KHALEEJ TIMES, Wednesday, Nov 15, 2017 | Safar 26, 1439
Ask Dubai how an oil exporter should diversify: World Bank
Dubai is a good example of how
an oil exporter should diversify, Hafez Ghanem, World Bank Vice President for
Middle East North Africa, said and noted that low oil prices are providing an
impetus for Gulf economies to diversify away from the oil industry.
Saudi Arabia, with its Vision
2030, is doing the same as what Dubai did years ago, Ghanem said at the
inaugural Global Financial Forum (GFF).
The World Bank official
stressed the need for the private sector to drive most of the economic growth,
and private-public-partnership models will be very important in securing that.
He added that the privatisation drive will help prop up the capital markets.
The GFF, organised by the Dubai
International Financial Centre (DIFC), the leading international financial hub
for the Middle East, Africa and South Asia (Measa), provided a platform for
expert-led sessions on geo-economic trends shaping the region as well as
technological developments that are geared to take the financial services
industry to the next level.
Addressing the conference,
Khaled Talhouni, Managing Partner of Wamda Capital, said that "the new oil is
the consumer" and that is where there will be the greatest opportunity as the
Gulf pivots away from old economy that is state-led and oil-centric to a new
economy that is private-led and consumer-centric.
Karim El Solh, co-founder and
chief executive officer of Gulf Capital, said the challenge is for capital from
the GCC to invest in the region and to attract foreign capital to the region, as
it transforms from being state-led to consumer and private sector driven.
Speakers at a session on the
"Islamic Economy: Engine of South-South Investment," observed that Islamic
finance has been growing, and although it only represents a very small amount of
the total finance world, its appeal is spreading to an increasing number of
non-Muslims because the principles underlying Islamic finance are in line with
ethical and responsible financing. Mohamed Damak, Global Head of Islamic
Finance, S&P Global Ratings, said one of the main hurdles that has stunted
Islamic finance's growth is the lack of standardisation, mainly that in some
jurisdictions one instrument's structure is deemed as Shariah compliant while in
another it is not. Abdulla
Al Awar, Chief Executive Officer, Dubai Islamic Economy Development Centre, said
that having a single standard may not be necessary, arguing instead for a
harmonisation of standards.
Dr. Patrick Njoroge, Governor,
Central Bank of Kenya, said that early adopters of mobile banking technology in
Kenya has helped bring financial services to those who were underbanked; as of
2016 roughly three-quarters of the adult population have access to financial
services. Dr. Njoroge added that micro lending and investment in government
securities through various platforms, will encourage a culture of saving and
investment, ultimately this is positive for the entire economy.
On a global scale, the governor
also said that it would be important to have access to cheaper smart phones, so
that the 2 billion people who have no access or limited access to financial
technology can be serviced.
Soumya Kanti Ghosh, Chief
Economic Advisor, State Bank of India, said that India is on the path to major
structural reforms, including demonetisation which will help formalise the
unorganised financial sector. Some of the major benefits of those reforms have
been financial inclusion, demonetisation, and the empowerment of women.
Bill Winters, Chief Executive
Officer, Standard Chartered, believes that the underlying economic story in the
Gulf is positive. He added that Standard Chartered is investing heavily in the
region due to plenty of competitive opportunities. Across the rest of the Measa
region, Winters said that the growth dynamic is positively changing in Africa;
Ghana and South Africa are the two biggest markets in that continent that have
recovered remarkably over the past two years. As for China, he believes that the
leadership is aware of the size of debt that it has accumulated over the last
decade and are taking measures to reduce leverage. He also added that in the
medium term, the capital markets will continue to open up to foreign investment.
On India, Winters said that the Indian government has set itself on a path of
positive growth and recovery.
As for FinTech, Winters said
that the biggest spenders are banks; over the last several years upgrading and
adopting to new technology makes up roughly 10 percent of banks' expense base.
In the UAE, Standard Chartered processes over 98 percent of their transactions
Winters believes that
commercial banks will be around for a long time, but they will adapt to new
innovative products and services.
Kevin Sneader, Chairman, Asia,
McKinsey, said that globalisation has entered a new era; the growth of emerging
markets and their middle classes will drive consumption and a further shift of
the centre of trade towards Middle East, Africa and Asia.
Sneader also said that
initiatives such as China's One Belt, One Road will require more involvement
from private sector to ensure long-term sustainable growth.
Alicia Garcia Herrero, Chief
Economist, Asia Pacific, Natixis, said the nature of economic relation between
China, the second largest economy in the world, and the Middle East has changed
substantially in a very short period of time. One of the drivers is China's push
for a gigantic investment in its One Belt, One Road initiative where the Middle
East received as much as 24 percent of China's total investment in those Belt
and Road countries, Herrero noted.