML enhance process efficiency, while IoT ensures equipment optimisation. 3D printing reduces waste and emissions; direct air capture systems highlight CCS potential. Thermoelectric generators reclaim waste heat, and green hydrogen offers a clean energy alternative. Advanced insulation like aerogels optimises heating and cooling, and bio-based processes produce sustainable polymers. Energy storage advances with solidstate batteries, promoting renewable use. Digital twins enable precise energy management. These technological innovations promise a sustainable future, emphasising their adoption of effective deep energy decarbonisation. GCC’S PATH TO TRANSFORMATION Deep energy decarbonisation in the industrial sector varies across regions and is influenced by factors such as energy resources, types of industries, and governmental policies. The GCC region plays a vital role in the global energy market due to its significant hydrocarbon reserves. In recent years, there has been an increasing emphasis on deep energy decarbonisation of the region’s industrial sector for economic diversification and environmental reasons. By implementing supportive regulatory frameworks and energy efficiency measures, investing in low-carbon infrastructure, promoting the development of sustainable industrial zones, exploring innovative technologies like hydrogen steelmaking, and developing expertise in areas such as CCS, the region has the potential to become a leader in sustainable industrial transformation. Governments play a crucial role in industrial decarbonisation with emission targets, regulations, and incentives.
IMPACT OF DEEP ENERGY DECARBONISATION PATHWAYS Pathway
Near-Term Impact Mid-Term Impact (2020-2030) (2030-2040)
Mid-Term Impact (2030-2040)
Renewable Energy Integration
High
High
High
Energy Efficiency Measures
High
High
Medium
Electrification
Medium
High
High
Carbon Capture and Storage (CCS)
Low
Medium
High
Hydrogen and Sustainable Alternate Fuels
Low
Medium
High
Circular Economy Approach
Medium
High
High
gulfbusiness.com
CONCLUSION Deep industrial decarbonisation is vital for achieving climate objectives, technological advancements, infrastructure development, and supportive policies. Aiming for net-zero emissions by mid-century necessitates transformative shifts in production, energy sources, and materials. The integration of renewable energy, improved energy efficiency, process electrification, carbon capture, hydrogen use, and circular economy practices are pivotal pathways for substantial emission reductions. Collaboration between governments, industries, and society will be essential to foster innovation. January 2024
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The brief / Sustainability Chandra Dake, executive chairman and Group CEO of the Dake Group
ILLUSTRATION: GETTY IMAGES/ ALASHI
synonymise “people” with local populations they deal with and “planet” with the world at large. Without firmly laying down the blocks to solve at the people level, any larger outcomes on the planet could become unrealistic.
People, profit, and planet: Making a business case for corporate sustainability transition The ‘Triple Bottom Line’ is a key concept that all businesses need to weave into their strategies
T
raditionally, profit has been the singular bottom line for most businesses. But the reality of the contemporary business landscape is that it is ever-evolving, with sustainability and climate actions increasingly impacting various outcomes. Companies globally are recognising that financial prosperity alone is insufficient and that, to succeed, they must concern themselves with issues that affect society as a whole. Now is the perfect time to talk about a framework that allows businesses to examine their impact without compromising on the all-important bottom line. The ‘Triple Bottom Line’ framework is a guiding principle that can shape business strategy in a way that reconciles with three core pillars: profit, people, and the planet. More simply referred to as the 3Ps framework, it demands a holistic assessment. NO GLOBAL WITHOUT LOCAL COP28 underscored the need for decisive climate action. While all stakeholders will be reminded of that again, the ticking climate-change clock requires that necessary actions are backed by interdisciplinary solutions that can truly make a difference. In MENA, water scarcity, high carbon footprint, and importheavy food systems are challenges at the intersection of people, planet, and profit. All sustainability solutions must sit within these 3Ps. A helpful way for companies to look at it is to 14
January 2024
HOLISTIC THINKING IS KEY While a long-term, overarching vision is important for businesses to work toward, the details are just as paramount. For instance, implementing strict water conservation measures — such as limiting discretionary water usage — can be perceived as climate action that addresses many challenges in the UAE. However, such blanket measures can place a burden on agrarian communities, in turn aggravating the region’s food shortage. That is precisely why the UAE’s climate action plans and goals to hit net-zero emissions by 2050 are multi-faceted and interdisciplinary. Let’s revisit the example of the water conservation challenge mentioned before — regulating water usage would affect food security, which would impact quality of life and the economy, in addition to having second-order effects. A way to approach this challenge using the 3P framework would be the implementation of a concept like “Sponge Cities”, which involves decentralised rainwater harvesting systems that can turn a climate-change effect like erratic rains into a new source of potable water. Such an infrastructure will help reduce dependence on carbon-intensive water production and contribute to net-zero goals while alleviating existing scarcity, thus contributing to climate change adaptation and mitigation. Sponge Cities can enhance cities’ liveability and economic prospects while ensuring their resilience against flooding and other challenges linked to climate change — a shining example of the Triple Bottom Line Framework. BEYOND COP28 The 3Ps framework is a strategic way for businesses to begin thinking holistically and eventually transform their operations and offerings. With global representatives deliberating on pressing environmental issues at COP28, the harmonious convergence of profit, people, and the planet has become a common talking point. It might not be a stretch to say that this convergence could be a force multiplier for trailing sustainability and climate actions. Considering that efforts toward a greener future must necessarily be inclusive and allencompassing, the Triple Bottom Line Framework makes a compelling case for corporate consideration. Businesses must take a step back to see where they fit in the framework, and where they need to be. gulfbusiness.com
The Brief / Investing
ILLUSTRATION: GETTY IMAGES/ MHJ
Ahil Mansoor, CEO & CIO of Octave Asset Management
there arises a call for new solutions—ones that position customers at the heart of the business.
Embracing asset management’s transformative journey through value-based investing Focusing on value and transparency will become increasingly important concepts to live by in the Middle East’s investment universe in the coming years
I
n the dynamic world of finance, the asset management landscape in the GCC region has emerged as a formidable force, evolving rapidly to become one of the strongest globally. As per a recent report by PwC, assets under management in the GCC are projected to expand to about $500bn in onshore assets by 2026, up from $400bn at the end of 2022. This growth, outpacing the global average, is a testament to the region’s burgeoning financial prowess. The Dubai International Financial Centre (DIFC) alone now houses over 300 wealth and asset management companies, managing an industry size of $450bn. This growth is not just in numbers; it reflects a deeper, more profound change in the region’s financial landscape. The Middle East’s assets under management grew by $100bn in 2022, reaching $1.3tn despite global economic challenges—a figure that underscores the region’s resilience and its growing influence in the global asset management sector. However, amidst this rapid growth and evolution, a critical element seems to be diminishing in today’s competitive arena: the principle of ‘value generation’ and ‘transparency’. These values are not just ethical imperatives but are fundamental to the integrity and sustainability of the asset management industry. A closer look at the UAE, where billionaires possess over $180bn in wealth, unveils a market flourishing with opportunities. The data highlights a significant influx of 4,000 millionaires migrating to the country in 2022. These statistics highlight the critical role of asset managers in adding substantial value to their clients’ portfolios. Naturally, to address these evolving needs,
gulfbusiness.com
WHY VALUE, TRANSPARENCY MATTER Value-based investing in asset management is not solely about achieving financial returns. It involves a comprehensive approach that prioritises measured, strategic actions aimed at generating sustainable returns. This methodical approach to investment decisions is crucial in navigating the complexities of the financial markets, ensuring that investments are not only profitable but also well-considered and aligned with long-term financial goals. Transparency, on the other hand, is essential for fostering trust between asset managers and their clients. It necessitates clear and open communication regarding investment strategies, risks, and performance. In a context where more than 70 per cent of regional private wealth is held in offshore accounts, as noted by Strategy&, the importance of transparency is amplified. THE ROLE OF ASSET MANAGERS As the industry evolves, asset managers must adapt to these changing dynamics. The Boston Consulting Group (BCG) highlights the need for transformative measures to return to historical levels of profitable growth. This includes a shift in revenue mix towards higher-margin products and a focus on cost optimisation. Asset managers in the Middle East are at a critical juncture. They need to reassess their operations to regain profit growth experienced in previous years. BCG suggests that asset managers cut costs by 20 per cent overall and generate at least 30 per cent of their revenue from higher-margin products. Success lies in recognising that wealth management is not a one-size-fits-all endeavour. Asset managers must transcend mere service provision; they need to craft a customer experience that resonates with the unique financial goals and aspirations of each individual client.
THE DUBAI INTERNATIONAL FINANCIAL CENTRE (DIFC) ALONE NOW HOUSES OVER 300 WEALTH AND ASSET MANAGEMENT COMPANIES, MANAGING AN INDUSTRY SIZE OF
$450BN
EMBRACING CHANGE Rather than succumbing to fads and trends, the focus should be on taking a step back, assessing clients’ true appetites, and recommending strategies that stand the test of time. Now, more than ever, wealth managers must look beyond their own profits and operate through a lens of sincerity and transparency. The evolution of wealth management is not just a historical narrative but an ongoing saga. As wealth managers navigate these new horizons, they possess the power to shape not only their clients’ financial futures but also the trajectory of their industry. January 2024
15
THE BRIEF
INTERVIEW
economy had declined by about 7 per cent, you had inflation running at all time highs. Earlier this year, Sri Lanka received an IMF bailout. I just wanted to get an update from you on how everything is going. Is Sri Lanka turning the corner?
PICS: GETTY IMAGES
Yes, we expect positive growth for next year. It may not be too high, but nevertheless there will be positive growth. That is a sign that we have been getting for the last two months. Secondly, we finished the negotiations with our creditors, with the Paris Club, with India that was working with Paris Club and with China. And we anticipate that the official creditors committee will come up with a positive statement before the end of the year (2023). Then we are left to negotiate with the private creditors.
Is troubled Sri Lanka finally turning a corner? SPEAKING ON THE SIDELINES OF THE RECENT COP28 UAE SUMMIT IN DUBAI, PRESIDENT RANIL WICKREMESINGHE OPENED UP ABOUT HIS COUNTRY’S ECONOMIC CHALLENGES AND HOW THEY’RE OVERCOMING THOSE. INTERESTINGLY, PART OF THE SOLUTION FOR SRI LANKA MIGHT ALSO LIE IN TAPPING THE EMERGING GREEN ECONOMY BY GARETH VAN ZYL
R
ewind to 2022 and Sri Lanka’s economy was literally in freefall. The island-nation’s economy shrank by 7.8 per cent, while inflation at one point surged past 70 per cent. In March this year, Sri Lanka received a $3bn bailout from the International Monetary Fund. Amid the 2022 crisis, the former fivetime Sri Lankan prime minister, Ranil Wickremesinghe, returned to power — this time as president, thereby giving him more executive powers. While his return hasn’t been smooth sailing, changes are slowly starting to happen. This year, the World Bank forecasts that the Sri Lankan economy is expected to contract by 3.8 per cent, posting a weak but better performance compared to 2022. The World Bank forecasts that Sri Lanka’s economy could even grow 1.7 per cent next year. 16
January 2024
Added to this, the inflation monster in Sri Lanka has also been tamed, with this rate hitting 3.4 per cent in November 2023. So, when I sat down with President Wickremesinghe on the sidelines of the COP28 summit in Dubai, my questions first centred on how his country is dealing with the economic crisis first, and, second, with the emerging climate crisis. Interestingly, Sri Lanka has made some meaningful contributions to the global debate on climate change with an offer to host a climate university in the country while also spearheading an initiative to drive private investment in renewables in the tropical belt nations of the world. Mr. Wickremesinghe, looking at
Sri Lankan economy, your Q the country was in the headlines
last year for all the wrong reasons. Your
And obviously, you have been prime minister several times previously. Now you are the president, which gives you a lot more executive powers. Have you found that has helped you to drive home some more reforms? And if so, why?
Firstly, it helped me to stabilise the country politically. It couldn’t have been done otherwise. The whole system has virtually broken down. And in that context of emergency, yes, it has helped me to bring in more reforms and changes... In 2001 [when I became Prime Minister], I took on the economy when it was again in negative growth, but we were able to sort it out through the peace process when the cities, the airports and the ports were no longer under threat. But this [current crisis] is more of an economic problem rather than a military issue. So being the president certainly has helped me to get things moving. You’ve been dealing with the economic crisis head on. But our world this year has had some of its hottest temperatures. How is the climate crisis going to impact Sri Lanka, especially after you’ve come out of this economic crisis?
It is already impacting us. We’ve recently had heavy rains where we’ve experienced landslides and our infrastructure has been impacted. It’s not only us. There are many other countries in the tropical areas that are going through the same process, and then gulfbusiness.com
WE FINISHED THE NEGOTIATIONS WITH OUR CREDITORS, WITH THE PARIS CLUB, WITH INDIA THAT WAS WORKING WITH PARIS CLUB AND WITH CHINA. AND WE ANTICIPATE THAT THE OFFICIAL CREDITORS COMMITTEE WILL COME UP WITH A POSITIVE STATEMENT BEFORE THE END OF THE YEAR (2023). THEN WE ARE LEFT TO NEGOTIATE WITH THE PRIVATE CREDITORS.”
there is a lack of money. Secondly, droughts are also having an impact. We may not have the crops that we’ve been expecting, and we can have a shortfall. Again, we have to find money for food. So, in many ways we are affected severely. At COP28, you have put some measures on the table, particularly regarding the role that countries in the so-called tropical zones can play. Can you tell us more about the thinking behind this?
We have proposed that we must think outside of the box. It is a crisis if we are not getting results from the present path we are on, and we therefore have to look at something new. So we’ve suggested a Climate Justice Forum which we are moving to the agenda of the next UN climate conference, where there will be constructive discussions.
Secondly, there is a need for an international climate change university, because there has to be capacity building. There also has to be a focal point where research happens. This will be more of a university for postgraduate research as well as training of officials. It will be more like something like the East-West Centre that you find in Hawaii, and it will be an international university with stakeholders. The third [proposal] will be [sustainability initiatives] in the tropical belt... So we looked closer at the tropical belt, which covers about 40 - 44 per cent of the earth’s surface, and by 2030 we will have about 50 per cent of the world’s population. If we can invest and protect the forests, the tropical forests, the mangroves, the coral reefs, the swamps, the grasslands, that means we are
tackling the whole issue of climate change, but it has to be [via] private investment as they’ve got to get carbon credits. That’s the only way that you can get commercial investment. Secondly, because the tropical forests can absorb carbon, this means the northern part of the world could also get involved. We’re also looking at the blue economy and a sustainable Indian Ocean. Water can absorb carbon much faster than even the landmass. So if you combine all this, you’ll have the world’s largest carbon sink and that can take in emissions that come from outside, but it means the whole world needs to get involved in this effort.
SRI LANKA BY THE NUMBERS:
POPULATION, TOTAL:
22,181,000
DRIVING RENEWABLE ENERGY IN THE TROPICS
Arctic Circle
GDP (CURRENT US$)
US$74.4BN
Tropic of Cancer
SOURCE: WORLD BANK | YEAR: 2022
Equator Tropic of Capricorn
UNEMPLOYMENT:
Antartic Circle
6.7%
Equatorial zone
Tropical zone
Temperate zone
Subequatorial zone
Subtropical zone
Subpolar zone
gulfbusiness.com
Polar zone
Watch the full interview on Gulf Business: https://youtu.be/UTgZWQBaJAE
January 2024
17
INTERVIEW
PIC: GETTY IMAGES
THE BRIEF
Committed to climate change FROM COMMITTING $30BN TO THE ALTERRA FUND AND SIGNING CLEAN ENERGY DEALS WITH AFRICA AND THE UK, ABDULAZIZ ALOBAID, CHIEF OPERATING OFFICER, MASDAR, TELLS GULF BUSINESS HOW THE COMPANY IS GEARING UP TO SUPPORT THE AMBITIOUS TARGETS SET AT COP28 BY NEESHA SALIAN
How did Masdar strategically align itself with COP28 to meet leadership goals, and what specific targets were set during the conference?
Q
During the first week of the United Nations Climate Change Conference (COP28) at Expo City Dubai, Dr Sultan Al Jaber, COP28 President and chairman of Masdar, announced that 117 countries, later rising to 118 countries, had signed up to triple renewable energy capacity by 2030. This bold, ambitious, and necessary target aligns with our 18
January 2024
work at Masdar, where we are targeting 100 gigawatts (GW) of gross renewable energy portfolio capacity and one million tonnes of green hydrogen capacity by 2030. The growth of installed renewable capacity globally in the past decade has been tremendous. But the world needs to accelerate the pace if we are to reach 11,000GW by 2030. As we seek to meet this objective, there are challenges ahead, including supply disruptions, uncertain regulatory environments, and challenging financial situations
in some markets. But with a collaborative approach, which partners with others across the entire value chain, we will meet the leadership’s goals. How does the company actively contribute to global clean energy initiatives?
Masdar operates a global portfolio of renewable and clean energy projects and has developed projects in more than 40 countries, from PV solar and onshore and offshore wind to geothermal energy and gulfbusiness.com
ON THE SIDELINES OF COP28, WE ALSO ADVANCED A 10GW GROWTH PLAN WITH SIX SUB-SAHARAN AFRICAN NATIONS – ANGOLA, UGANDA, THE REPUBLIC OF CONGO, KENYA, MOZAMBIQUE, AND ZAMBIA – WHICH, ALONGSIDE OUR COMMITMENT TO MOBILISE $10BN IN FINANCE ON THE CONTINENT, WILL HELP UNLOCK AFRICA’S VAST CLEAN ENERGY POTENTIAL.”
green hydrogen. We are contributing to the energy transition by investing in and developing projects and scalable platforms in a diverse set of countries, supporting their own decarbonisation goals. Guided by our Green Finance Framework, Masdar also deploys a broad suite of green finance instruments to expand our capacity across the globe. Earlier this year, we announced the successful completion of our first green bond issuance for $750m 10-year senior unsecured notes. The bond is the first in a programme to raise up to $3bn to meet Masdar’s equity funding commitments on new clean energy projects at home and overseas. In line with the framework, net proceeds from the bond and future offerings will be used to invest exclusively in ‘dark green’ renewable energy projects – many of which will be in developing economies and climate-vulnerable countries where the need for investment is critical. What were the key announcements made during COP28, encompassing various sectors and their potential impacts?
Masdar announced a series of new partnerships and investments in renewable energy, including joining forces with RWE to invest $13.8bn to co-develop a 3GW offshore wind site in the UK. One of the world’s largest offshore wind projects under development, Dogger Bank South will power up to three million homes, boost the UK economy and create thousands of jobs. We also signed an
EARLIER THIS YEAR, WE ANNOUNCED THE SUCCESSFUL COMPLETION OF OUR FIRST GREEN BOND ISSUANCE FOR
gulfbusiness.com
of what can be achieved when the world unites on climate action. Post COP28, what is the company’s vision for the future, and what specific call to action has been outlined?
Masdar’s vision is clear – we are focused on delivering 100GW of gross renewable energy portfolio capacity and one million tonnes of green hydrogen by 2030, in support of tripling renewable energy capacity globally by the same year. Just this year, we entered new agreements in hydropower, floating solar, and geothermal energy. We are planning to grow significantly in various markets – such as the US, Europe, Central Asia and more – and explore new clean energy technologies and innovations. What are Masdar’s plans for 2024?
agreement with Iberdrola to co-invest up to $16bn in offshore wind and green hydrogen projects in Germany, the UK and the US. On the sidelines of COP28, we also advanced a 10GW growth plan with six Sub-Saharan African nations – Angola, Uganda, The Republic of Congo, Kenya, Mozambique, and Zambia – which, alongside our commitment to mobilise $10bn in finance on the continent, will help unlock Africa’s vast clean energy potential. Towards the start of the conference, Dr Al Jaber delivered a landmark agreement to support climate-vulnerable developing nations by operationalising the Loss and Damage Fund. This is a fine example
$750M 10-YEAR SENIOR UNSECURED NOTES
Masdar plans to build on the unprecedented year of growth achieved in 2023 by turbocharging investments in pioneering renewable energy and hydrogen projects across the world. As you can see by the agreements signed over the past two weeks at COP28, we are committed to expanding our presence at home and across all regions of the world while continuing to diversify our portfolio into alternative technologies. Following the recent in auguration of the world’s largest single-site photovoltaic (PV) solar plant at Al-Dhafra in Abu Dhabi, we expect to be developing more worldleading solar projects across the UAE. In August, Masdar was selected as the preferred bidder for the 1.8GW sixth phase of the Mohammed Bin Rashid Al Maktoum Solar Park in Dubai – another major clean energy project that will contribute to the UAE achieving its ambitious renewable energy targets. Masdar will also continue to support the UAE’s global leadership role in accelerating the energy transition and developing renewable energy worldwide, including investing in projects in developing economies. The UAE’s role in accelerating the development of clean energy in the Global South was made clear during COP28 as it committed $30bn to the Alterra Fund, the world’s largest private investment vehicle for climate change action that aims to raise $250bn globally over the next six years to combat the climate change. January 2024
19
INTERVIEW
PIC : SUPPLIED
ILLUSTRATION: GETTY IMAGES/ Z_WEI
THE BRIEF
Key opportunities, risks facing the global economy in 2024 IN AN EXCLUSIVE INTERVIEW WITH GULF BUSINESS, THE CIO OF SAXO BANK, STEEN JAKOBSEN TOLD US ABOUT SOME OF THE KEY RISKS FACING THE GLOBAL ECONOMY IN 2024. YOU CAN WATCH THE FULL INTERVIEW ON GULF BUSINESS.COM, BUT BELOW ARE SOME KEY TAKEAWAYS FROM JAKOBSEN ON HOW 2024 IS SHAPING UP BY GARETH VAN ZYL
What is your forecast for the economic picture in 2024?
Q In the early parts of 2024, the Federal Reserve will start to indicate that they will cut interest rates. And the reason for that is pretty simple. As you alluded to, we’ve seen a significant increase in the nominal interest rate, which actually brought the real rate, which is the difference between the nominal rate and inflation, to a positive 250 basis points, which is unheard of in modern US history. But the problem from a financial standpoint is that if you pay real rates of 2.5 per cent a in a country that has huge amounts of debt, and ever expanding financing needs, you end up in a situation where you’re going to bankrupt yourself if you keep those high payments to investors. So what the Fed needs to contemplate — and that will have a significant impact on interest rates in the US, but also in this region because of the tie-up to that monetary policy— is that the Fed is going to argue that if inflation is back in the bottle, so to speak, then we have the ability to cut rate. 20
January 2024
This is because if inflation is coming down and interest rates remain the same, that real rate will actually expand. And unlike a lot of people, I don’t really buy into the concept of a soft landing. When you go from excess, which you very well outlined in terms of COVID and the post-pandemic fiscal expansion that we saw, then you normally mitigate that by a cycle downturn. What are your thoughts on some of the key risks going into 2024?
The most dominant one, of course, remains Japan. This is simply because Japan has a central role in the world in terms of its trade financing. They are the biggest trade financing country in the world. They have increasingly become a geopolitical power as the skirmish and the technology race between the US and China is ramping up. Of course, Japan is seen as a place where you can produce some of the stuff that you produce in Taiwan. It is a great economy by any means, but it is also an economy loaded with public sector debt and a monetary
experiment that is out of this world. Again, going back to my university days, if you told me that one of the richest countries in the world is going to have debt-toGDP of 220 per cent in the public space, a fixed bond market in terms of prices and a currency rate that is manipulated, I would tell you that you are absolutely crazy. But that is the case. And make no mistake, your readers need to know that Japan is a civilised country in every sense of the word, but not in financial terms. It is the only grown up market in the world where you don’t have price discovery, as an economist would say. So the ability to actually price money on any part of the yield curve in Japan is given, but only by one force, and that is the Ministry of Finance, the Bank of Japan, both in coordination. If you have no price discovery, you are going to end up in a situation where you create a boom and a bust economy. And for you and I, for the local investor, it is important to know why this is the case, especially because Japan is the single biggest investor in overseas bonds. gulfbusiness.com
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The Brief / Learning
ILLUSTRATION: GETTY IMAGES/ TOMOZINA
COMMENT
Human intervention in learning is non-negotiable even in the AI-era Artificial intelligence is becoming more widely used in our world, but the human touch is still essential for learning
I
t looks like the corporate learning management system (LMS) has finally come of age. The global market is poised to triple from the current level by 2030 to $35bn. The Middle East and Africa LMS market size was at $1.4bn in 2021 and is projected to reach $6.4bn by 2030. The pandemic years saw an astronomical rise in the use of LMS systems, which was until then more or less stagnant in most enterprises. The rise in use during the pandemic years must have been due to extra time and skills needed to survive. Automated learning systems have their own limitations as well. A Medici Institute research survey among a cross section of senior managers, across the spectrum,
22
January 2024
HUMAN TRAINERS AND MENTORS PROVIDE PERSONALISED GUIDANCE AND ADAPT CONTENT TO AN INDIVIDUAL’S UNIQUE LEARNING STYLE AND PREFERENCES
reveals that many employees prefer human intervention in learning and development, despite the potential benefits of an AI-driven adaptive LMS. When employees have to acquire a skill that would immediately bring them some benefits, they don’t care how they acquire it – automated, virtual or in-person. Human trainers and mentors provide personalised guidance and adapt content to an individual’s unique learning style and preferences. This is one of the primary reasons human intervention is indispensable in learning and development (L&D) efforts. Employees have diverse experiences, which can be challenging to address solely through automated systems. Human trainers can adapt their approach to meet individual requirements. A Dubai-based IT firm that implemented an AIdriven coding tutorial platform found that while it provided valuable content, employees had specific questions and challenges related to their projects. Human trainers were subsequently brought in to offer one-on-one mentoring, resulting in more targeted support and accelerated skill development. gulfbusiness.com
Dr M Muneer, co-founder of the nonprofit Medici Institute
Some CHROs also feel that customisation is needed to ensure that employees receive the right level of support at the right time – meaning better engagement, faster skill acquisition, and improved job performance. They need to be able to relate to real life issues and contextual examples. Employees need emotional support and motivation to learn. An AI-based LMS cannot offer encouragement, address concerns, or help users stay engaged throughout the journey – at least for now. Human trainers play a vital role in motivating and holding employees accountable for their learning progress. They can set clear expectations, track performance, and provide encouragement — all of these the right ingredients for taking responsibility for development. One of our medium-sized clients initially relied on a LMS platform for digital marketing training but noticed that many employees skipped modules or did not complete courses. After introducing a human mentor to track progress and provide regular feedback, completion was much better. Employees groan that their questions or clarification on complex topics are not well addressed or easily addressed by automated systems. They believe human trainers can only address such issues well. Another area of concern is when learning soft skills such as communication, leadership, and teamwork, which are essential in the workplace. These skills are challenging to teach and assess through automated systems, as they involve complex human interactions. A leading engineering consultancy firm attempted to implement AI-driven interpersonal skills training but the numerous engineers there found it awkward to apply the theory in real-world client interactions. The issue was solved by using human coaches who rolled out role-playing scenarios, feedback,
FOR TOPICS RELATED TO EMPATHY, DIVERSITY, EQUITY, AND INCLUSION; HUMAN TRAINERS ARE ESSENTIAL
THE PANDEMIC YEARS SAW A RISE IN THE USE OF THE LMS, WHICH WAS UNTIL THEN MORE OR LESS STAGNANT IN MOST ENTERPRISES. THE RISE IN USE DURING THE PANDEMIC YEARS MUST HAVE BEEN DUE TO EXTRA TIME AND SKILLS NEEDED TO SURVIVE
THE MIDDLE EAST AND AFRICA LMS MARKET SIZE WAS AT $1.4BN IN 2021 AND IS PROJECTED TO REACH
$6.4BN BY 2030 gulfbusiness.com
and coaching, resulting in more effective soft skills development. Most organisations have their own unique challenges not just because of the type of industry they are in but of company culture, etc and an automated LMS will not fully understand the nuances and address the same. Without experienced human trainers conversant with the organisation’s culture and such, L&D programmed cannot be tailored to align with the specific requirements. The manufacturing arm of a large conglomerate was mandated to use the existing off-the-shelf automated safety-training programme but it did not adequately address their specific safety protocols and equipment. Senior trainers were brought in to customise the training under the supervision of experts to align with their unique safety requirements. Here are some more reasons why employees find it better with human intervention: In industries, or roles that involve intricate problem solving, human trainers will guide employees through complex scenarios and help develop critical thinking and decision-making skills. For topics related to empathy, diversity, equity, and inclusion, human trainers are essential. Human trainers can only serve as mentors, offering career guidance, setting goals, and helping employees develop a long-term perspective on their professional growth. LMS cannot assess the effectiveness of training programmes and make real-time adjustments based on learner feedback and performance. This iterative process leads to continuous improvement in training quality. Human trainers build trust with employees and that’s invaluable in sensitive topics like ethics, compliance, or confidential matters. The ideal approach might be a blended one, where technology is used to augment human trainers and coaches. January 2024
23
Alan’s Corner Alan O’Neill Managing director of Kara, change consultant and speaker
ILLUSTRATION: GETTY IMAGES/ KTSDESIGN/SCIENCE PHOTO LIBRARY
The two sides to embracing change
Dealing with change requires a dual approach of bringing your team along with you while also acknowledging a greater personal responsibility 24
January 2024
J
ust last month, I celebrated the 25th anniversary of my consulting company. Founded in 1998, I named it Kara Change Management. That was a mouthful at the time and people in my circle questioned it. The concept of ‘change management’ wasn’t that prevalent back then, but look how that has changed since? You don’t need me to remind you that the pace, the volume and the complexity of change is escalating at an exponential pace. Coping with that has become a real challenge for all of us. To coincide with this silver jubilee, I recently launched my third book. It’s called “Show Me the Lid on the Box, How to Manage Change with Least Resistance”. The ‘lid on the box’ refers to the lid on a jigsaw puzzle. Can you imagine trying to assemble a jigsaw puzzle without having visibility of the picture on the lid? Yet, in my experience this is where organisations go wrong all the time. They invest millions in IT systems, new products, acquisitions, and what not. All of these can cause profound change. But too often organisations forget to prioritise their own people in that change. Such investments inevitably prompt changes to ways of working, culture, organisation reporting lines, etc. But when people are not included in the right way and at the right time in the change journey, they often resist the change. Then they are seen to be negative. All that is wrong and unfair. There are two sides to managing change. One is for leaders and how best to bring your people on the journey. The other side is the personal responsibility we should all take to embrace change. Let me share an excerpt from the book that will give you some food for thought. In the west of Ireland in a lush meadow, there once lived a curious little caterpillar named Kara. Kara was a creature of habit, munching on leaves and crawling through the grass day after day. But deep down, he knew he was destined for something more. As the days passed, Kara noticed a strange feeling inside him. He felt confined within his exoskeleton, unable to grow and explore the world around him fully. It was time for a change, and he instinctively knew it. With determination in his heart, Kara found a secluded spot on a tall twig. He hung upside down, knowing that this was the first step in his transformation. The twig offered a perfect place for him to create his cocoon, a safe haven for the upcoming metamorphosis. As Kara began spinning his cocoon, he could feel his exoskeleton cracking and splitting. It was a discomforting process, but he knew it was necessary to shed his old self. Slowly but surely, he gulfbusiness.com
The Brief / Alan’s Corner
“THERE ARE TWO SIDES TO MANAGING CHANGE. ONE IS FOR LEADERS AND HOW BEST TO BRING YOUR PEOPLE ON THE JOURNEY. THE OTHER SIDE IS THE PERSONAL RESPONSIBILITY WE SHOULD ALL TAKE TO EMBRACE CHANGE. LET ME SHARE AN EXCERPT FROM THE BOOK THAT WILL GIVE YOU SOME FOOD FOR THOUGHT.” wriggled out of his former skin and emerged with a soft, new outer layer. Inside his cocoon, Kara felt a profound change occurring. His body was undergoing a remarkable process called imaginal cell growth. These cells were like tiny seeds of transformation, containing the blueprint for his metamorphosis. However, as the imaginal cells multiplied, Kara’s immune system recognized them as foreign invaders. Confusion ensued, as his immune system saw them as a threat, rather than the key to his future. Yet, Kara’s innate wisdom knew that he needed these cells to fulfil his destiny. In a breathtaking display of courage, Kara made a remarkable decision. He consumed some of his own old exoskeleton, hoping to signal to his immune system that these imaginal cells were a part of him and not to be rejected. To his astonishment, his immune system responded positively to the familiar elements, accepting the imaginal cells as his own. This moment of acceptance was pivotal, as it allowed the transformation to proceed without hindrance. For more than two weeks, Kara remained hidden within his cocoon, his body dissolving into a liquid. It was a surreal experience, like surrendering to the mysteries of life itself. The liquid contained essential nutrients, which provided the energy for his metamorphosis. Amidst the chaos of transformation, Kara’s inner wisdom guided every step of the way. The liquification allowed the imaginal cells to reshape him, building the framework of the butterfly he was destined to become. Finally, the day arrived when Kara was ready to emerge from his cocoon. With a newfound strength and grace, he broke free from the confinements of the past. His once stubby legs now extended into delicate wings, adorned with vibrant colours and patterns. As Kara spread his wings, a sense of freedom and exhilaration washed over him. He took flight, soaring high above the meadow he had once crawled through. The world looked different from up above, gulfbusiness.com
WHEN PEOPLE ARE NOT INCLUDED IN THE RIGHT WAY AND AT THE RIGHT TIME IN THE CHANGE JOURNEY, THEY OFTEN RESIST THE CHANGE
and Kara embraced this new perspective with wonder and awe. Fluttering proudly in the spring sunshine, Kara appreciated the results of the recent metamorphosis. With new skills it could soar to new heights above the flowers and was ready for new challenges. Life in its previous form as a caterpillar had been good, if a little slow. Although it could cope well, it knew that change was inevitable. It could never have resisted it. As the wind carried him through the sky, Kara realized that he had become the butterfly he had always dreamed of being. His transformation was a testament to the power of change, growth, and the resilience of life itself. In the end, Kara’s journey from a curious caterpillar to a beautiful butterfly taught us the profound truth - that sometimes, in order to truly discover our potential, we must embrace change, shed our old ways, and have the courage to transform ourselves from within. Like Kara, we too can spread our wings and take flight, empowered by the wisdom of our own metamorphosis. THE LAST WORD This excerpt shows us that resistance to change is often futile. Kara’s transformation is a testament to the profound truth that change is not only inevitable but also a source of strength. The call to action is clear. As business leaders, we should embrace change, shed the old ways, and have the courage to transform from within. Like Kara, let us spread our wings, take flight, and revel in the extraordinary possibilities that lie ahead.
SOMETIMES, IN ORDER TO TRULY DISCOVER OUR POTENTIAL, WE MUST EMBRACE CHANGE, SHED OUR OLD WAYS, AND HAVE THE COURAGE TO TRANSFORM OURSELVES FROM WITHIN
January 2024
25
The Brief / Infographics
BY THE NUMBERS: COP28 UAE
THE WORLD’S BIGGEST CLIMATE GATHERING WAS A GREAT SUCCESS, WITH NEARLY 200 NATIONS REACHING AN AGREEMENT TO TRANSITION AWAY FROM FOSSIL FUELS FOR THE FIRST TIME EVER GWh
TOP 10 COUNTRIES
2,500,000
2,000,000
FOR THE WORLD TO KEEP A WARMING OF NO MORE THAN 1.5°C WITHIN REACH, 22-25 GtCO2 e of emissions need to be mitigated by 2030, said organisers of the COP28 Summit. Current Nationally Determined Contributions (NDCs) could lead to around 4-5 GtCO2 e of emissions reductions in 2030, helping to close the gap — but more is needed.
CLEAN ELECTRICITY GENERATION
1,500,000
1,000,000
TOP 10 COUNTRIES IN ELECTRICITY GENERATION BY RENEWABLE ENERGY
01 China 02 United States of America 03 Brazil
500,000 0
04 Canada 05 India China
United States of America
Brazil
CLIMATE FINANCE COMMITMENT COUNTER AT COP28
Canada
FINANCE
Norway
Spain
06 Germany
$9bn
$6.8bn ENERGY
$3.5bn ($12.8bn total)
INCLUSION
GREEN CLIMATE FUND (GCF)
$188m ADAPTATION FUND
07 Russia 08 Japan 09 Norway 10 Spain
LIVES & LIVELIHOODS
$2.7bn LOSS & DAMAGE
Germany Russian Japan Federation
The objective for this COP28 was clear: ensure that finance for climate action becomes more available, accessible, affordable, and ensure climate investment is seen as an economic opportunity. Early in the summit, governments, international financial institutions, and the private sector took significant leaps towards that goal.
$61.8bn
$792m
India
$129m
LEAST DEVELOPED COUNTRIES FUND
*SOURCE: Data from the International Renewable Energy Agency (IRENA), which reflects the standing in 2021, but which was recently updated in July 2023. This data looks at bioenergy, geothermal energy, hydropower, marine energy, pumped storage, solar and wind
2025
THIS IS THE YEAR WHEN EXPERTS EXPECT GLOBAL EMISSIONS TO LIKELY PEAK. Experts at COP28, though, said that for developing nations this may occur only in later years.
SOURCE: OFFICIAL COP28 UAE CONSENSUS BROCHURE
26
January 2024
gulfbusiness.com
COP28 UAE CONSENSUS BY THE NUMBERS
APART FROM AGREEING TO TRANSITION AWAY FROM FOSSIL FUELS FOR THE FIRST TIME EVER, THERE WERE A RANGE OF OTHER DEALS AND ENDORSEMENTS STRUCK BY COUNTRIES AT THE 2023 CLIMATE SUMMIT
Global Renewables & Energy Efficiency Pledge
ENDORSED BY 133 COUNTRIES
COP28 UAE Declaration on Agriculture, Food & Climate
ENDORSED BY 159 COUNTRIES
COP28 UAE Declaration on Climate & Health
ENDORSED BY 144 COUNTRIES
COP28 UAE Declaration on Climate Finance
ENDORSED BY 13 COUNTRIES
COP28 UAE Declaration on Cooling
ENDORSED BY 66 COUNTRIES
COP28 UAE Declaration on Climate Relief, Recovery & Peace
ENDORSED BY 80 COUNTRIES
Coalition for High Ambition Multilevel Partnerships (Champs) Pledge
ENDORSED BY 71 COUNTRIES
COP28 Oil & Gas Decarbonisation Charter
ENDORSED BY 52 COUNTRIES
COP28 Declaration on Hydrogen
ENDORSED BY 37 COUNTRIES *Source: Official COP28 UAE Consensus Document
3X NUMBER OF COUNTRIES THAT AGREED TO TRANSITION AWAY FROM FOSSIL FUELS AT COP 28:
200 COUNTRIES
Delegates from almost 200 countries at COP28 agreed to almost triple renewable energy sources over the next few years
We need to bridge the gap between the global north and the global south. And those who promise, must deliver. Those who pledge, must act. I am determined to do everything in my power to restore faith and confidence in multilateralism. I will hold every state, every party and every stakeholder accountable for keeping 1.5 in reach.” — Dr. Sultan Al Jaber COP28 President
“COP28 occurred at a decisive moment in the fight against climate change…it’s important that the outcome of the Global Stocktake clearly reaffirms the need for limiting global temperature rise to 1.5°C and that this requires drastic reductions in emissions in this decade…for the first time, there is a recognition of the need to transition away from fossil fuels – after many years in which the discussion of this issue was blocked.” — Antonion Guterres Secretary General, United Nations
“After 31 years of debates, and for the first time, we have a result that takes into consideration a trajectory of transitioning away from these fossil fuels… Obviously this road map is an effort we will have to pursue from now on... developed countries and developing countries must all be committed to having a common responsibility... developed countries should take that lead.” — Marina Silva Minister for Environment & Climate Change, Brazil Pics: Getty Images
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POWERING A PRAGMATIC ENERGY TRANSITION POS T-COP28, T HE WHOLE WORLD IS T RY ING T O FIGURE OU T A GREENER ENERGY MI X . BU T A S M A JID JA FA R , T HE CEO OF CRE SCEN T PE T ROLEUM POIN T S OU T, T HIS CA N’ T BE ACHIE VED WI T HOU T FOS SIL FUEL S A ND, MORE PA R T ICUL A RLY, CLE A NER N AT UR A L GA S
W O R D S G A R E T H VA N Z Y L P H O T O S A H M E D A B D E LW A H A B
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early 200 nations reached a historic decision at the COP28 UAE summit late last year to start transitioning the world’s energy systems away from fossil fuels. It was the first time ever that such a landmark agreement was reached at the annual United Nations climate gathering, which saw more than 80,000 delegates descend on Dubai. The ball has now been set in motion as countries have agreed to treble their usage of renewables by the end of this decade, while further trebling nuclear energy by the middle of the century. But while there is no doubt that an energy transition is needed to keep higher global temperatures at bay, the reality is that fossil fuels still have a critical role to play in helping us get to the next energy stage. And Majid Jafar, who is the CEO of Sharjah-headquartered oil and gas company, Crescent Petroleum, expanded this point succinctly in an exclusive interview with Gulf Business. “We need to decarbonise without unplugging the modern energy system, because a lot of the developing world will still need it. We live in a world where one billion people in the OECD — the rich, mainly Western world if you like — uses more energy, and is responsible for more of the historical emissions than the other remaining seven billion people.
MEET MAJID JAFAR, THE MAN BEHIND CRESCENT PETROLEUM Serves as the vice-chairman of the Crescent Group as well as the CEO of Crescent Petroleum Board managing director of Dana Gas (PJSC), the leading publicly-listed natural gas company in the Middle East, in which Crescent was the founding shareholder. Jafar has previously worked with Shell Exploration & Production and Shell Gas & Power. Educated at Eton College and Cambridge University (Churchill College), graduating with Bachelor and Master’s Degrees in Engineering (Fluid Mechanics and Thermodynamics). He also earned an MA (with Distinction) in International Studies and Diplomacy from the University of London’s School of Oriental & African Studies (SOAS), and an MBA (with Distinction) from the Harvard Business School.
Those in developing countries still need energy access, and they have needs for health and education and clean water. All of these things rely on energy. Did you know that 80 per cent of the world still hasn’t been on a plane? Therefore, people in those countries need their energy requirements to be met,” said Jafar. He goes on to further explain how everything that we’re going to need for the energy transition itself — from solar panels to wind turbines and even the components of electric cars — are all made from oil products. Meanwhile, natural gas will still be needed to back-up intermittent renewables and replace higher emitting fuels, as well as fertilisers in food systems. A key question that the world then faces is how to drive up rates of prosperity across the globe while decarbonising at the same time. 30
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He is an accredited director of the Institute of Directors (IoD Mudara), a member of the GCC Board Directors Institute and the Young Presidents Organization (YPO). He was named a Young Global Leader by the World Economic Forum. In addition to his professional responsibilities, Majid Jafar serves on several non-profit boards, including: the Arab Forum for Environment and Development (AFED), Queen Rania Foundation (QRF), the Board of Fellows Harvard Medical School, the Panel of Senior Advisers of the Royal Institute of International Affairs (Chatham House), and the International Advisory Board of the Prince’s Trust International and The Atlantic Council.
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Jafar explains that one way to achieve this is by shifting to cleaner fossil fuels, such as natural gas. “Renewables are great, and the costs have come down. But the reality is that there are limits to how much further the costs can come down, and, also, you can’t store that energy easily. When the sun isn’t shining, or the wind isn’t blowing, you need something to back it up. And here natural gas is a perfect transition fuel, because it is — by far — much cleaner than coal with half the CO2 emissions, and none of the polluting nitrogen oxide (NOx) and sulphur oxide (SOx) and other particulates that you have with coal fired generation,” Jafar told Gulf Business. “We see that with the UAE energy strategy for 2050, the country aims to have 40 per cent of renewables backed up by about 40 per cent natural gas — and then the rest made up with nuclear and other cleaner sources. Natural gas has a fundamental role to play, and the Middle East’s role in that is growing. Our region has about half the world’s oil and gas reserves, but only about a third of the world’s oil production, and only a sixth of the world’s gas production. There’s still a lot more room for us to grow. Plus, our region’s natural gas is often the lowest carbon and the lowest cost globally,” Jafar adds.
NATURAL GAS: FROM ZERO TO HERO Interestingly, the use-case for natural gas in our world wasn’t always that strong and as high in demand as it is today. Even Crescent Petroleum itself primarily started life as an oil producer, only to shift later to more predominantly focusing on natural gas. After Crescent Petroleum was incorporated in 1969, it started operations in 1971 — the same year that the United Arab Emirates was formed. “We started off in Sharjah as an oil producer, with the Mubarak field, which was the main offshore oil production facility that we operated for 40 years. We took that to peak production of 60,000 barrels a day. Over the last five decades, we’ve had operations in different countries in the region, including Egypt, Pakistan and Yemen. Today, Iraq is a big focus for us too. And what we produce has also evolved and changed — much like the overall energy transition. We used to produce oil, and today we’re actually producing much more natural gas. About 85 per cent of
PETROLEUM
CONTRIBUTION TO SHARJAH’S ECONOMY From its production inception in 1974 until 2010, Crescent Petroleum’s Mubarak Field generated approximately 103 MILLION BARRELS of oil a day (MMBBL) and 293 BILLION CUBIC FEET of gas. Crescent invested $2.6BN in today’s terms (capital and operational expenditures) into the Mubarak field
our production is natural gas, and that’s the trend that you see within the energy space globally as well,” Jafar told Gulf Business. As Crescent Petroleum has shifted its focus, it’s seen the shift of attitudes in the local industry too. “In the 1980s, and 1990s, at least in this region, natural gas was seen as an unwanted byproduct. When engineers drilled a well, there was a saying that it would be bad news if they didn’t find oil but good news if they didn’t find gas. This was because gas was something that you had to deal with somehow, and at that time there wasn’t even the market for it. Sadly, we saw a lot of flaring of natural gas happening at that time. “But I think that’s all that’s changed now, and the fundamental role for gas to fuel power generation, as well as industrial development, is very much recognised now,” said Jafar.
Renewables are great, and the costs have come down. But the reality is that there are limits to how much further the costs can come down, and, also, you can’t store that energy easily. When the sun isn’t shining, or the wind isn’t blowing, you need something to back it up. And here natural gas is a perfect transition fuel, because it is — by far — much cleaner than coal with half the CO2 emissions, and none of the polluting nitrogen oxide (NOx) and sulphur oxide (SOx) and other particulates that you have with coal fired generation.”
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BREAKING THE COAL ADDICTION While the world is becoming far more receptive to natural gas, the challenging reality is that many countries that should shift away from, say, coal-powered plants to gas-powered plants are not always necessarily doing so as quickly or as widespread as they should. For example, China has the world’s most number of coalpowered electricity plants, with an estimated 1,142 operational on the mainland, according to Statistita. Reports indicate that a further 200 coal-powered plants are under development in China. In Africa’s most industrialised nation, South Africa, over 90 per cent of that country’s electricity comes from coal-powered fire stations. This is even as the country’s monopoly power provider, Eskom, grapples with a severe energy crisis where major cities such as Johannesburg can be left without electricity for up to 10 to 12 hours a day. To explain this, Jafar said our world can do better on what he calls the energy trilemma: affordability, availability, and sustainability. “For many countries like China, India and South Africa; they have coal readily available, and it’s the cheapest energy source for them. These countries face a challenge where they may need to import natural gas. But countries with natural gas, such as the UK, such as the US have managed to do the coal to gas switch, and it’s led to the fastest drop in emissions. “It’s how the UK has achieved Victorian era 19th century levels of emissions, and then enabled renewables. And you’ve had a similar situation in the US where that country is down to 1990 levels of emissions or per capita 1965 levels of emissions. “But if you don’t have your own natural gas, then you’re going to need to import it. And we have two issues facing us here at the moment. Firstly, Western governments and capital markets are dissuading investments in natural gas, even while they continue to acquire and use it themselves. We saw last year with the energy crisis in European countries, where they were even subsidising consumption of energy from gas and calling it ‘energy support’ while buying more gas from international markets to replace Russian supplies. So that’s been driving up the cost of natural gas globally, for countries in Asia, for countries in Africa,” said Jafar. On the affordability theme, Jafar said that other global dynamics are playing into higher gas prices. These include
THE COMPANY SUCCESSFULLY BROUGHT DOWN ITS METHANE EMISSIONS TO
0.12% OF PRODUCTION
the US-China trade tensions and the US introducing its Inflation Reduction Act, which has been deemed to implement a lot of subsidies for new energy technologies. In turn, Europe has been worried over whether this is a form of protectionism, resulting in the EU responding with its own subsidies and tariffs, often at the expense of developing countries.
CURBING METHANE EMISSIONS Apart from high prices and potential supply challenges with natural gas, another key issue for the industry is tackling methane emissions. Methane — which is the primary component of natural gas — is a potent greenhouse gas that if left unchecked and uncontrolled can have a negative impact on the atmosphere. According to the US Environmental Protection Agency, methane is more than 28 times as potent as carbon dioxide at trapping heat in the atmosphere. Putting this into further context, Jafar said that methane doesn’t last as long in the atmosphere as carbon dioxide, but that its short term impact is still worse. The key is to manage methane emissions better.
We still have some assets in the UAE and Sharjah but Iraq is a major focus, and we are currently producing 500 million cubic feet per day of gas there, as well as 15,000 barrels a day of condensate, which is very light, clear, and clean oil. In Iraq, we are also producing over 1000 tonnes per day of Liquid Petroleum Gas (LPG). We will be increasing that by 50 per cent by next year. So our total investment now, there in Iraq is close to $3bn.”
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The gas we produce, by displacing diesel for power generation, avoids more than 5 million tonnes of CO2 annually.” Crescent Petroleum itself has just completed a seven year programme of reducing emissions and flaring whereby the company successfully brought down its methane emissions to 0.12 per cent of production. The company has further offset the remainder of its emissions with UN certified carbon credits to achieve carbon neutrality, thereby effectively achieving net zero production two years ago. Jafar said the company has since maintained that record. “As an industry, how we produce methane must be a cleaner process and COP28 recognided this with the decarbonisation accelerator and its concrete pledges on bringing methane emissions down to nearly zero by 2030,” said Jafar. He further said that more than 50 companies, including Crescent Petroleum, have signed this pledge and thereby recognising the key role of gas decarbonising the system, and “enabling not just renewables today, but the hydrogen economy of tomorrow.” Jafar said that methane is also a useful product that, if captured properly, can be utilised in many other industries and applications.
LOOKING AHEAD From its humbling beginnings in Sharjah in the 1970s, Crescent Petroleum today is a major energy powerhouse with a growing reach across the Middle East. gulfbusiness.com
THE MIDDLE EAST WILL CONTINUE TO BE A CRUCIAL PLAYER IN THE WORLD’S ENERGY MIX IN THE YEARS AHEAD
While the UAE is a big focus for the company, opportunities in frontier markets such as Iraq are also opening up new doors for energy in the region. “From north to south, we now have over eight fields which is more than any other operator in Iraq, and Iraq still has a lot of unfulfilled potential. There are many challenges in operating there. But we’ve been producing in that country now for over fifteen years continuously. And we have an understanding of the needs and the way to operate. The federal government and the prime minister in Iraq have made natural gas a priority, because they still don’t have full electricity,” said Jafar..” And the rate of expansion in Iraq is substansive. “We still have some assets in the UAE and Sharjah but Iraq is a major focus, and we are currently producing 500 million cubic feet per day of gas there, as well as 15,000 barrels a day of condensate, which is very light, clear, and clean oil. In Iraq, we are also producing over 1000 tonnes per day of Liquid Petroleum Gas (LPG). We will be increasing that by 50 per cent by next year. So our total investment now, there in Iraq is close to $3bn,” said Jafar. Apart from this boost in investment in existing operations, Crescent Petroleum in 2023 signed three new blocks with the government of Iraq containing multiple fields in Diyala and Basra, with some discoveries near the Kuwait border. This adds to its already significant number of oil and gas fields in the country, with plans for a further $1bn of investment in the new fields that will add 400 million cubic feet per day of new gas in the first production phase. Overall, Jafar said the Middle East will continue to be a crucial player in the world’s energy mix in the years ahead. “Our region has half the world’s oil and gas resources with the lowest-cost renewables and the newest technologies being invested in and rolled out at scale here. We see this region as a hub for global energy for decades to come,” he concluded. January 2024
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FEATURES / BANKING & FINANCE
BUCKING THE TREND
GCC BANKS’ FINANCIAL PERFORMANCE REMAINS RESILIENT WHILE THEY CAPTURE AND BENEFIT FROM THE GROWTH OPPORTUNITIES ARISING ON THE BACK OF THE LONG-TERM NATIONAL VISION TRANSFORMATION PLANS
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2024, together with non-oil he GCC banking sector GCC banks are also leveragsector growth of about 3.5 per will remain resilient in ing innovative technologies and cent, will support moderate 2024, bucking the global GenAI to assess the sustainabilfinancing growth. trend, amid robust ecoity of their lending portfolios It is worth noting that economic growth in the and develop new sustainable nomic growth in the Gulf region non-oil sectors across the region. Moody’s finance products and services. is mirrored in the performance projected that GCC banks’ liquidity Meanwhile, sustainability of the banking sector, which is buffers will stay ample this year and has become a topic of cruAsad Ahmed experiencing a period of muchprofitability will remain strong in stark cial importance for many welcomed profitability. contrast to the global market, where corporations in the GCC region, finanprofit is expected to plunge cial institutions included. One on higher funding costs, lower reflection of this is the UAE loan growth and loan-loss probanking sector’s pledge to AN ENABLING ENVIRONMENT visioning needs. mobilise $270bn (Dhs1tn) in The GCC banking sector remains Banks in the Gulf region have green finance by 2030. unscathed by the global financial turweathered several storms in Vijay Valecha, chief investmoil, owing to regional banks’ solid recent years from the 2008/09 ment officer at Century liquidity buffers, and low-cost and stable global financial meltdown to Financial says the pledge by customer deposits. last year’s banking crisis that UAE banks at COP28 signifies Mohamed Damak Asad Ahmed, managing director and culminated in the collapse of a pivotal moment in the finanhead of Middle East Financial Services three US regional banks and Swiss bankcial industry, where sustainability takes at Alvarez & Marsal highlights ing giant Credit Suisse. centre stage. that banks in the Gulf region However, despite the volatility in the The latest data shows that have proven to be more resilglobal market, regional banks are benethe outlook of the Gulf region ient to market challenges than fitting from strong operating conditions has strengthened, with a 3.6 their global counterparts. supported by high oil prices, contained per cent GDP growth projected “From where we are today, inflation and high-interest rates. in 2024, driven by robust oil we expect 2024 to be a stable “We are of the view that banks in the prices and the improvement year for banks, net interest GCC will continue to perform well in in non-oil activity. margin will show slight down2024 after showing a stellar performance From an Islamic banking Redmond Ramsdale ward movement as interest in 2023,” says Mohamed Damak, managperspective, Redmond Ramsrates begin to decline; cost of credit is ing director at S&P Global Ratings. dale, Fitch Ratings’ head of Middle East likely to show some increase if the con“Banks have benefited from the Bank Ratings and Islamic Banking says tinued higher rates affect credit quality; increase in interest rates in 2023 and the the GCC region’s real GDP growth in return on equity and return on assets are relatively supportive non-oil economies unlikely to show any major surprises,” in most GCC countries.” he explains. Digital transformation is the future Despite a projected deterioration in of the GCC region’s banking sector. By asset quality indicators and an increase automating processes and leveraging in the cost of risk, GCC banks will report innovative technologies such as generaBANKS HAVE stronger profitability in 2024 supported tive artificial intelligence (GenAI), banks BENEFITTED FROM by higher margins from higher rates, can reduce their reliance on manual increased business volumes and lower labour and lower operating costs. THE INCREASE IN loan-loss provisions. “The integration of GenAI into bankINTEREST RATES “Profitability will continue to bening operations has the potential to efi t from higher interest rates in 2024, revolutionise the industry by enhancIN 2023 AND supported by high levels of low-cost ing efficiency, customer experience, and THE RELATIVELY deposits and muted financing impairdecision-making processes,” observes ment charges. Fitch does not expect Abbas Basra, partner and head of FinanSUPPORTIVE the US Treasury to start cutting rates, cial Services at KPMG Lower Gulf. impacting the GCC, until at least midGenAI dominated the financial services NON-OIL 2024, and this is likely to be very technology conversation in 2023, and the ECONOMIES gradual,” adds Ramsdale. debate is set to continue this year. Global The region’s top five lenders – Saudi accounting firm Deloitte said in its 2024 IN MOST GCC National Bank, Al Rajhi Bank, Qatar banking outlook report that the impact of COUNTRIES.” National Bank, First Abu Dhabi Bank and GenAI, industry convergence, embedded Kuwait Finance House – posted $1.34tn in finance, open data, digitisation of money combined net assets in the nine months and digital identity will increase this year. gulfbusiness.com
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FEATURES / BANKING & FINANCE
to September 30 and Moody’s said profitability will remain strong in 2024 after record profits last year.
GENAI IN BANKING
Pics: Getty Images
The exponential pace of new technologies, and the confluence of multiple trends, are influencing how banks operate and serve customer needs. “From chatbots to fraud detection, innovative technological tools that utilise large volumes of data are increasingly being used for more efficient credit, investment and businessrelated decision making,” says KPMG Lower Gulf’s Basra. Abbas Basra Several banks in the GCC region are piling into GenAI as the hype surrounding the buzzy technology shows no signs of fizzling out. While AI-facilitated automation and prediction are common parts of banks’ digitalisation journeys, investment in and adoption of tools driven by GenAI-powered systems remain nascent. However, the potential for the new AI to reshape banking seems vast and its benefits are likely to prove incremental. “The strides made by GenAI, exemplified by OpenAI’s GPT-4 and Alphabet’s Bard, present a transformative opportunity for the banking sector. The technological advancement holds the potential to revolutionise the industry by reshaping how banks deliver value, improve efficiency, and foster innovation,” says Valecha. GenAI promises to reshape the banking industry, at a steady and incremental rate, by providing new capabilities, revenue opportunities, and cost reductions. Dubai’s Emirates NBD partnered with Microsoft in July 2023 to harness the
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power of GenAI to advance the banking group’s operations and productivity across various business functions. The collaboration seeks to unlock new opportunities for innovation, efficiency and customer experience within the banking industry. Damak notes that the bulk of banks’ near-term use cases will likely focus on offering incremental innovation (i.e., small efficiency gains and other improvements across business units) and will be based on specific business needs. GenAI is revolutionary. The most immediate impact that the innovative technology is expected to have on banks, much like digital transformation before it, is further advancing customer experience and personalised product offerings.
JOURNEY TOWARD NET ZERO Finance has long been at the heart of global climate negotiations, energy transition, climate adaptation and disaster relief. “The journey towards a more sustainable future requires an active approach from investors,” says Neha Coulon, managing director and head of ESG for EMEA at J.P. Morgan Private Bank. “Engaging with fund managers who possess expertise in Neha Coulon navigating the complexities of climate risk is crucial.” With the goal of net-zero carbon emissions by 2050, sustainable finance has become an urgent priority. As drivers of sustainable economic growth, GCC banks are vital contributors to global climate efforts.
FROM CHATBOTS TO FRAUD DETECTION, INNOVATIVE TECHNOLOGICAL TOOLS THAT UTILISE LARGE VOLUMES OF DATA ARE INCREASINGLY BEING USED FOR MORE EFFICIENT CREDIT, INVESTMENT AND BUSINESS-RELATED DECISION MAKING.”
“We expect green and sustainable finance to become one of the main contributors to the growth of the banking industry in the GCC for the next few years,” Damak tells Gulf Business while projecting a higher volume of sustainability bonds and sukuk issuance from the region. Sustainable finance can boost revenues for GCC banks and contribute substantially to businesses’ progress in meeting global climate goals but success requires a strategic approach. Neha underscores that by seizing the opportunities presented by investing in climate solutions, the financial services sector can create a resilient and sustainable world for future generations. Global accounting firm EY said nearly three-quarters of the MENA banks have developed environmental, social, and governance (ESG) strategies, but few have robust ESG governance and accountability frameworks that promote rigorous implementation. Meantime, the GCC banking sector has gone through a fundamental transformation and has been on a growth trajectory over the past decades. This development is playing an increasingly important role in the region’s overall economic growth. gulfbusiness.com
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FEATURES / TECHNOLOGY
2024 TECH PREDICTIONS FROM ADVANCES IN ARTIFICIAL INTELLIGENCE TO EVOLUTIONS IN THE WAY WE COMMUNICATE ONLINE, THIS YEAR WILL BE ANOTHER INTERESTING ONE
T
he year 2023 was marked by the explosion in the popular use of Artificial Intelligence (AI) and Large Language Models (LLMs), largely thanks to ChatGPT bursting on to the scene and making
serious waves in the worlds of businesss and consumer technology culture. This year, we’re still set to see AI take up a lot of the IT space. But more than this, the way we have been communicating in a pandemic
MOREY HABER Chief security officer, BeyondTrust POTS (plain old telephone system) and even VoIP will give way to unified communication services (UCS) such as Zoom and Teams. Today, any two devices that are connected to the Internet can put their users in touch with one another. Soon, phone numbers themselves will be obsolete, replaced by email addresses and other digital aliases. Of course, with communications digitised, we must watch for vulnerabilities and their exploitation by threat actors.
FRED LHERAULT CTO, Emerging Pure Storage Demand for generative AI solutions will spark a new surge in container adoption: A recent study by McKinsey predicted that $150bn (or 9 per cent of combined GDP) of value could be added to GCC economies by artificial intelligence, but it went on to state “that figure could be quickly surpassed” by the adoption of technologies such as generative AI. Next year, we can expect to see the widespread adoption of containers — already a growth market — to facilitate generative AI’s integration.
CONTAINERS PLAY VITAL ROLES IN THE CURATION, CLEANING, AND FORMATTING OF DATA, AS WELL AS IN MODEL TRAINING, LARGELY BECAUSE THE TOOLS USED IN THESE STAGES ALL RESIDE IN CONTAINERS.” 38
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and post-pandemic world is set to take more steps forward. We could, finally, ditch the use of traditional calls for pure online meeting communication tools. Top tech experts weigh in on their views.
The open-source Kubernetes — and containers in general — are widely seen as the best way to achieve the required agility to adopt AI at an organisation’s own pace. Containers play vital roles in the curation, cleaning, and formatting of data, as well as in model training, largely because the tools used in these stages all reside in containers. This will be the third phase of growth for containers. The first being the containerisation of workloads and the second involving databases and applications. Now that AI and its supporting tools are migrating, we will see the reliance on containers continue to rise, throughout 2024 and beyond.
CATHY MAUZAIZE President EMEA, ServiceNow Technologies will support growth of new business models and revenue streams: Innovation is always top of mind for any forward-thinking business leader. However, the pace of this is faster than ever and isn’t showing signs of slowing down. The accelerating pace of innovation will make it necessary for organisations to embrace new business models and revenue streams in the coming year – and the CIO may just sit at the heart of this. According to the 2023 State of the CIO Report, more than two thirds (68 per cent) of CIOs acknowledge that the creation of new revenue streams is among their job responsibilities. Incumbents will leverage technology to reach customers in novel ways, while agile startups will continue to design disruptive offerings from scratch. With change coming faster than ever before, companies will demand faster time-to-value when investing in new solutions. Collaboration will be key as organisations look to partner with complementary capabilities. The companies that openly share knowledge and expertise with their network will be best positioned to thrive amidst the coming wave of technology advancement. gulfbusiness.com
FEATURES / TECHNOLOGY
Security will take ownership of data in 2024. Since data sits at the heart of so many core business applications, 2024 will be the year that security, finally, and uniformly, addresses the need for organisation-wide compliance. We will see
CHRISTIAN BORST CTO EMEA, Vectra AI
business units, we have long seen technology professionals from inside and outside the security function talk about information silos and their potential to stymie effective operations. By placing data in the hands of a single function, we won’t slow down operations, instead it’ll allow the security team to offer consistent protection while adding business value.
This growing recognition will give rise to a shift where every stage of technology development and deployment is anchored around the user, rather than siloed metrics focused on business outcomes such as efficiencies. As organisations begin to see the positive ripple effect that a human-centric perspective has on individuals, as well as the wider business and the world around them, they will increasingly seek to demonstrate thoughtful practices. With a proactive and inclusive approach to digitalisation, businesses will not only nurture greater engagement, but they will also be better placed to strategically extend, enhance and enrich human capabilities.
Widespread LLM usage will fade away, but deep fakes will skyrocket. Many organisations are exploring ways to use Large Language Models (LLMs) following the initial wave of hype this year. But when you scratch beneath the surface, it’s clear the novelty factor will soon evaporate. LLMs are typically quite difficult to use, because they are unable to HUMAN-CENTRICITY understand context or provide reliable outputs, CAROLINE MALCOLM WILL DEFINE DIGITAL so the wider practical use of LLMs is restricted. VP of Global Public Policy, Next year we will therefore see businesses scale INITIATIVES. MORE AND Chainalysis back their use of LLMs as they wait for these tools MORE ORGANISATIONS 2023 proved to the to become more functional and user-friendly. ARE RECOGNISING THE world that the UAE Threat actors will face the same issues with government recogusing LLMs, so we likely won’t see much complex POWER OF A PEOPLEnises the value and activity such as AI generating malicious code. FIRST APPROACH potential for digital However, we can expect cybercriminals to TO TECHNOLOGY.” assets to deliver a wide harness generative AI to create more realistic range of benefits to and sophisticated deep fakes. This will give them both businesses and consumers. With a better chance of tricking users into giving up sensitive data or regulations in place, businesses will clicking on something malicious through more convincing audio now be keeping a close eye on what technologies government entior visual phishing lures. ties are utilising to manage the risks associated with digital assets. The government will set the pace, and the private sector will follow suit. Prominent financial entities are eagerly waiting in the MATT CLOKE wings to launch their crypto-centric services. Through 2024 we CTO, Endava can expect governments and enterprises to leverage the regulaHuman-centricity will define digital tory clarity in the country and invest in responsibly building out initiatives in 2024. More and more the ecosystems. organisations are recognising the power of a people-first approach to technology, and 2024 will be the year where this ethos proliferates. Many are realising that past digital WITH REGULATIONS IN PLACE, BUSINESSES transformation failures have been a result of a range of cultural WILL NOW BE KEEPING A CLOSE EYE ON WHAT factors, and data from an IDC survey sponsored by Endava reveals TECHNOLOGIES GOVERNMENT ENTITIES ARE a rising awareness of the role of humans in shaping technology UTILISING TO MANAGE THE RISKS ASSOCIATED with lasting impact. For example, 39 per cent of respondents cited a lack of employee buy-in as the reason for project failures, WITH DIGITAL ASSETS.” followed by conflicting opinions from leadership (36 per cent) and a lack of internal collaboration (33 per cent). gulfbusiness.com
January 2024
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HADI JAAFARAWI Managing director, Middle East, Qualys
security being involved in every instance of data access. This security presence will extend to everyday operations. Even the machinery of OT will not be exempt. Security teams will end up conducting performance diagnostics because such screenings require data, and data is going to be the domain of security. While this may appear to be the end of autonomy for
FEATURES / TECHNOLOGY
KURT MUEHMEL, Everyday AI strategic advisor, Dataiku
MENA MIGALLY Regional vice president for emerging EMEA, Riverbed Young generation employees will shape enterprise IT. In a recent Riverbed survey, 64% of decision-makers in the UAE and Saudi Arabia said younger generation employees are the most demanding of IT’s time, and nearly all (97 per cent) of respondents believe they will need to provide more advanced digital experiences to meet their needs. If regional businesses are to attract top talent, they have to ensure their tech investments align with the expectations of younger generation employees. And what are these tech investments likely to be? UAE and Saudi leaders believe that AI (54 per cent), cloud (50 per cent), digital experience management solutions (43 per cent), application or network acceleration technology (36 per cent), and automation (34 per cent) are crucial for organisations looking to remain competitive in today’s marketplace.
In 2024, there will be a generative AI regulation conundrum for organisations. Despite the fact that regulators are moving much slower than the technology itself, we expect to see more work surrounding the regulation of Generative AI like ChatGPT. However, while enterprises anticipate that there will be future regulation, they don’t know exactly what it will be. This puts the onus on them to be prepared and implement good AI Governance practices They will need to be able to communicate clearly what they are using Generative AI for, how it’s being used, and what they are doing to avoid shadow AI. While no one knows for certain what the regulation is going to be, we do know that it’s important to comply as quickly as possible — and that will be difficult FEATURES SUCH AS VIRTUAL without good AI Governance practices in place.
JEFF STEWART VP of Global Solutions Engineering, SolarWinds
TROUBLESHOOTING AGENTS AND GUIDED INCIDENT RESOLUTION WILL CONTINUE TO SUPPORT THE WORKLOAD OF IT TEAMS IN 2024.”
IT Service Management (ITSM) will support faster, more successful IT outcomes in 2024. On average, research shows that organisations surveyed who adopted AI-powered tools to meet their ITSM needs were able to reduce system downtime by 21 per cent and decrease time spent resolving incident and service requests by 23 per cent. Features such as virtual troubleshooting agents and guided incident resolution will continue to support the workload of IT teams in 2024. In fact, SolarWinds Service Desk customers surveyed reported saving 23 hours per week due to reduced ticket volume— nearly the equivalent of adding an extra employee to their team.
JOSEPH CARSON Chief security scientist & advisory CISO, Delinea
AI compliance will only accelerates in the year ahead. In 2024, the landscape of cybersecurity compliance is expected to evolve significantly, driven by emerging technologies, evolving threat landscapes, and changing regulatory frameworks. Privacy regulations such as the GDPR, CCPA and the UAE’s Data Protection Law have set the stage for stricter data protection requirements. We can expect more regions and countries to adopt similar regulations, expanding the scope of compliance requirements for organisations that handle personal data. Artificial intelligence and machine learning will also play a far more prominent role in cybersecurity compliance. These technologies will be used to automate threat detection, analyse vast datasets for compliance violations, and provide realtime insights. All of these factors are set to make it easier for organisations to stay compliant.
UAE AND SAUDI LEADERS BELIEVE THAT AI (54 PER CENT), CLOUD (50 PER CENT), DIGITAL EXPERIENCE MANAGEMENT SOLUTIONS (43 PER CENT), APPLICATION/NETWORK ACCELERATION TECHNOLOGY (36 PER CENT), AND AUTOMATION (34 PER CENT) ARE CRUCIAL FOR ORGANISATIONS LOOKING TO REMAIN COMPETITIVE IN TODAY’S MARKETPLACE.”
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January 2024
gulfbusiness.com
Pics: Supplied
Against this backdrop, the UAE’s crypto sector looks to be in high-gear on a highway to success. And as more institutions leverage crypto as an asset class, the more innovation we will see in the segment. The potential use cases could rival, or even outdo, traditional finance in placing the UAE at the forefront of global innovation.
FEATURES / E-MOBILITY
As a form of transport, e-scooters have exploded in popularity here in Dubai. How do races such as the Dubai Electric Scooter Race help to raise the awareness of using this type of e-mobility to get around?
SCOOTER CUP ELECTRIFIES DUBAI’S STREETS
Alex Wurz
E-MOBILITY TOOK A GIANT LEAP FORWARD IN THE EMIRATE RECENTLY WITH THE DEBUT DUBAI ELECTRIC SCOOTER CUP BY GARETH VAN ZYL
Motorsport has always helped in the advancement of road safety. There are multiple examples of this, and our mission as the Federation for Micromobility and Sport is to help grow and regulate the electric scooter sport sector, together with other micromobility sports. We equally want to support road safety and the mobility sector. Indeed cities, police and other traffic participants are sometimes struggling with e-scooters, so we have to address those challenges. There is a long list of items which are a risk and a barrier to entry, and it’s something we discussed with the Roads and Transport Authority (RTA) and sports council in a workshop about safer micromobility held alongside the Dubai Electric Scooter Cup. It was fantastic that the Dubai stakeholders have been open to listening to our federation. What were some of the fastest speeds and times recorded in the Dubai Electric Scooter Race?
The track in D3, Dubai’s Design District was a very compact setting, slightly limited for the top speed of our RS-Zero DXB edition racing scooter. The scooter can reach a top speed of 140kph, but with a short straight of 80m at the D3 track, we reached just over 100kph. Finally, is there a business model behind the sport?
he first-ever Dubai Electric Scooter Cup took place on December 16, 2023 at the Dubai Design District (d3). With riders flying down a specially designed 340m street track at speeds of up to 100 kph, the most talented male and female riders in the world competed as equals. Riders also rode the RS-Zero DXB edition, which at its top speed can reach up to 140kph. Alex Wurz, president of the Federation for Micromobility and Sport, explained more about the race in an interview with Gulf Business.
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What was the thinking behind choosing Dubai as a venue for the race?
I would say that Dubai chose us! From my perspective as a globetrotter, it’s impressive how Dubai as a city and society embraces and supports the future. The Electric Scooter Cup is a new sport for future cities and Dubai is the best example of that.
While we all are part of launching this new sport because we simply love it, the business aspect has got very healthy ingredients. The cost to set up a top end global event or championship is significantly lower than a Formula E race for example. The track build time is much faster and much cheaper and yet the market is much bigger. The audience demographic is also wider, spanning a large age range, and the on-track show is very market and consumer friendly. A top end e-scooter race costs 10 per cent of a Formula E event, is built up and down in 10 per cent of time, and it occupies maybe 10 per cent of the footprint of a Formula E track. In addition, the scalability of electric scooter racing is 10-fold higher than Formula E or event karting.
How fast is this sport growing and what are the key attributes that are making it so popular?
The key attributes of electric scooter racing are that the sport is, and will remain, the cheapest and most cost-efficient form of motorsport. The races, as well as the scooter itself, are the motorsport with the lowest CO2 output. The sport will also act as an accelerator for new technologies, making the entire micromobility sector safer, more socially acceptable and regulated. Moreover, the sport comes to the spectators in the urban environment, because it can. We race where micromobility happens. gulfbusiness.com
January 2024
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SPECIAL REPORT
POWER LETTERS 2024 TOP CHIEF EXECUTIVE OFFICERS AND FOUNDERS GIVE THEIR TAKE ON WHAT LIES IN STORE
SPECIAL REPORT
RIZWAN SAJAN FOUNDER AND CHAIRMAN OF DANUBE GROUP
world embraces the new year with mixed emotions, people in the UAE have reasons to be upbeat about the business performance in 2024. I am confident that the UAE economy will continue to perform well due to several valid reasons. Firstly, the Unique Selling Points (USPs) of the UAE and Dubai haven’t changed but rather strengthened. All factors that are contributing to the growth of the UAE remain the same. From a domestic economic perspective, I don’t see any challenges or threats to our growth. Secondly, the increased number of investors who are relocating businesses to the UAE or expanding their businesses in the UAE will start hiring professionals to run their business activities. This means an increase in well-paying jobs and an influx of professionals. This will eventually increase domestic consumption and, therefore, drive demand for more accommodation, food, clothing, and other essentials. Thirdly, the continuous investment in infrastructure and housing will drive domestic demand. The latest property releases and sell-out demand for homes, villages, and apartments — especially in Dubai Maritime City, Palm Jebel Ali, and Jebel Ali Hills — indicate that the market is still hot and can absorb more real estate projects. The construction and building materials sectors will see a good number
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As long as investors remain hungry for more, the property sector will continue to grow and help the economy grow. Real estate will drive the growth of the Dubai economy, and mega projects will help the rest of the country’s economy to grow at a moderate pace.” of projects coming online. Dubai’s property prices remain relatively conservative when compared to other global destinations like Hong Kong, Paris, London, or New York. This, coupled with the growing population and sustained demand, could lead to an overall forecast of a 20-30 per cent rise every year in the value of apartments. If the real estate sector maintains its current growth, the picture is rosy. The market could only be affected by external factors. However, Dubai’s property market and economy in general have benefited from external shocks. With the population of Dubai expected to double in the next few years, there is a strong anticipation of increased demand in the real estate market. As long as investors remain hungry for more, the property sector will continue to grow and help the economy grow. Real estate will drive the growth of the Dubai economy, and mega projects will help the rest of the country’s economy to grow at a moderate pace. If you consider the GCC, Saudi Arabia’s push to deliver mega projects will further drive activities in the Kingdom, and that will help a lot of UAE-based businesses that have contracts in Saudi Arabia. As far as 2024 is concerned, I see smooth sailing in the months to come. We all just must keep our eyes and ears open, as always, to look up for more opportunities and to keep a check on any external threats.
SPECIAL REPORT
PRATEEK SURI CHAIRMAN AND CEO OF MASER GROUP
thrilled to share with you our remarkable journey and future aspirations that are set to redefine the landscape of consumer electronics globally. We look back on Maser’s 2023 fiscal year with pride. We achieved much and finished the year with considerable momentum. In 2023, we accomplished 60X returns for Maser shareholders, reflecting the exceptional growth and potential of our company. Last year we topped $500m in revenue and a valuation of $1.9bn, which goes to show that even at $1bn we can be profitable. With plans to expand into other African countries, Eastern Europe, Latin America and other regions worldwide; Maser is poised to redefine the global smart TV market along with white goods. Founded with a mission to democratise access to affordable and high-quality consumer electronics across the African market, Maser has undergone a transformative evolution. Beginning our journey in Africa, we achieved a significant milestone of becoming a unicorn, a testament to the success of a hardware business in a dynamic and challenging market. Our recent metaverse launch in Africa further provides us with great hope for this market and year ahead. It marked a pivotal moment for Maser as we ventured into new realms of immersive experiences. In our existing enterprises, we have aimed to fortify our competitive advantages, ensuring continuous strides forward. In emerging
domains that are pivotal to shaping future lifestyles — such as AI, IoT, robotics, and the metaverse — we remain committed to harnessing our latest technologies and capabilities. This steadfast approach enables us to adeptly address new challenges through innovative solutions. As we step into the future, Maser is committed to filling critical gaps, from introducing innovative wearables to developing tech-enabled climate change mitigation solutions. Our goal is to become the foundation of inspiring and rich consumption of thrilling entertainment experiences globally, with a long-term vision of shaping the future of TV experiences across all platforms. Though most startups will burn through cash to achieve valuations, at Maser our philosophy lies in creating a profit-making environment and ecosystem — and we will continue to endeavour to achieve this. In our pursuit of excellence, we are not only focused on our core business but we are also actively contributing to the growth of the tech ecosystem. Our partnership with the African Financial Federation is another testament to our commitment to power African entrepreneurs’ dreams, fostering digital prosperity across the continent. MDR Investments, the investment arm of Maser Group, was unfurled in 2023, and also set sail to acquire large-cap ventures in Africa, the UK and the Middle East. It is navigating into the realms of shipping, AI, and mining of natural resources. And as we chart our course into 2024, our sights are set on expansive investments and ventures, steering the course towards a future of lucrative opportunities and strategic growth. MDR Investments aims to bring innovative practices to the traditionally conservative mining industry. This move not only reflects our confidence in the sector’s potential but also underscores our commitment to reshaping industries through progressive and sustainable business practices. As we navigate the intricate currents of the investment landscape into 2024, we stand poised to leverage these growth milestones as stepping stones towards a new horizon of success and profitability.
We foresee the transformation of our technology company as a sustained journey marked by rapid growth, advancing across all our business verticals.” 45
SPECIAL REPORT
MOUSTAFA GAD HEAD OF INVESTMENT BANKING OF EFG HERMES, AN EFG HOLDING COMPANY
Hermes, EFG Holding’s Investment Bank, the leading investment bank in frontier and emerging markets with a current footprint spanning 12 countries across four continents, a transformative wave is set to sweep through our operations in 2024, driven by the strong economic tailwinds in our region. We continue to strengthen our presence in the GCC as we ramp up our pipeline of prominent equity transactions across the region’s largest exchange, a testament to our unwavering efforts to capture the rising demand in the region and bring quality, valuegenerating investment prospects to local and global investors. We were successful in advising on some of the GCC’s most prominent listings, having advised on ADNOC Gas’ initial public offering (IPO) on the Abu Dhabi Securities Exchange and Al Ansari Financial Services’ IPO following the advisory on the IPO of Dubai-Based Education Platform Taaleem as part of the rise of the private sector led IPOs on the Dubai
Financial Market, amongst others. This underscores our unrivalled ability to continue tapping into the region’s robust pipeline of state-owned and private company offerings that unlock compelling prospects for global and regional investors. Looking at the landscape, 2024 promises to sustain the momentum in the GCC region, with Saudi Arabia taking centre stage. The depth of the market, particularly in the private sector, makes Saudi Arabia a powerhouse that contributes significantly to the economy. These signs are already apparent as we witness a surge in demand for both equity capital markets and merger and acquisition, setting the stage for a record number of live mandates entering 2024. Shifting our focus to the UAE, a market we know intimately due to our over 22 years of presence, having established our operations back in 2002, we are witnessing a noteworthy evolution unfolding. The private sector is stepping more into the limelight, marking a departure from the historical dominance of government-backed institutions in the IPO arena. This trend, coupled with a surge in private sector activity and a rise in M&A deals, paints a picture of a market on the brink of exciting changes. In 2023, we also took strides in Oman by actively participating in shaping regulatory frameworks. EFG Hermes has played a pivotal role in facilitating the successful IPO of OQGN – the Sultanate’s biggest IPO ever – contributing to Oman’s drive to list stateowned institutions and enriching the stock market. Our second Omani listing this year follows the listing of OQ’s oil and gas drilling unit, Abraj Energy Services. Delving into debt capital markets, our success story in Egypt, where innovative financial products were introduced, serves as a benchmark. As we look ahead to 2024, the anticipated easing cycle from the Federal Reserve is poised to provide an additional economic boost, further solidifying the GCC’s position. This isn’t just a story of financial growth; it’s a narrative of our commitment to fostering economic expansion, financial market development, and collaborative success in the Middle East.
Shifting our focus to the UAE, a market we know intimately, a noteworthy evolution is also unfolding. The private sector is stepping more into the limelight, marking a departure from the historical dominance of government-backed institutions in the IPO arena. This trend, coupled with a surge in private sector activity and a rise in M&A deals, paints a picture of a market on the brink of exciting changes.” 46
SPECIAL REPORT
AZIZ KOLEILAT GE AEROSPACE’S VICE PRESIDENT FOR SALES & MARKETING AND GENERAL MANAGER FOR THE MIDDLE EAST, EASTERN EUROPE, TÜRKIYE, RUSSIA & CIS
is projected to be a milestone year for passenger traffic, with overall travel numbers expected to reach 9.4 billion travellers — surpassing pre-pandemic levels for the first time. Aviation continues to be a dynamic and important sector of the global economy. Nowhere is this more apparent than in the Middle East, one of the fastestgrowing aviation markets in the world, which is all set to expand its regional fleet by 5.1 per cent annually over the next decade. The sector has developed quickly over the last four decades, especially in the Middle East and Türkiye. Passenger and fleet numbers have steadily risen as aviation infrastructure has improved. The strength of the regional aviation industry became evident with the pace of recovery in the Middle East, which was the first global region to see international air travel arrivals surpass pre-pandemic levels in the first quarter of 2023. And in Türkiye, Turkish Airlines became the first European carrier to exceed pre-pandemic levels, with passenger traffic by the middle of 2022 up nearly 12 per cent over 2019. A conducive business growth environment, expansion of regional carriers, and new tourism and business travel strategies by individual countries are supporting the sector to grow and thrive. With airlines in the region continuously looking to the future, GE Aerospace recorded strong demand for engines and services at the 2023 Paris and Dubai Airshows, a testament to the importance of the robust regional aviation industry in the broader story of economic growth. From a global perspective, airlines in this part of the world are also leaders when it comes to innovation, advancements, and technology. As the sector takes bold steps towards decarbonisation, there is an ongoing focus on sustainability, with innovations in materials, propulsion systems, and autonomous technologies revolutionising both aircraft design and performance while also driving fuel efficiency. At GE Aerospace in the region, we are building local capabilities, developing advanced technologies, and supporting some of the largest fleets in the world to shape the future of flight.
In MENA and Türkiye, aviation is uniquely positioned as a growth engine. For every person directly employed by the aviation sector or aviation-enabled tourism in the region, the industry supports an additional 4.6 jobs.”
In the UAE for instance, our multi-faceted collaborations with Etihad Airways and Emirates cuts across engineering, maintenance, digital solutions, and sustainability to help support the carriers’ commitments to reduce carbon emissions and enhance operational efficiencies. Home-grown innovations pioneered at our Middle East Tech Centre and the Turkish Technology Centre are building the region’s expertise in next-generation technologies. GE Aerospace is also supporting knowledge transfer and localised capabilities through maintenance services and training at the Emirates Engineering and Maintenance Centre in Al Warsan, and our own On Wing Support facilities in Dubai South and Doha. The sector-specific innovations that are transforming aviation today also have broader applications across industries, driving growth and creating a ripple effect of development and technology advancements across diverse economic sectors. In MENA and Türkiye, aviation is uniquely positioned as a growth engine. For every person directly employed by the aviation sector or aviation-enabled tourism in the region, the industry supports an additional 4.6 jobs. Similarly, for every $1 directly spent in the air transport sector, $2.10 is spent in the broader economy. In the coming years, this economic impact is set to grow even further as regional carriers continue to expand their lens and leadership as global transportation hubs.
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SPECIAL REPORT
From community malls to global partnerships, GMG is shaping a world where innovation, sustainability, and community thrive in harmony.”
MOHAMMAD A. BAKER DEPUTY CHAIRMAN AND CEO OF GMG it is acquiring new international brands or developing homegrown concepts, when an opportunity presents itself, we go after it. This is in our DNA.” This commitment, articulated in my letter last year, is not just a philosophy; it is a testament to our success because in 2023, we successfully seized several significant opportunities on both local and global scales. Sustainability, customer loyalty, operational efficiency, and hyperpersonalisation were some of the buzzwords that shaped the retail landscape this year and will continue to do so in 2024. Customers will aim to build relationships with retailers who understand their needs and align with their values. At GMG, the consumer is at the forefront of everything we do. Creating a truly immersive omnichannel experience will remain essential for us to continue bringing invaluable services and experiences to our consumers. As we stand on the cusp of a new year, it’s both an honor and a privilege to reflect on the remarkable journey we’ve continued at GMG. Looking back at the strides we’ve made in 2023, my team and I are filled with immense pride and enthusiasm for what lies ahead. Our foray into the year was marked by a solid acquisition—the integration of aswaaq LLC into the GMG family. This strategic move added 11 community malls and 22 supermarkets to our retail network and solidified our position as one of the UAE’s largest operators of community malls. Partnerships and new launches have been the heartbeat of our success. The franchise agreement
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with JD Sports, a global sports fashion giant, promises to bring the latest trends to our customers’ fingertips, with around 50 stores slated to open across the UAE, Saudi Arabia, Kuwait, and Egypt by 2028. Our digital footprint expanded as we successfully launched nike. ae and nike.sa, with over one million sessions within the first week, showcasing the digital prowess that underpins GMG’s growth. On the global stage, we planted firm roots in Asia, establishing our headquarters in Malaysia and aiming to open 100 new stores by 2025. The launch of Sun & Sand Sports in Southeast Asia and GMG’s corporate office in Singapore marks a significant stride towards making our presence felt worldwide. The unveiling of our headquarters in Cairo and the subsequent plan to open over 100 sports retail stores in Egypt by 2026 signals our commitment to contributing to the local economy and providing employment opportunities. Launching four state-of-the-art food manufacturing factories in the UAE underscored our dedication to food security and local manufacturing. These initiatives align seamlessly with the ‘Make in the Emirates’ initiative and position GMG as a significant player in the global food manufacturing landscape. Our farm-to-fork model is poised to make a lasting impact worldwide. As we move forward, our mission in GMG Foods remains being consumer-centric, focusing on making food that is enjoyable, nutritious, and accessible. Collaborations with Emirates Flight Catering signifies our commitment to local sourcing and sustainability, reflecting our belief that responsible business practices can positively impact people and the planet. In the spirit of giving back, we are excited to unveil “GMG Cares,” an extensive CSR program that revolves around the pillars of the planet, community, and our employees. Through launching initiatives like planting over 1,000 Ghaf trees and supporting local farmers, we aim to make a meaningful contribution to the wellbeing of our communities and the environment. As we navigate the dynamic landscape of 2024, GMG stands poised at the intersection of innovation, sustainability, and community engagement. We are not just shaping the future; we are actively participating in creating a better world. Here’s to a year of continued growth, meaningful impact, and shared success.
SPECIAL REPORT
KHALID SALEM PRESIDENT OF MIDDLE EAST AND NORTH AFRICA AT MITSUBISHI POWER
landscape in the MENA region is faced with a dual challenge. While it is undoubtedly poised for significant change with countries’ decarbonisation drives and planned net zero targets, the region is experiencing a high demand for power over the next few years. Within this context, the priority is to build sustainable and resilient energy systems for the long-term. It’s about futureproofing the region’s energy systems while rising up to the challenge of reducing emissions by 43 per cent by 2030 which was at the top of the COP28 agenda. In order to balance these two goals, several emerging trends will influence the development of the region’s power systems in the next few years. We see the potential of hydrogen as rising in the next few years both for use by developers and utilities to generate clean power at scale to meet the surge in demand and by industrials, which are known to be the heaviest emitting sectors. Hydrogen-ready gas turbines provide the flexibility to ramp up in line with the scaling up in the use of hydrogen. Energy efficiency has also emerged as a key theme from COP28. It’s important to support power providers in realising ways to maximise their existing assets through converting and upgrading existing power systems to higher efficiency and lower carbon emissions. Public-Private Partnerships can further play a key role in supporting projects focused on enhancing energy efficiency. As an example, Mitsubishi Power’s collaboration with the Egyptian Ministry of Electricity and Renewable Energy, to
upgrade to the Sidi Krisi and El-Atf power plants, a project funded by the Japan International Cooperation Agency (JICA), showcases the potential of joint efforts between companies and governments to enhance energy efficiency, enabling Egypt to pursue its ambitious energy transition, while looking forward to becoming a regional hub for decarbonisation using advanced carbon-neutral technologies. Technology and Innovation remain central to the energy transition. One of the main challenges is to ensure that new promising technologies are brought to commercial scale fast enough, thus innovation is key to unlocking the full potential of promising carbon-neutral fuels such as hydrogen across industries. When it comes to the energy transition, what has transpired over the last few years is that there isn’t a single energy transition roadmap. Each market has unique characteristics, demands, and challenges, and is at different stages in the development of its energy infrastructure. Therefore, accelerating the energy transition globally requires a localised approach that is rooted in understanding and catering to these specific needs. Furthermore, there is no single technology that will be applicable in all situations; it’s about drawing on the decarbonisation solutions today and customising it to specific market needs. Green investment and financing are crucial to unlocking the full potential of decarbonization technologies such as hydrogen. I am optimistic about the road ahead. Futureproofing the MENA’s energy systems is possible. It will take a relentless commitment to decarbonisation and to pushing the boundaries of what’s possible through innovation and collaboration. Working together, I am confident that we can build a legacy of energy security and sustainability, where clean and reliable power — a foundational pillar of the region’s continued progress and growthwill be accessible to all.
It’s important to support power providers in realising ways to maximise their existing assets through converting and upgrading existing power systems.”
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SPECIAL REPORT
ABDULLAH ALAJAJI FOUNDER AND MANAGING DIRECTOR OF DRIVEN PROPERTIES
2023 was a fantastic one for the Dubai real estate sector as a whole. The entire ecosystem thrived on the back of increased demand and systemic reforms aimed at attracting more investment into the city. With little to no barriers to enter the market, the prevailing question is how you do you create economic moats within this sector that will help withstand any turbulent times? This is what we spend most of our time doing at Driven. We invest in human capital, and we push forward with research and development that continue to guide our convictions as we grow. In the year 2023, we created Driven Labs, a division that essentially incubates and empowers the most important cog in the wheel to unlock hidden value in the real estate ecosystem that is now massively underserved by tech and innovation in the MENA region. Moreover, we invested in marketing automation and AI tools to ensure that we are ahead of the curve when it comes down to the transaction level. These initiatives have already paid off as the customer journey becomes more transparent to the agent, agency, and ultimately the customer. In addition to
With little to no barriers to enter the market, the prevailing question is how you do you create economic moats within the real estate sector that will help withstand any turbulent times?” our investment in tech, we also ensured we maintain our position as a real estate investor, with balance sheet investments crossing the Dhs1.5bn mark in 2023. We continued to purchase and upgrade assets across the city. Some of these investments include a City Walk building and a portfolio in the same district, the largest portfolio in Burj Daman in DIFC, a development on the Jumeirah Water Canal, and
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several sites, compounds, and houses in Jumeirah and Umm Suqeim, with a plan to bring to market a new standard of living in some of the most prime locations in city. We also invested in scaling some of our verticals to ensure we are across the entire customer journey. On the luxury front, our exclusive partnership with Forbes Global Properties helped ensure we lead against market participants in terms of transactions on the ultra-high end space, with over Dhs10bn in 2023 alone. On the development management front, we added over 700 agency partners to our belt, thereby maximising liquidity options for our development partners. As developers, we are bringing to market some of the most innovative developments in the city, working with the Pritzker prize winner David Chipperfield to deliver the most sustainable real estate landmark in the city. We have further partnered with the government on several initiatives. Dubai Chamber has been a strategic partner for Driven where we jointly created programmes and organised roadshows aimed at attracting more investment from continents such North America, South America and Africa into Dubai. Moreover, we have been chosen by the Ministry of Economy and the Central Bank of the UAE as the representative from the country’s real estate sector in front of the assessors of the Joint Group of African and Middle Eastern States of the Financial Action Task Force (FATF), in an effort to combat money-laundering. As we look forward to 2024, we will continue to invest in talent and tech. We are of the view that there will be much consolidation in the sector as competition intensifies and we believe we are in prime position to benefit from such events as we cement our economic moats.
SPECIAL REPORT
ZAID S. AL KHAYYAT MANAGING DIRECTOR, AL KHAYYAT INVESTMENTS (AKI)
years, the GCC region has shown great resilience in withstanding a global pandemic, rising inflation, unpredictable supply chains, and a host of other international headwinds. The Gulf economy continues on a path to further growth, estimated at a 3.6 per cent uptick in 2024 and 3.7 per cent in 2025, according to recent World Bank forecasts. A main factor underscoring this positive outlook is the diversification efforts of governments and enterprises across the region. Today, the GCC is not only a global marketplace, but a dynamic ecosystem where adaptability is the currency of success. We have seen this firsthand at AKI. For over four decades, we have shared the region’s spirit, energy, and optimism for what is possible. We are wholly committed to contributing to the diversification and enlargement of our home economies, and supporting plans like the Dubai Economic Agenda ‘D33’. Diversification is not merely a strategy; it must be ingrained in the fabrics of the business. One must actively seek out change, driven by an entrepreneurial spirit. In this sense, AKI stands as a testament to the economic opportunity at hand in the GCC today. Over the past year, AKI has diversified across its ten business units and within six core industries, including retail, healthcare, consumer goods, fitness and lifestyle, contracting, and automotive. While being a trusted partner to global brands, we have been pioneers of new, locally inspired concepts across these various sectors, like that of BinSina pharmacy which has continuously been at the forefront and spearheaded innovation in the pharma sector, or Befit which seeks to provide an integrated and holistic fitness destination to sports and fitness enthusiasts in the region. This has been crucial to expanding AKI’s footprint geographically. Born out of the UAE, we now proudly provide products and services in nine countries across the Middle East and Africa region. This approach is not a reactive measure. It is a proactive stance reflecting an understanding of the evolving needs of the communities we serve. In the retail landscape, for instance, AKI collaborations with partners such as Superdry, Petit Bateau, adL, and Nanàn speak to the importance of aligning with shifting consumer preferences in the ‘moments’ economy, where customer experiences are king. It is
For over four decades, we have shared the region’s spirit, energy, and optimism for what is possible.” also why we have diversified the ways that we engage consumers, doubling down on our investments in e-commerce and mobile-led experiences. Meanwhile, in recent years, a demand for new forms of healthcare solutions has emerged in the region. In our case, being attuned to the unique preferences of patients and healthcare providers enabled us to make strategic investments in supporting evolving health priorities. The success of AKI Healthcare, MedLab, and Pharma reflect the region’s appetite for comprehensive healthcare solutions and a holistic approach to well-being. Our belief in seizing new opportunities is visible in other areas too. Our Gulf Contracting & Landscaping (GCL) business has transcended beyond erecting structures to crafting sustainable spaces and landscapes that resonate with the spirit of the community. At the same time, AKI Consumer Goods division (food and non-food) now ranks among the top three largest UAE FMCG suppliers. The potential for investment diversification is larger than ever in 2024. In a landscape where economic paradigms shift and consumer preferences evolve, businesses in the GCC would do well to diversify.
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SPECIAL REPORT
MUZZAMMIL AHUSSAIN CEO OF ALMOSAFER
demand for travel in 2023 continues to set high expectations for a bullish appetite for short and long vacation breaks, adventure holidays, and immersive experiences — especially amid a rising appeal for less-traversed landscapes and countries. Globally, travel is set to become a $15.5tn industry by the end of the year, accounting for nearly 12 per cent of the global economy and representing a 50 per cent increase in value since 2019. A significant wave of growth is also evident in the GCC region and the broader Middle East and North Africa region where the sector is poised for a transformative year. The ongoing geopolitical realities have not dampened the demand for travel, especially in core markets in the region, and prices and occupancy continue to be on the high end. In the fourth quarter of 2023, the Middle East shifted to growth mode with international arrivals up by 4 per cent, much ahead of the global average of 3 per cent.
In Saudi Arabia, we are witnessing sustained demand for inbound and outbound travel, and visitor arrivals remain steady as before. The kingdom’s investments in the tourism sector is bearing fruit and the country was named among the top 10 tourism destinations globally and listed fifth in global rankings for international arrivals in 2023, compared to 2019. A surge in visitor numbers is on the cards both in Saudi Arabia and the wider region when the announced unified GCC tourist visa begins to be implemented. Going forward, this game-changing initiative that facilitates and provides a seamless experience for both residents and tourists among the six GCC countries will bolster tourism and reshape the travel landscape of the region. As the Middle East’s leading travel company that works across the Saudi travel ecosystem, Almosafer enters 2024 on a high note having achieved robust financial results for the third quarter of 2023. With a net booking value of SAR2bn, this marked yet another quarter of growth for Almosafer. In the year ahead, we will build on the strong foundations of our consumer travel vertical, as we further grow our diversified travel businesses by leveraging all the opportunities for growth within each of our business entities. The great economies of scale that this business model provides will be pivotal in forging partnerships with stakeholders across the industry and allied sectors as we look to combine resources and expertise to consolidate the business and open doors to new markets and customer segments. Underlying these priorities is the commitment to drive the growth of Saudi Arabia’s tourism industry through industry partnerships, advanced digital offerings, market expansion, and delivering exceptional experiences for our consumers — including prioritising preference for personalised and experiential travel needs. The year 2024 will see us move beyond our core consumer markets of Saudi Arabia and Kuwait to cater to the wider GCC market as we continue our growth as a digitally driven company. If 2023 was the year of cautious optimism for the travel and tourism industry, despite regional headwinds, 2024 will reinforce the role of tourism as a driving force of socio-economic development for all nations.
Globally, travel is set to become a $15.5tn industry by the end of the year, accounting for nearly 12 per cent of the global economy and representing a 50 per cent increase in value since 2019.” 52
SPECIAL REPORT
DARIUSH SOUDI FOUNDER OF GLADIATOR MASTERY
Surviving on two coffees and a sugar doughnut each day in a modest maid’s room, I was resolute in reclaiming my life. Fast forward 14 years, and I’ve not only regained my millions but also embarked on a mission to help others attain abundance through my Gladiator Mastery programmes, podcast, and now, my upcoming book.” the proud founder of ARENA Capital, a family office investment group rooted in Dubai. With over 40 years of hands-on experience in owning and operating companies, I’ve honed unique and successful techniques for maximising business profitability. And I’ve learnt a lot of my key lessons in life thanks to the opportunities that the GCC has presented to me over the years. Fourteen years ago, my life took a dramatic turn. Before making Dubai my home, I was a prosperous serial entrepreneur worth multi-millions in the UK. However, one fateful night altered the course of my life entirely. I was attacked in my home by four men, held at knifepoint. Driven by fear for my family’s safety, I left everything behind, including my businesses, and embarked on a new chapter in Dubai with a mere $750 in my pocket. Surviving on two coffees and a sugar doughnut each day in a modest maid’s room, I was resolute in reclaiming my life. Fast forward 14 years, and I’ve not only regained my millions but also embarked on a mission to help others attain abundance through my Gladiator Mastery programmes, podcast, and now, my upcoming book.
This book is the result of all the lessons that I’ve learnt in this part of the world. “The 10 Commandments Of A Modern Gladiator” is more than a book; it’s a transformative journey sharing insights into not just my personal story but also the key strategies that I’ve gathered after spending more than 40 years in business. Through it all, I kept learning and growing. I genuinely believe in abundance for all, and this is what I hope for everybody in the GCC for the year 2024 and beyond. By working on our selfworth, drive, and growth desires, we can reach our fullest potential. My life’s purpose is to educate those, like me, who didn’t receive an education on how to be truly rich — in life, love, and health. I draw inspiration for my book from the success of my Gladiator Mastery Events. These two-day gatherings have shown me a way to reach a broader audience, allowing them to learn from my experiences without being physically present in Dubai. “The 10 Commandments Of A Modern Gladiator” is set to release in the first week of February 2024, and pre-orders are now available on my website.
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SPECIAL REPORT
This year, we witnessed the transformative power of AI not only within our company but also across the nation.”
NAIM YAZBECK GENERAL MANAGER, MICROSOFT UAE approach a new year, the echoes of 2023 resonate with one clear theme: the Year of AI. At Microsoft UAE, this wasn’t just a buzzword – it was the driving force behind some of the most exciting achievements, impactful collaborations, and innovative solutions alongside our customers and partners. Our state-of-the-art cloud datacenters in Abu Dhabi and Dubai, which celebrated their fourth anniversary this year, once again served as the bedrock of this transformation. Through them, we democratised access to the latest AI breakthroughs, empowering government institutions, businesses, and individuals with the tools and resources they need to build their own AI applications and drive innovation. Take, for example, our collaboration with the Department of Health in Abu Dhabi. Leveraging the enterprise-grade cloud services delivered from our UAE facilities, we are advancing the use of AI and digital technology in healthcare to improve patient outcomes, increase efficiencies, and enhance health research and service. The arrival of the Azure OpenAI Service in our UAE datacenters, which coincided with the visit of our CEO Satya Nadella to the UAE, marked another significant milestone both for us as Microsoft UAE and for the country’s innovators. We formed our multiyear, multibillion-dollar partnership with OpenAI in line with our joint commitment to responsibly advance cutting-edge AI research and democratise AI as a new technology platform. By bringing this suite of powerful AI models, including GPT-4 and DALL-E 2, to our UAE datacenters, local and regional organisations
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can develop innovative AI applications such as virtual assistants, content generation, code generation, image editing tools, and more. As we enter 2024, our ongoing strategic collaboration with G42 will take this progress to the next level through the availability of sovereign cloud offerings that will allow the UAE public sector and regulated industries to use new platform capabilities for securing sensitive data. We will also jointly develop AI-enabled industry-specific solutions for health and life sciences, energy, sustainability, and projects of national significance. And we will expand our Azure services footprint in the UAE via Khazna Data Centers, a joint venture company between G42 and e&, But it’s not just about the latest technology. At Microsoft, we understand the human element is crucial. That’s why the introduction of Microsoft Copilot, our everyday AI companion, through our Early Access Programme and its subsequent launch, marked a pivotal moment in our journey in the UAE this year. Our latest Work Trend Index report found that 64 per cent of employees today are struggling with having the time and energy to do their job, and this makes them 3.5x more likely to also struggle with innovation and strategic thinking. As a result, nearly 60 per cent of leaders have stated that a lack of innovation or breakthrough ideas from their teams is a concern. Copilot tackles this head-on, automating tedious tasks and freeing up valuable resources. We are committed to helping the UAE realise the potential of the Microsoft Cloud to add $39bn to the UAE economy and generate almost 100,000 jobs. That’s why we continue to support the government and private sector in preparing workforces of today and tomorrow with the skills they need to succeed and advance the digital economy. We continue to work tirelessly to achieve our global mission of becoming carbon negative by 2030, and we are helping organisations of all sizes and industries across the UAE reach their own sustainability goals. This includes empowering B2B tech startups, whose creativity and innovation are crucial for a sustainable future. Our vision for 2024 is clear: to continue expanding our innovation footprint and solidify the UAE’s position as a regional leader. We are enthusiastic about the journey and the positive impact our advancements will continue to have on this region.
SPECIAL REPORT
DR. AZAD MOOPEN FOUNDER & CHAIRMAN, ASTER DM HEALTHCARE marked by rapid technological advancements, global interconnectedness and rising challenges posed by climate change and its impact on future generations, the outlook for healthcare is undergoing a paradigm shift. The link between climate change and its impact on healthcare is undeniable and we must integrate sustainability with innovation into core healthcare operations. It is also very important for the global healthcare systems to be ready not only to support the evolving needs of people but also to manage Black Swan events like the Covid-19 pandemic. Sustainable healthcare systems are a key requirement to reduce carbon footprint on the planet and to build capacity for emergency preparedness created by climate related disasters. Healthcare systems around the world need to become energy efficient, transition to renewable energy and ensure effective waste management. Innovation in healthcare is also key for the future of healthcare. The impact of artificial intelligence (AI) is creating ripples in the field. Many of the diagnostic tests and radiological studies, such as MRI and CT scans, are now being read by machines instead of people. Doctors are provided with able decision-making support systems which help in better diagnosis. Genomic studies have helped in diagnosis and treatment of many of the diseases. Proactive rather than reactive medical practices are gaining centre stage. Personalised instead of generalised treatment modalities are now gaining momentum as well. In addition, the cornerstone and future of healthcare is all about patient-centricity. The industry is witnessing a shift towards personalised treatment plans, incorporating patient feedback into service development, and empowering individuals in their healthcare journey. The focus has evolved from a one-size-fits-all approach to a holistic model that ensures the well-being of both patients and the planet. The GCC health sector is also a market that is ripe for future growth. In the UAE, the country’s share of population above the age of 65 is forecast to increase to 4.4 per cent by 2030, up from 1.1 per cent at present, according to the World Bank. This is expected to stimulate increased demand for quaternary care and facilities providing advanced healthcare with experts, including geriatric care. A growing population, changing dynamics and the
Healthcare systems around the world need to become energy efficient, transition to renewable energy and ensure effective waste management.” UAE government’s focus on building the country as the hub for world-class medical tourism will bring in investments from the private sector and open opportunities for digital tech solution providers, innovators, and experienced medical professionals. Similarly, immense opportunities lie ahead for countries such as Saudi Arabia, Oman and Qatar as the region gears up to meet rising healthcare demands locally, without patients having to travel abroad to seek advanced care. Saudi Arabia is expected to see massive growth and change in the healthcare sector, with the government focused on improving healthcare infrastructure as a part of its Vision 2030. There is huge potential for primary care operators to expand their network of standardised care and meet public demand.
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SPECIAL REPORT
AHMED ABDELAAL GROUP CEO, MASHREQ
2023, has been a monumental chapter in Mashreq’s history, marked by significant achievements, resilient performance, and a steadfast commitment to innovation and excellence. Our financial performance in 2023 was outstanding, with a 118 per cent year-on-year growth in net profit, reaching Dhs5.7bn in the first nine months. This achievement is a testament to our solid operating performance, cost efficiencies, and prudent risk management. Our “Rise Every Day” positioning has transcended beyond a mere slogan to become the essence of our philosophy, driving our relentless pursuit of progress and dedication to our clients and communities. In fostering a collaborative culture, we achieved an 84 per cent participation in our global Employee Engagement Survey, and relaunched our Employee Value Proposition, committed to supporting our employees in all their personal and professional endeavours.
Our financial performance in 2023 was outstanding, with a 118 per cent yearon-year growth in net profit, reaching Dhs 5.7bn in the first nine months.” 56
The ‘Reignite’ programme marks a milestone in empowering women returning to work, offering training, mentoring, and upskilling opportunities. Strides in gender diversity with 48 per cent diversity scores in Mashreq Global Network (MGN) underscore our commitment to creating a more inclusive work environment for all; MGN India’s certification as the Best Organisation for Women further highlights our commitment to this agenda. 2023 was also a landmark year for our global expansion and digital transformation. We have received In-Principle Approval to establish a digital retail bank in Pakistan and a new banking license in Oman. Our collaboration with Etisalat by e&, in the Egyptian market, is a pioneering step in mobile banking, supporting financial inclusion. Through various strategic partnerships, Mashreq is poised at the forefront of the digital banking revolution. Our unwavering commitment to sustainability aligns with the UAE’s Net Zero by 2050 initiative. Mashreq’s role in COP28, our aim to facilitate $30bn in sustainable finance by 2030, and commitment to the Science-Based Targets Initiative (SBTi), demonstrate our dedication to a sustainable future. The launch of the Climb2Change initiative marks our comprehensive approach towards Environmental, Social, and Governance (ESG) concerns, establishing Mashreq as a leader in customer focused and sustainable banking practices. Embracing AI and enhancing digital platforms across Neo propositions also remains a priority. We will continue to elevate customer experiences, strengthen our security measures, and optimise operations through automation. This year, we proudly maintained our position as the UAE Market Leader, as named by Euromoney, and the best Digital Bank for the fourth consecutive year in a row. This is a testament to our relentless focus on client experience and digital innovation. We will continue to leverage our digital capabilities to create unique client-centric experiences. Our performance in 2023 has solidified our position as a modern, digitally empowered challenger bank, contributing significantly to the national economy. Enhancing our digital platforms, including Neo and NeoBiz, remains a key priority. As we step into 2024, Mashreq is more committed than ever to lead the way in digital innovation, client experience, sustainability, and inclusive growth. With a renewed focus on facilitating sustainable finance, aligning with global sustainability goals and the UAE’s vision for a greener future, we are excited for the opportunities that await us and are ready to rise every day to meet them, ensuring a greener, more sustainable future for all.
SPECIAL REPORT
BAL KRISHEN CHAIRMAN AND CEO, CENTURY FINANCIAL
is now upon us, the global economic landscape reflects the impact of significant events in 2023, particularly notable shifts in interest rates. The US Federal Reserve’s decision to raise rates has led to an unprecedented surge, reaching levels not seen in over two decades, with the federal funds rate hovering between 5.25 per cent and 5.5 per cent. Investors are now pondering the duration of elevated interest rates and the timing of potential rate cuts. Despite a Q4 recovery in 2023 favouring risk assets, concerns persist due to geological stress points and a slowdown in key global hubs. Entering 2024, several growth and inflation scenarios could impact critical market assets—equities and bonds. While correlated movement is expected in some scenarios, decoupling is possible in others. Historical patterns suggest that peak rates are shortlived, often followed by sharp rate-cut cycles. Market consensus currently leans towards central bank rate cuts in the first half of 2024, driven by factors like falling rent inflation, weak demand, and a pullback in wage growth. In the potential soft-landing scenario for the US economy, macro data suggests a base case with consumer spending and inflation likely to ease, leading to an overall dovish stance in central bank policies. While there will be degrowth, rate cuts and yield softening are expected to support US equities and bond markets without a significant recession. Corporate balance sheets may have limited impact due to consumer spending degrowth and reduced capital expenditure cycles. Conversely, a hard landing scenario implies a sharp growth slowdown, possibly entering a recession, prompting aggressive interest rate cuts by the US Fed. In this situation, bonds could perform well as a safe haven, but equities might suffer as companies control costs to meet earnings expectations. Growth in full-throttle mode suggests positive equity returns and flat to negative bond returns, driven by strong economic growth and persistent inflation. The intricacies of these scenarios suggest a nuanced and cautious approach for investors navigating the complexities of the evolving economic landscape. Most economies in the GCC delivered stellar returns this year, supported by a surge in trading
Growth in full-throttle mode suggests positive equity returns and flat to negative bond returns, driven by strong economic growth and persistent inflation.”
volumes and investor participation. This was driven by economic diversification and new listings. Dubai and Saudi Arabia were at the forefront, propelled by the momentum in banking and real estate stocks, as well as robust corporate earnings growth and foreign inflows. Overall, the trend of strong performance is expected to gain traction in 2024, owing to an uptick in tourism, bilateral ties with international exchanges, and expected interest rate cuts. The World Bank expects the GCC region to grow at an improved pace of 3.6 per cent in 2024. The GCC real estate market size is projected to grow at a continued annual growth rate (CAGR) of 5.13 per cent between 2024-2032, with Dubai’s real estate market alone expected to expand by 15 per cent in 2024. Easing of foreign ownership restrictions, introduction of new visa categories, rapid urbanisation, and hefty capital investments by the government support the sector. The year ahead brings with it opportunities but uncertainties, highlighting the significance of investors staying vigilant and adaptable to navigate these evolving market trends.
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SPECIAL REPORT
It was another strong year as we continued to build upon the momentum of last year’s progress with even more ambitious goals and targets.”
NASSER AL AWADHI ABU DHABI ISLAMIC BANK’S GROUP CHIEF EXECUTIVE OFFICER
2023 has been pivotal, marked by a concerted drive towards impact, innovation, and sustainability. It served as a transformative period, underscoring the significance of change, particularly in terms of sustainability. It was another strong year as we continued to build upon the momentum of last year’s progress with even more ambitious goals and targets. Having repeatedly exceeded our ROE targets, Abu Dhabi Islamic Bank (ADIB) is on track to deliver a successful 2024 while continuing our focus on digital innovation and sustainability. As a leading Islamic financial institution, we are uniquely positioned to deliver innovative financial solutions that incorporate ESG principles. ADIB will continue to work towards creating value for all our stakeholders in pursuit of our vision to become the world’s most innovative Islamic bank. We will continue to prioritise innovation, sustainability, digital excellence, and our segment focused approach to drive forward progress on the implementation of the bank’s strategy. As always, we remain true to our purpose of being a lifelong partner for our clients, community, and colleagues. ADIB has always taken a proactive approach to conduct responsible business, which is why to solidify our commitments, we invested in a robust three- year ESG strategy that has continued to generate mutual benefits to all our stakeholders, especially in the social and environmental field. Our efforts have led us to be recognised as the best bank in the UAE, and the Safest Islamic bank globally. This reflects our commitment
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to upholding the trust of our customers and ensuring that we continue to seamlessly provide for all their banking needs. For us, ESG is not just a criteria to be considered, it is a core component of Islamic financing that is ingrained in the DNA of the bank. The year of sustainability in sync with COP28 shone a light on the growing demand for sustainable financing, which has always aligned with Islamic principles. Therefore, our commitment to maximising our positive impact on society extends far beyond COP28. In the last quarter of 2023, under the sustainable finance framework, we also issued the world’s first ever USD-denominated green Sukuk issued by a financial institution. The $500m issuance was more than five times oversubscribed, attracting over 100 global and regional investors. Global demand for green financial instruments is growing rapidly, and the success of this issuance demonstrates clearly that financial institutions must keep pace with this demand. In addition to the green Sukuk, we have also issued in July a $750m tier-one perpetual Sukuk, which was over nine times oversubscribed. ADIB is further committed to achieving net-zero by 2050 in alignment with the UAE’s climate goals. We are working towards baselining our portfolio and operational emissions, a critical step towards setting quantitative decarbonisation targets. The process is expected to be completed in the first half of 2024, allowing us to define robust decarbonisation objectives as we contribute to the regional shift towards sustainability. ADIB is actively working on prioritising substantial investments in renewable energy, clean technology, and eco-friendly projects, fortifying our role in tackling climate change. Placing our customers at the forefront of our digital initiatives, we have expanded our digital offerings. Throughout 2023, we introduced 19 new services accessible via our mobile app. Presently, 80 per cent of our customers actively use the bank’s digital platforms. We expect to continue our strong performance in 2024, aided by a positive economic outlook for the GCC. We are optimistic towards the future and dedicated to capitalising on our successes.
JAN
Lifestyle
24
Sportswear, reinvented Castore has just opened a new store in Dubai Mall as it looks to bring its engineering approach to sportswear to the GCC p.60
Kudakwashe Muzoriwa, senior features writer, on the latest hydrogen powered car from BMW gulfbusiness.com
FUEL-POWERED MOTORING, TAKEN TO THE NEXT LEVEL Step on the pedal, and the iX5 Hydrogen responds with a surge of power and can take you from 0 to 100km in under six seconds – making it as fast and agile as any other BMW. This hydrogen-powered beast accelerates with quiet confidence, effortlessly blending performance and environmental consciousness in a symphony of driving delight. January 2024
Pics: Supplied
“The iX5 Hydrogen promises to be a groundbreaker for BMW, with lots of innovations rolled into a package that looks identical to the rest of the X5 lineup”
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Lifestyle / Sportswear
Engineered sportswear store moves up a gear CARA JACQUES
Castore is closely linked to sports. Tell us about the brand’s close connection to this segment. The brand was established by two brothers, Tom and Phil Beahon, in the United Kingdom. Coming from a rich background in sports, Tom boasts a distinguished career in professional football, while Phil has made significant contributions within the cricketing sphere. Their brand’s distinctiveness is underscored by a multitude of esteemed sportswear partnerships spanning a wide spectrum of disciplines, including but not limited to football, rugby, cricket, golf, motorsports, and boxing
Castore Dubai Mall
WELL-KNOWN SPORTS RETAILER, CASTORE, HAS OPENED A BRAND NEW STORE IN DUBAI MALL. CARA JACQUES, CASTORE’S BUSINESS MANAGER, TELLS US MORE ABOUT THE LAUNCH BY NEESHA SALIAN
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January 2024
Tell us about Castore setting up an outlet in Dubai? What are the factors that led to the brand coming to the UAE? Since its inception in 2016, Castore has seen remarkable growth beyond the United Kingdom. The GCC region is considered a retail hub, and the increasing focus on sports within the region have opened doors for the Castore brand to explore the right expansion opportunities. Recognising the importance of a seasoned regional retail partner for a successful expansion, Castore strategically partnered with Liwa Trading Enterprises. This collaboration encompasses a comprehensive range of initiatives, including the establishment of Castore retail stores in the GCC, the launch of a regional website, wholesale distribution, and strategic brand partnerships. Tell us about the legacy of the brand and its evolution over the years. Castore was established in 2016 in Liverpool, gulfbusiness.com
by brothers and former sportsmen, Tom and Phil Beahon. Their entrepreneurial journey began with a keen observation of the limited availability of premium, highperformance sportswear in the market, a gap that prompted them to create hightech, performance apparel designed to help individuals reach their fitness goals. Just three months into the company’s launch, the brand’s ethos, “Better Never Stops,” was firmly established and remains a core message for the brand to this day. With a commitment to continuous innovation, Castore leaves no stone unturned in its search for performance enhancement. Tapping into sports science, Castore collaborates with experts to optimise athletic performance. This scientific approach informs the design of each product, ensuring that athletes benefit from gear that supports peak physical achievement, endurance, and recovery. What sets it apart from other brands in the same category. The Castore mission is to create expertly engineered precision sportswear for every athlete – worldwide. Through technological advancements, we provide performance athletic wear that uplifts athletes with
Pics: Supplied
Castore Dubai Mall
gulfbusiness.com
the edge they need to reach their highest potential. From initial stages to delivery, we push the boundaries of hybrid sportswear - seeking innovative ways to challenge our athletes’ limits. We seek gains through innovation and partnerships with ambitious teams and exceptional athletes. Stretching across multiple sports, Castore is backed by some of the best athletes in the world and continues to make waves within the sporting industry. Tell us about your collections and what goes into making them. The design process for each collection commences well over a year in advance of its launch. Our commitment is to provide sportswear that transcends the ordinary, granting athletes a distinct advantage and symbolising the remarkable journey of progress and the capacity to exceed perceived limits. Every garment is meticulously crafted with the intention of empowering our customers to uncover their personal edge and inspiring them to ascend to their utmost potential. Who are some of the celebrities that Castore counts as loyal customers? • Tennis champion Andy Murray, who
lends his name to the acclaimed AMC range at Castore • Olympic swimmer Adam Peaty, a celebrated figure in the world of aquatic sports • English cricket captain Jos Buttler, renowned for his leadership on the cricket pitch • England rugby captain Owen Farrell, an inspirational figure in the realm of rugby • Boxing star Joe Cordina, recognised for his prowess in the boxing arena • Rangers captain James Tavernier, a prominent figure in the world of football Furthermore, our brand has established close partnerships with notable brands such as the likes of McLaren and Red Bull, as well as numerous other esteemed individuals across various domains. Tell us what shoppers can experience when they step into the Castore store in Dubai? The 70-square-metre store is poised to serve as an exclusive showcase for our most recent men’s and women’s sports and activewear collections. From precision-engineered, performance-oriented activewear to elegantly designed casual attire, the launch of our Dubai Mall store promises a discerningly curated array of high-quality clothing and accessories for our esteemed clientele. Tell us how the brand is meeting customers’ expectations when it comes to sustainable fabrics and operations. Sustainability is at the heart of everything we do, as we are deeply committed to minimising our environmental footprint in every facet of our business. This unwavering dedication to sustainability extends from the careful selection of eco-friendly materials for our garments to the thoughtfully designed packaging, conscientious choice of distribution channels, and the implementation of pioneering return and exchange policies. At Castore, we constantly strive to remain at the forefront of the industry in the realm of sustainability. Furthermore, we have undertaken a solemn commitment to ensure that all the fabrics we utilise in our products will be 100 per cent recyclable by the end of 2028 to a greener and far more sustainable future. January 2024
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Pics: Supplied
“Through technological advancements, we provide performance athletic wear that uplifts athletes with the edge they need to reach their highest potential.”
YEARS OF
REALIZING MORE
REALIZE MORE
For 40 years We have been realizing more for clients looking to us as a gateway to compelling Frontier and Emerging Markets’ equities; for investors who want to deploy impact capital into renewables, healthcare, and education; for individuals who need lifestyle-enabling solutions; for businesses looking to unlock their full potential; for shareholders who require confidence in our growth strategies; for communities that need viable change to drive integrated sustainable development; and for people seeking to unlock their full growth potential, empowering them to fulfill their career aspirations.
CHARGING INTO THE FUTURE WITH BMW’S IX5 HYDROGEN THE FUTURE HAS SWITCHED LANES AS HYDROGEN-POWERED VEHICLES ARE SET TO MAKE A GRAND ENTRANCE ON OUR ROADS AND HIGHWAYS BY KUDAKWASHE MUZORIWA
“H
ydrogen is the missing piece of the puzzle for emission-free mobility because a single technology will not be enough to enable climate-neutral mobility worldwide,” BMW Group’s chairman of the board of management Oliver Zipse said earlier in 2023 when the auto giant launched a pilot fleet of hydrogen-powered cars. The promise of hydrogen power has tempted the auto industry for more than half a century, and it seems the versatile energy source is finally or at least almost ready for primetime. Perhaps this has something to do with the attractiveness of GCC countries for green hydrogen investments, with as much as $200bn in projected revenues by 2050. Or maybe it’s because global auto giants BMW and Toyota have been co-developing hydrogen fuel cell technology.
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January 2024
To claim a higher stake in a segment currently dominated by Korean and Japanese brands, the BMW iX5 concept vehicle is reflective of the company’s commitment to sustainability. The German automaker completed intensive rounds of hot-weather testing of its iX5 Hydrogen fleet in the UAE in September. Despite temperatures reaching 45°C and having to tackle sand, dust, as well as varying gradients, the electric SUV’s fuel cell drive system performed flawlessly. The good thing that I discovered during a brief drive of the luxury SUV in Dubai is that it is almost unremarkably normal. Given that the vehicle is built on the X5 platform, it feels as comfortable and composed as any other BMW – though that really shouldn’t come as a surprise. So, buckle up for a ride into the future where power meets responsibility, and luxury intertwines with sustainability.
PERFORMANCE THAT IGNITES PASSION The iX5 Hydrogen promises to be a groundbreaker for BMW, with lots of innovations rolled into a package that looks identical to the rest of the X5 lineup. The concept vehicle is powered by a fuel cell system that generates 125 kW/170 hp and a highly integrated drive unit using fifth-generation BMW eDrive technology – the electric motor, transmission and power electronics are grouped together in a compact housing. Combined, the overall drive system delivers 295 kW/401 hp. Step on the pedal, and the iX5 Hydrogen responds with a surge of power and can take you from 0 to 100km in under six seconds – making it as fast and agile as any other BMW. This hydrogen-powered beast accelerates with quiet confidence, effortlessly blending performance and environmental consciousness in a symphony of driving delight. gulfbusiness.com
Lifestyle / Auto Review
THE IX5 HYDROGEN RESPONDS WITH A SURGE OF POWER AND CAN TAKE YOU FROM 0 TO 100KM IN
Braking was easy, like regenerative brakes in electric vehicles, by simply lifting your foot off the accelerator, the SUV slowed. Aside from the occasional hum of the fuel cell doing its thing, the iX5 Hydrogen is as serene as you would imagine a fully electric X5 would be. The ride is smooth, quiet, and refined. The hydrogen needed to power the fuel cell is stored in a pair of 700-bar tanks made from carbon-fibre-reinforced plastic. Together, these tanks can hold around six kg of hydrogen and the storage capacity gives the iX5 Hydrogen a range of 504 km (313 miles) electric range with a full tank. THE LOOKS OF IT The iX5 concept vehicle is an example of what BMW thinks SUVs should be decades
from now: luxurious, efficient, and sustainable. Inside, the vehicle is a sanctuary of opulence. Premium materials, state-ofthe-art technology, and thoughtful details create an ambience that resonates with the Arab world’s taste. This isn’t just any ordinary hydrogen car; the BMW iX5 is an experience of indulgence and forward-thinking sophistication. The vehicle is seamless inside between front and rear, and morphs between drive modes and appearance based on the mood of the driver. Its steering is pleasantly direct, and its air springs and adaptive dampers return nicely balanced body motions. Meanwhile, individual exterior and interior design elements highlight the car’s ties to the BMW i brand, as well as its specific drive technology. The inner edging of the BMW kidney grille, the inserts in the 22-inch aerodynamic wheels and the attachments in the outer portion of the rear apron are all in blue accents, which sets it apart from its conventional twin. Entry sills and cover trim for the instrument panel also sport a ‘hydrogen fuel cell’ badge. The iX5 concept has emerged as a beacon of innovation, seamlessly marrying cutting-edge technology with the epitome of automotive elegance.
This isn’t just any ordinary hydrogen car; the BMW iX5 is an experience of indulgence and forward-thinking sophistication. The vehicle is seamless inside between front and rear, and morphs between drive modes and appearance based on the mood of the driver. gulfbusiness.com
THE HYDROGEN POTENTIAL With many people hesitant to associate themselves with the troubles that come with owning an electric car, hydrogen could gain a foothold faster, thanks to short refueling times. However, a key challenge, as with electric cars, is for an entire network of hydrogen refuelling stations to be built. Nevertheless, the hydrogen fuel cell technology seems like the next big thing for automotive applications, thanks to its quick fueling times, zero emissions and the ability to provide long driving range. Filling up the iX5 takes three to four minutes – so there are no limits on using the vehicle for long distances. In addition, the SUV’s range is unaffected by weather conditions, as proven by the vehicle’s real-world testing, meaning it delivers a smooth, quiet driving experience no matter where life goes. The iX5 Hydrogen transcends the ordinary, offering a glimpse into the future of automotive excellence. It invites you to drive into the future, where power, elegance, and sustainability merge seamlessly. BMW is part of international partners that are working with ADNOC Group and ENOC Group in Abu Dhabi and Dubai, respectively, to test the long-term viability of hydrogen vehicles in the UAE. The country aims to produce 1.4 million tons of hydrogen annually by 2031 as part of its climate neutrality goals, and the figure is expected to increase by tenfold to 15 million by 2050. BMW iX5 Hydrogen is expected to hit showrooms by the end of the decade, a time at which the brand expects electric and hydrogen cars to claim a more than 50 per cent share of its overall sales. January 2024
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UNDER SIX SECONDS
Lifestyle / Interview
THE BMW GROUP WAS THE LARGEST CUSTOMER OF EMIRATES GLOBAL ALUMINUM, WHICH SUPPLIED OVER 43,000 TONNES OF SOLAR ALUMINIUM TO BE USED IN BMW VEHICLES THIS IS SAVING
230,000 TONS OF CO2 ANNUALLY
What are your plans to reduce carbon emissions in the region?
DRIVING CLEANER E-MOBILITY GLENN SCHMIDT, VP FOR GOVERNMENT AFFAIRS, BMW GROUP, SHARES THE AUTOMAKER’S PLANS FOR ELECTRIFICATION FOR THE REGION, AND THE GROUP’S GLOBAL APPROACH TO DECARBONISATION AND ITS CONTRIBUTION TO COP28 BY NEESHA SALIAN
Tell us about your contribution to COP28.
Ahead of COP28, we announced our role as the VIP e-mobility provider for the climate conference. As a part of this contribution, we deployed a fleet of BMW i7, BMW iX as well as BMW iX5 Hydrogen for the exclusive use of VIP guests and officials during the event. 66
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We also hosted our first BMW Dialogues session in the Middle East that brought together prominent regional stakeholders to discuss climate change and sustainable mobility, shedding light on crucial topics and fostering actionable insights. We then used the insights gained from the dialogues to release a white paper that we launched during COP28.
The BMW Group is working with government and industry regulators to advocate and promote the expansion of emissionfree mobility energy infrastructures for both battery-electric (BEV) and fuel cell electric (FCEV) vehicles. In 2022, BMW Group Middle East and the UAE’s Ministry of Energy and Infrastructure signed an agreement to expand the electric vehicle charging network across UAE federal roads and destinations. Through this agreement, we continue to support the ministry in the construction of electrical charging stations across the Emirates. We are also driving the creation of a complete green hydrogen value chain, and have joint activities in place with relevant stakeholders across Saudi Arabia, UAE, Qatar, Oman, and Jordan in support of the development of sustainable hydrogen infrastructure. For example, just ahead of COP, ADNOC and ENOC, in partnership with DWEA some of the region’s first green hydrogen refuelling station to support the establishment of hydrogenpowered vehicles. With the recent release of the BMW iX5 Hydrogen pilot fleet, BMW Group has produced the world’s first-ever sports activity vehicle featuring hydrogen fuel cell technologies. Vehicles of the pilot fleet are currently underway in the Middle East, showcasing the potential and feasibility of this technology. gulfbusiness.com
Additionally, in 2022, the BMW Group was the largest customer of Emirates Global Aluminum, which supplied over 43,000 tonnes of solar aluminium to be used in BMW vehicles. This is saving 230,000 tons of CO2 annually. As of January last year, BMW Group and EGA expanded on the partnership to source sustainably sourced aluminium blended with recycled metal. What about the countries that are not ready for electrification? What are your plans in those markets?
The BMW Group is the only premium brand to advocate for an open technology approach. Rather than pursuing a single drivetrain technology, we are developing different drivetrain technologies that rely on different energy sources, as a realistic
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measure towards the transition to sustainable mobility. This includes battery electric vehicles, but also fuel cell electric vehicles relying on hydrogen and even very efficient combustion engines. Across the global mobility market, this approach is most relevant in the Middle East market, where BMW Group Middle East has recognised the unique energy mix present in the region. Especially hydrogen is seen as a crucial element for the future energy system, and lawmakers in various regions, including the Middle East, have acknowledged its importance. Hydrogen-powered vehicles hold the potential to offer unique benefits to many customers, particularly in terms of longdistance capabilities and fast refuelling, providing a high level of flexibility and we
Does BMW believe it’s ready to move to fully electric? When do you think this will happen?
As mentioned, at the BMW Group, we believe in an open-technology approach and are committed to the development of drivetrain technologies that rely on multiple energy sources. This is a more realistic measure towards the transition to sustainable mobility, avoiding the reliance solely on battery electric mobility. With the current pace of technological development, zero-emission mobility will be wide-spread, as long as the development of the necessary infrastructure can keep pace. We believe that building up charging infrastructure and refuelling stations for hydrogen is crucial for zero-emission mobility to succeed. The production of EVs produces a huge amount of carbon emissions. How will you reduce that?
The BMW Group is a leader in the field of e-mobility. But harnessing the potential of e-mobility requires a holistic approach that encompasses the supply chain. Our sustainability targets encompass the entire lifecycle: from the supply chain through production to the end-of-use phase. The aim is to reduce CO2 emissions per vehicle by 40 per cent by 2030 across the entire spectrum coming from a 2019 baseline. Of course, this also extends to battery cell production. All our battery cell suppliers have agreed to use only green electricity for cell production. We are asking them to include as many recycled materials as possible, as circularity is way to break the dilemma between growth and sustainability. For our next generation of electric vehicles, our so called ‘NEUE KLASSE’, we aim to reduce the carbon footprint of battery cells by up to 60 per cent compared to our current generation of cells. January 2024
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Pics: Supplied
“We are also driving the creation of a complete green hydrogen value chain, and have joint activities in place with relevant stakeholders across Saudi Arabia, UAE, Qatar, Oman, and Jordan in support of the development of sustainable hydrogen infrastructure.”
are evaluating the feasibility of mass-producing hydrogen-powered vehicles in the second half of this decade This technology is particularly wellsuited for larger vehicle classes, which constitute a significant portion of the BMW Group’s product portfolio. Consequently, BMW is exploring a combination of battery-electric and fuel cell-electric drivetrains in the long term, contingent on evolving conditions.
JAN
24
The SME Story A dedicated hub for the regional startup and SME ecosystem INTERVIEW
More personalised transport Paying greater attention to the individual needs of e-hailing passengers and those who lease cars has become an obsession for these founders Tell us more about Zed’s business model.
Abhinav Patwa, head of Zed
Pic: Supplied
Give us a brief history of the company. What inspired you to start the company?
We saw an opportunity to bridge the gap between technology and transportation, offering a convenient and efficient alternative to conventional taxi services. We didn’t want to be just another taxi provider in a crowded market. Determined to be different, we delved into in-depth research and analysis, by conducting focus groups and consulting local consumer behaviour specialists. The insights we gained were eye-opening, leading us to create an app that goes beyond the ordinary – Zed. gulfbusiness.com
Our business model is centred around providing scheduled ride-hailing services through our mobile application. In order to book a Zed, users are required to create an account on the Zed platform and can link their preferred payment method, streamlining the transaction process. Registration is a fundamental step for customers to access Zed’s services and experience the convenience of our platform. The application has a userfriendly interface, allowing customers to effortlessly book rides in real-time. Additionally, users can customise their vehicle from lighting to temperature, track their driver’s location, order a cold brew, and pick their music of choice – all before entering the vehicle. Safety is a key consideration for us. We prioritise the well-being of both riders and drivers. To establish trust and credibility, we have implemented rigorous safety features including conducting comprehensive background checks on drivers, and ensuring vehicle inspections meet the safety standards. To ensure smooth operations, we continuously collect and analyse data including rider preferences, travel patterns, and driver performance, among others. Data analysis serves multiple purposes such as improving service quality, optimising routes to reduce travel times, and
making informed decisions based on user behavior and preferences. Having a data-driven approach is instrumental in shaping the company’s strategies and service improvements and will help us build out our feature offerings as we go. As we operate in the UAE, the regional focus enables us to tailor our services, marketing strategies, and pricing to match the demand and preferences of the UAE market. Our localised operations allow us to remain competitive and relevant in the region. However, operating within the competitive landscape, our business model necessitates a focus on gaining and maintaining market share. In order to achieve this, we continuously introduce innovative features and maintain a high level of quality service. What is Zed’s unique value proposition when it comes to urban transportation?
Zed’s USP in Dubai’s urban transportation sector lies in personalisation, convenience, and delivering a touch of luxury. We are not just another e-hailing service, we are a tailored experience. Our mobile application allows users to set the mood by picking a playlist, controlling the lights, managing the temperature, and even ordering a cold brew before they get in the car. Additionally, we offer users the ability to schedule January 2024
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The SME Story
IT’S NOT JUST ABOUT GETTING FROM POINT A TO POINT B –
IT’S A SEAMLESS JOURNEY WHERE YOU CONTROL THE LIGHTING AND TEMPERATURE BEFORE YOU STEP INTO THE CAR
recurring rides to avoid the hassle of hailing a car during rush hour, mitigating the chance of ride cancellations and car unavailability. We’re all about making each journey a reflection of the passenger’s preferences, from music choices to the ambiance. It’s not just transportation, it’s an experience and we’re committed to setting new standards in urban transportation, making it an integral part of the overall Dubai experience. That’s what sets us apart in this bustling city. Why did you feel there was a gap in the market and how is Zed plugging the gap?
We noticed a significant gap in the market because traditional e-hailing services lacked the convenience and personalisation that today’s customers expect. Dubai, being a city of luxury and dreams deserved a transportation service that mirrored that image. Zed is plugging this gap by offering a fully customisable and convenient limousine service that is all about matching your mood and empowering you. It’s not just about getting from point A to point B – it’s a seamless journey where you control the lighting and temperature before you step into the car. You can even set up recurring rides for added convenience. We’ve taken the best experiences from various industries to craft an app that goes beyond the ordinary. We’re on a journey to transform urban transportation, making it more personalised and convenient for our users and we look forward to the impact we’ll make in the market. How do you see the e-hailing industry evolving in the UAE, and how does Zed plan to position itself in this changing landscape?
The e-hailing industry in the UAE is on an exciting trajectory, and Dubai has always been at the forefront of 70
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embracing innovation. Technology is at the core of this transformation. We can expect an increase in the use of online platforms to book rides, given the rise in smartphone penetration and the convenience of online payments. Dubai is considering the potential entry of flying cars, which is a fascinating development. Sustainability is another significant factor. The move towards electric cars is not just a global trend but also a growing focus in the UAE, driven by environmental considerations and the need for cleaner transportation solutions. At the heart of everything happening in the UAE is the concept of experience, and that’s precisely where Zed fits in. Zed is all about delivering exceptional, personalised, and luxurious experiences to our users. As the landscape evolves, we plan to position ourselves as the go-to choice for those who seek not just a ride but a memorable journey. Our commitment to personalisation, convenience, and a touch of luxury aligns perfectly with the changing dynamics of the e-hailing industry in the UAE. We’re excited to be a part of this transformation and set new standards in the sector. Zed places a strong emphasis on passenger customisation. Give us examples of the most unique and personalised rid experiences that Zed offers?
Each Zed journey is about tailoring the experience to you. When you sign up, you can choose your favourite colour, and the floor inside of your Zed will light up in that custom colour. But it doesn’t stop there. We give you the controls to create different modes to match your journey needs. Whether it’s a work mode, relax mode or travel mode, you have the choice to adjust the lighting, select your favourite playlist, set the music volume, and even control the temperature before your Zed arrives.
Want a chat or some quiet time during the ride? You decide how much conversation you want with your driver. And for those who can’t start their day without that perfect brew, you can pre-order your iced coffee, so it’s ready for you when you step into the car, saving you the morning rush. And for those regular commutes or appointments, Zed offers the convenience of setting up recurring rides known as rhythms, so you don’t have to worry about hailing a cab during busy hours. It’s all about making your journey truly yours, tailored to your preferences. What key lessons did you learn during your career that have influenced your approach?
Throughout my career, I’ve learned some invaluable lessons that have influenced my approach as the head. One of them is the importance of differentiation. In a competitive landscape, it’s crucial to stand out and offer something unique. Zed was born out of this idea — to break away from the ordinary and offer a distinct, personalised transportation experience. Another significant lesson is the value of starting small, becoming strong, and
“ZED IS ALL ABOUT DELIVERING EXCEPTIONAL, PERSONALISED, AND LUXURIOUS EXPERIENCES TO OUR USERS. AS THE LANDSCAPE EVOLVES, WE PLAN TO POSITION OURSELVES AS THE GO-TO CHOICE FOR THOSE WHO SEEK NOT JUST A RIDE BUT A MEMORABLE JOURNEY.” gulfbusiness.com
The SME Story
Being a startup, how is Zed funded?
As a startup, we’re fortunate to have the backing of one of the largest family business groups in the UAE. Their support has been instrumental in helping us bring our vision of redefining urban transportation. What plans do you have for Zed for the next six months and beyond?
Dubai is our primary focus for the short term, where we’re deeply committed to making a significant impact and setting high standards for transportation services. Beyond Dubai, we have ambitions to expand into other markets, including opportunities in the UAE and potentially beyond. Our goal is to replicate the success we’re achieving in Dubai and bring the Zed experience to more people, offering personalised and revolutionised transportation. In the coming months and beyond, our plans for Zed are straightforward. We aim to continually enhance our offerings, ensuring each ride with Zed is a memorable journey, not just transportation. We’re dedicated to setting new standards in urban transportation, with exciting developments on the horizon. gulfbusiness.com
world, so navigating the process and securing funding early on was hard for us as first-time founders. What is your business’ model, USP and how do you differentiate from some of the other players in the market?
Chris Kirby, CEO and co-founder at Tomorrow’s Journey
What inspired you or what were some of the major drivers behind your decision to start your company?
I worked in the automotive industry for over 15 years before starting Tomorrow’s Journey, and in that time I saw firsthand the friction drivers face whenever they wanted to access a vehicle, regardless of whether it was to test drive it for one hour, rent it for one day, or lease it for multiple months. This friction was almost always caused by inflexible processes and outdated technology. We also recognised that in today’s digital world, people demand more flexibility and less commitment — something that these systems also prevent. What were some of the biggest challenges that you faced when starting the business?
We have 3 key USPs. First, our system can be white labelled and is fully customizable; meaning it can be tailored to support the specific use case of our customer. Second, from a single code base, we can support all types of flexible mobility — from one hour test drives to multi-year flexible leasing. This is a capability that is far beyond anything that our competition offers. And third, our customers can build an ecosystem of offerings from a single fleet of cars (e.g., test drives, rental and subscription), all managed dynamically and from a single tech platform. Can you elaborate on your funding to date and what are your future plans to raise capital as well as strategic plans for the region?
For our first few years, we were largely bootstrapped, raising under $300,000 from a handful of angels whilst generating $2m in revenue. In 2023, we closed our seed round, led by Flat6Labs in Abu Dhabi, and due to a rapid acceleration in our key metrics, we are currently raising our Series A of $5m.
This was both mine and my cofounder’s first startup and we learnt a lot in the first couple of years, particularly around finding the product-market fit and raising investment. With our product, we knew there was the need in the market, but it took a couple of iterations to find a point where customers would start to pay for the service, giving us a place to scale from. With investment, the landscape is really different to anything in the corporate or commercial
Pics: Supplied
then scaling. It’s about building a strong foundation before aiming for larger horizons. We began in Dubai, with a clear focus on delivering exceptional service in this vibrant city, and we are now looking at expanding while maintaining our high standards. Furthermore, perhaps the most crucial lesson is that customer experience is of utmost importance. In our case, the driver is our first customer. They play a pivotal role in delivering an unforgettable experience for our passengers. If our drivers are happy, our passengers will be too. So, we put a lot of emphasis on ensuring our drivers are satisfied and well-equipped to provide an excellent service. These lessons have shaped Zed’s approach, and we’re committed to setting new standards in urban transportation by applying these principles.
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COMMENT
How will the wise investor and entrepreneur approach 2024? GLOBAL BUSINESS TRENDS In 2024, the industries that will flourish will be those driving these changes, and the businesses becoming part of that change or adapting to it quickly. Let’s break this down in more detail:
Pic: Getty Images
INNOVATION: Entrepreneurs with innovative solutions in this domain stand to gain traction, and investors should keep a keen eye on companies leading the charge. The Boston Consulting Group asserts that ‘to be an industry leader in five years, you need a clear and compelling generative artificial intelligence (AI) strategy today’, and it’s already clear that AI and machine learning will need to be thoroughly integrated into many of the products and services that major companies offer. Generative AI puts the power to create and intelligently automate the customer experience, as well as internal operations, in the hands of nearly every organisation. It’s down to the leaders of those businesses to ensure this is done efficiently and in a timely manner.
Being aware of trends ranging from innovation to data, and sustainability will put the investor and entrepreneur in a good position for 2024
I
n the dynamic landscape of global business, 2024 holds real opportunities for the discerning investor and visionary entrepreneur. But what are the major global trends, and how do those look from a GCC perspective? When we think about next year – or even the year after that – what we’re doing is trying to understand what the future may hold, based on what we know today. And that’s something startup founders and 72
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investors alike consider on a daily basis. As Alexander Limpert, CEO and co-founder of GuestReady, says: ‘An effective leader must envision the start-up’s future and articulate a captivating mission’. So, let’s take a look at what 2024 might hold, starting with global business trends, then narrowing down to the GCC region, before examining the key opportunities for entrepreneurs and investors in the UAE during the course of this year.
DATA: By 2024, numerous companies in the business landscape will have refined their operations and enhanced customer offerings through a strategic handling of their data. Consequently, they will be poised to embark on the next phase — leveraging data monetisation to generate fresh business opportunities. Pioneering this movement are companies such as John Deere, which has introduced the practice of selling sensor data from its farm equipment back to farmers, offering valuable insights to enhance productivity. As the accessibility of extensive data collection and AI-driven analytics becomes more widespread, I anticipate smaller enterprises in niche and diversified sectors embracing this trend. SUSTAINABILITY: The global shift towards sustainability is reflected in the investment gulfbusiness.com
Feature / Investment Karl Hougaard, CEO of TLZ
THE GCC IS PROJECTED TO GROW BY 3.6 PER CENT IN 2024 BEFORE RISING TO 3.7 PER CENT
landscape. Both entrepreneurs and investors should explore opportunities that align with environmental, social, and governance (ESG) principles, contributing to both profit and positive impact. A key catalyst is evidently customer demand, with ongoing research indicating a growing preference among consumers for companies demonstrating a robust commitment to reducing their environmental footprint. In addition, as the green economy expands, we are discovering that environmentally friendly solutions often translate into bottom-line growth.
THE GCC AND UAE PERSPECTIVE Let’s look at the 2024 economic outlook for the GCC region as a whole and the UAE in particular. According to the World Bank, the GCC region is projected to grow by 1 per cent in 2023 before rising to 3.6 per cent next year and 3.7 per cent in 2025. The non-oil sector is positioned to propel economic growth, due to expansion in tourism, government initiatives, and technological advancements. There is also an anticipated rise in the number of new job openings in the GCC during the fourth quarter of this year, with companies gearing up to further expand their teams for 2024.
When we look at the UAE specifically, the IMF has recently reported that the economy is sustaining its growth trajectory, due to domestic activity. Nonhydrocarbon GDP growth surpassed 4 per cent this year, and it is likely to maintain a similar pace next year. In line with what we’re seeing in the GCC as a whole, this is propelled by the flourishing sectors of tourism, construction, and real estate. Entrepreneurs aspiring to launch their ventures in 2024 should consider these industries, aligning their plans with both global and local trends. Likewise, investors seeking profitable avenues should diversify their portfolios while keeping a watchful eye on the burgeoning sectors.
UAE OPPORTUNITIES 2024 The UAE has put together a number of key initiatives to foster economic diversification which are laying the groundwork for an even stronger future. The ‘We are the Emirates 2031’ programme and the Dubai Economic Agenda D33 are just two of the key initiatives aimed at driving growth, trade and foreign investment. Other programmes, such as the National Tourism Strategy, also help set the stage for increased diversification. As an investment and business destination, measures such as visa programmes, granting 100 per cent foreign ownership of companies, as well as further refining the ease-of-doing-business all play key roles. With the country very much back on track post-pandemic, visitor numbers are likely to increase as the country’s travel and tourism sectors grow. With this in mind, let’s look at the specific areas entrepreneurs and
investors in the UAE should be focusing on: TECHNOLOGY: Dubai continues to position itself as a global technology hub. The Smart Dubai initiative, coupled with the city’s commitment to innovation, makes it an attractive destination for tech entrepreneurs. Investing in local tech startups or establishing a presence in Dubai’s tech ecosystem could prove fruitful. REAL ESTATE AND TOURISM: The UAE, and Dubai in particular, is renowned for its ambitious real estate projects and vibrant tourism industry. Despite global uncertainties, the country’s strategic investments in these sectors are likely to yield returns. Entrepreneurs exploring ventures related to hospitality, real estate and travel – as well as tech innovations within those industries – could find ample opportunities. E-COMMERCE AND LOGISTICS: The surge in shopping and the demand for efficient logistics services create a fertile ground for entrepreneurs in e-commerce and supply chain management. With Dubai serving as a logistics and trade hub, ventures in these areas can tap into a robust infrastructure. HEALTHCARE AND BIOTECHNOLOGY: The ongoing emphasis on health and wellness, exacerbated by recent global events, positions the healthcare and biotechnology sectors as robust investment choices. Advancements in medical research, telemedicine, and biopharmaceuticals are likely to shape the industry’s landscape. STRATEGIC ALLIANCES: Collaboration and partnerships can play a pivotal role for entrepreneurs entering the market. Forming strategic alliances with established players in Dubai’s business ecosystem as well as the wider GCC can provide valuable insights, mentorship, and access to resources.
CONCLUSION
THE IMF HAS RECENTLY REPORTED THAT THE ECONOMY IS SUSTAINING ITS GROWTH TRAJECTORY, DUE TO DOMESTIC ACTIVITY. MEANWHILE, THE NON-HYDROCARBON GDP GROWTH SURPASSED 4 PER CENT THIS YEAR. gulfbusiness.com
The year ahead presents multiple possibilities for the investor and entrepreneur. By understanding global business trends, aligning with the unique opportunities in the GCC region, and maintaining a forwardthinking approach, the evolving landscape can be navigated with confidence and success. January 2024
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Feature / Empowerment COMMENT
Victor Orlovski, general partner at R136 Ventures & author of a bestseller, From Rhinos to Unicorn
Trying to balance out the gender forces in the startup and VC funded world will require a major culture shift over the next few generations. But it is crucial to start now in order to transfer the necessary skills
W
hen I first moved to Silicon Valley back in 2016 to start my VC fund, I was inspired by the diversity of nationalities and cultures. Despite this diversity, I was surprised to find that almost all VC partners I met with were American men, who are also of white origin more often than not. The venture capitalist industry in general was led by men. I believe the reason behind this is that when the VC industry first took off in the 1970s and 1980s and started playing a key role in US economy, the wealth provided was mostly generational wealth from pensions, endowments, and mutual funds, headed by the patriarchs of the family. These men went on to form trustworthy relationships with each other, which in the VC world is everything. Another element that makes the VC industry very much an exclusive club is the legality of insider trading, further restricting the circles and posing a bigger barrier to entry. I pose the question: why are most of the founders in the Valley men, although most of them are not necessarily “white”? Over 75 per cent of all founders in the Valley are first generation immigrants — talented individuals who came to this part of the world driven by ambition, innovative ideas, and desire to change the world. Men have a competitive advantage because they either come
on their own and their families remain in their home country, or if they come with their families, women at the time mostly we’re responsible for settling the home and children. A new home, new schools, new environment for kids, new languages – it was certainly not an easy task despite how welcoming California was. With that being said, in the majority of the cases, men were freer to pursue careers and build companies from the ground up, which required lots of energy, passion, and complete focus on the business. Individuals who start a company are 100 per cent engaged and usually dedicate all their time to the business even though success is not guaranteed. Another point to make is that most of tech startup founders are technicians or computer science majors, which
OVER 75 PER CENT OF ALL FOUNDERS IN THE VALLEY ARE FIRST GENERATION IMMIGRANTS – TALENTED INDIVIDUALS WHO CAME TO THIS PART OF THE WORLD DRIVEN BY AMBITION, INNOVATIVE IDEAS, AND DESIRE TO CHANGE THE WORLD.
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statistically speaking, the representation of men and women in tech spaces and fields of study are not equal. This is especially true for major donors of tech talent in the Valley, Southeast Asia, India, and Africa. Probably it has to do with social inequality in these regions where it is still hard for an average woman to study tech in a college or university. That’s the main reason why women are left behind. The situation is changing and on the path to more gender diversity, espeically as many VCs in the Valley are genuinely concerned about equality and diversification. Now it is easier for businesswomen and founders to be invited to speak with the VC than ever before. I know from my colleagues in the Valley, and I can speak on my own behalf, that I highly value women founders. Today, soft skills of founders such as negotiation, public speaking, research, communication and listening skills are highly valued and relied on for startup success just as much as engineering skills. Women on average have excellent soft skills, along with the technical knowledge needed to lead and work at tech startups. I trust that we will see increased number of women gaining a competitive advantage in driving the startup movement and building up great companies. We are proud to be investors in companies founded by women such as Peek Travel where we have Ruzwana Bashir as a great founder and entrepreneur. Ruzwana is of Indian origin, raised in the UK, and built her brilliant career in the Valley. Another founder we are proud of is Elena Beloshapkova from Inspace. She is a successful serial entrepreneur driving her company in hybrid workspace analytics. Also, we backed Fetch Robotics founded by a brilliant engineer Melonee Wise. I’m sure we will back more women founders in our next generation of venture funds and that women founders will lead the tech progress in the 21st century. gulfbusiness.com
Pic: Supplied
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