OME Autum 2015 - Middle East Association

Autumn 2015
OP P ORT U N I T Y
M I DD L E
E A S T
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The Magazine of the Middle East Association
5-6 | Opportunity Arabia
The Magazine of the Middle East Association
11-13 | Islamic
Finance
16-17 | Digital Levant
www.the-mea.co.uk
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New markets
and a renewed
focus on sectors
T
Contents
his latest issue of OME sees
the Middle East Association
enter a very busy period. The
quiet Ramadan and holiday months did
not quite appear as we expected, and
the team has been busy planning new
initiatives for the autumn programme.
We kick off with Opportunity Arabia
on 14th September. Being the first
time we have held the conference in
London since 2012, there is a great deal
to discuss and some excellent speakers
lined up. We welcome Tobias Ellwood
MP as the first Minister of the British
government to speak in the event’s
twelve-year history.
Developments in the region have kept
us busy. We have been monitoring the
effect that the drop in the oil price has
had on our members, and on projects
in which they are involved. In our
discussions with MENA Ambassadors,
the FCO and UKTI, and business
leaders, it is clear that the move for
diversification, vocational training
and joint ventures are going to become
stronger themes, developing on the steps
already seen in several national visions.
We welcome the opening of the
British Embassy in Tehran, and are
pleased to see its Iranian counterpart
now open in London. Our ‘Update on
Iran’ assesses the current situation and
lays out the MEA plans to re-engage
with partners in the market.
Finance continues to be a key
issue for Members, and we will see
what steps the government takes
throughout the autumn. We caught
up with the Islamic Finance sector at
the London Sukuk Summit in June,
and also spoke to Tahir Ahmed at UK
Export Finance about their developing
initiatives and strategies to support
British exporters.
Finally I would like to draw your
attention to our Diary of Events at the
back of this issue, and in particular to
our Autumn Lunch on 26th November. It
will be a valuable networking occasion,
and an excellent place to entertain.
13 MEA news
4 Members news
15 Diary of events
5 An Update on Iran
16 MEA
9 ‘Commit, don’t commute’:
The secret to winning in
Saudi Arabia
10 Saudi Arabia: Retail sector in
the spotlight
12 A focus on Qatar
The Magazine of the Middle East Association
Opportunity Middle East is
the news magazine of the
Middle East Association
Editor in Chief
Peter Meyer
Editor
Rebecca Ryan
Views expressed in Opportunity
Middle East are not necessarily
those of the Middle East
Association or the publishers.
Acceptance of advertisements
does not imply endorsement
of the product or services
concerned. While every care
has been taken to ensure
accuracy of editorial content, no
responsibility can be taken for
any errors and/or omissions.
ISSN: 1365 8972
Middle East Association
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T: +44 (0)20 7839 2137
E: [email protected]
W: www.the-mea.co.uk
Twitter: @MiddleEastAssoc
Peter Meyer, CEO
3 Welcome
7 Opportunity Arabia
ome
welcome
17 Investors look to North Africa
18 London: The place to be for
Islamic Finance
22 UKEF: Boosting UK exports
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Publications UK Ltd
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24 Digital Levant article
27 Yemen in brief
Front cover image credit: Tom Kelly, 2011
www.the-mea.co.uk
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Membersnews
Rolls-Royce wins
regional contracts
R
olls-Royce has been selected by
SAUDIA, the national carrier
of Saudi Arabia, to provide
long-term TotalCare® engine service
support, worth US$1.3 billion, for 20
Airbus A330 Regional aircraft. The
company also announced in May that
it had been selected by Middle East
Airlines to supply Trent 700 engines
and TotalCare® service support for an
additional Airbus A330 aircraft to the
four already powered by Rolls-Royce.
This comes on the back of the
confirmation in May that Rolls-Royce
had won its largest ever order, worth
$9.2bn, to provide Trent 900 engines
and TotalCare® service support to
Emirates. The Rolls-Royce engines will
power 50 Airbus A380 aircraft that will
enter service from 2016.
Sir Tim Clark, Emirates Airline,
President, said: ‘Rolls-Royce is a key
partner for Emirates and we have
been impressed with its commitment
to continual improvements in the
economic and operational performance
of the Trent 900. These improvements
have been decisive factors in our
selection of the product for 50 of our
A380s. ‘Today’s announcement is
significant not only because it cements
the partnership between Emirates and
Rolls-Royce, but also because of the
significant economic impact that this
will have on aviation manufacturing in
the UK and Europe.’
Petrofac awarded US$780
million project in Kuwait
P
etrofac, the international oil
and gas services provider has
received an award notification
for Kuwait Oil Company’s (KOC)
manifold group trunkline (MGT)
system in the north of Kuwait.
The lump-sum engineering,
procurement and construction (EPC)
project, valued at approximately
US$780 million, is integral to KOC’s
plans to increase and maintain
crude production over the next
five years. Three new gathering
centres (GCs), which form part of the
broader project, are already under
construction with Petrofac executing
the EPC contract for GC 29.
Due for completion towards the
end of 2017, the MGT system will
provide the feedstock to each of
the GCs via three independent
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networks of intermediate manifolds
and pipelines. Each of the three
GCs will be capable of producing
around 100,000 barrels of oil per
day together with associated water
and gas.
Marwan Chedid, Chief Executive
of Petrofac’s Engineering,
Construction, Operations and
Maintenance division, said: ‘We
have a long track record in Kuwait
which extends over the last 15 years
and the MGT award represents
our twelfth project in the country.
Kuwait is, and will continue to be,
one of our core markets and is of
strategic importance to Petrofac’s
ambitions in the Middle East. We
look forward to working with KOC
to deliver this project safely and on
schedule.’
New Member:
Gabbitas
Educational
Consultants
W
elcome to the new Member
of the MEA, Gabbitas
Educational Consultants.
In April 2014 Gabbitas signed an
agreement to manage four new British
curriculum schools in Dubai being set
up with an investment of Dh500 million
by Mohan Valrani, a prominent Dubai
businessman.
Gabbitas, a global expert in
education, also announced the launch
of its Middle East operations with the
opening of a new office in Dubai at the
same time.
The new office aimed to meet the
growing demand for personalised
educational services and advice on
high quality educational options, and
Membership of the MEA will help to
achieve further business development
goals.
Shariah-compliant
property fund
N
ew MEA Member London
Central Portfolio runs a
fund that allows investors
to participate in the prime central
London residential property market
in a Shariah-compliant manner. CEO
Naomi Heaton says ‘Our London Central
Apartment II fund is the only Shariahcompliant residential fund available
in the UK. We decided to structure
our offering in this way to allow it to
be globally accessible to conventional
Shariah-conscious and ethical
investors.’ The fund aims to offer a
return of 14% per year with a mediumterm investment. By 2019, the return
is projected to be £12,150 on a £15,000
investment.
Part of this story has previously been
featured in Investors Chronicle, 6th
November 2014.
The Magazine of the Middle East Association
marketopening
An Update on Iran
I
n a continuation of the Middle
East Association’s watching brief
on the Iranian market, we have
been tracking recent events closely.
Following the welcomed agreement
made in Vienna on 14th July, a
rapid development in diplomatic
relations between the UK and Iran has
occurred. On Sunday 23rd August, the
British Embassy in Tehran and the
Iranian Embassy in London reopened
simultaneously.
The MEA were delighted to
congratulate the Chargé d’Affaires
to Iran, Ajay Sharma, and Foreign
Secretary, Philip Hammond on
this remarkable development. The
Foreign Secretary stated on the 23rd
August; ‘Last month’s historic nuclear
agreement was another milestone,
and showed the power of diplomacy,
conducted in an atmosphere of mutual
respect, to solve shared challenges.
‘Re-opening the Embassy is the
logical next step to build confidence
and trust between two great nations.
‘Iran is, and will remain, an
important country in a strategically
important but volatile region.
Maintaining dialogue around the
world, even under difficult conditions,
is critical, and Embassies are the
primary means of achieving this.’
The MEA has been working to
re-establish our expertise and
connections with Iran. On 23rd
June, in response to the on-going
negotiations, the organisation hosted
a briefing titled ‘Iran: Sanctions
Explained’ at Lincoln’s Inn. It was
hugely oversubscribed, and following
on from this event’s success an ‘Export
Showcase: Opportunities in PostSanctions Iran’ will be hosted by The
EIC in conjunction with the MEA on
23rd September. Additionally, there
will be a Market Briefing on Iranian
Finance on the 14th of October
(subject to confirmation).
Our activities are not just confined
The Magazine of the Middle East Association
Photo credit: Babak Farrokhi, 2010
to the UK. The MEA is facilitating a
Trade Mission to Iran in conjunction
with M-Power Enterprises from the
24th-28th September. This visit
will offer delegates the opportunity
to engage with Iranian companies
in light of the increased British
engagement with Iran. ‘As a market,
Iran has huge potential for British
businesses,’ says Peter Meyer, CEO
of the Middle East Association,
‘and at the MEA we hope to be at
the forefront of the developing
relationship as sanctions relief
begins.’ The MEA intends to take a full
Trade Mission to Tehran in April 2016.
The FCO and UKTI updated their
advice on Embargoes and Sanctions
on Iran on the 16th July, and the MEA
would encourage its members to
examine the limitations thoroughly and
to seek independent legal advice before
engaging in any business activity. We
will continue to develop our analysis
and business contacts, as well as
exploring the regional implications
of the sanctions agreement and
diplomatic developments both at home
and abroad.
Currently the Middle East
Association, in conjunction with
Menas Associates, is offering
Members a 20% discount until
30th November on Menas’ monthly
publication Iran Strategic Focus (ISF),
which provides in-depth analysis to
help businesses navigate the shifting
landscape. For those in search of
industry-specific insights, the MEA
has secured a 20% discount on the
NewsBase Iran Investment Report for
petroleum projects; we encourage our
Members to take advantage of this
valuable offer.
www.the-mea.co.uk
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The Magazine of the Middle East Association
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OPPORTUNITYarabia
Opportunity Arabia
Investment in the Middle East can seem a daunting prospect, but the Saudi Arabian
market offers far-sighted investors significant business opportunities in an increasingly
open economy.
THE RIGHT TIME TO INVEST
With the drop in oil price, new and
expanding companies have an
opportunity to develop in the Saudi
Arabian market as the Kingdom seeks
to diversify its investment portfolios,
by restructuring the stock market and
funding development programmes to
enhance infrastructure.
Such long-term strategic thinking
marks a shift in Saudi Arabia, and
indeed across the Gulf. The new
monarch, King Salman, is directing
a
structural shake-up and there
have
been several new appointments to
the cabinet. This is allowing a new
generation of prominent figures to
emerge, including King Salman’s son,
Mohammed bin Salman, appointed
the new Deputy Crown Prince, a
move which has been seen as an
awareness of the younger generation
in the relatively conservative Saudi
Arabian political scene. Crown Prince
Mohammed bin Nayef has been held
up
as representative of a new type
of
Saudi Royal. A keen proponent of
social welfare projects, the Crown
Prince has been a leading figure in
the
latest policy budget, which will see
billions of dollars allocated to social
infrastructure projects.
The readjustment is not only limited
to domestic policy. With its strategic
geographical location, Saudi Arabia has
made serious and concerted attempts
to take the lead in regional initiatives.
The air campaign in Yemen and the
decision not to cut oil production
despite the drop in price have been
controversial internationally, but
fundamentally reveal the country’s
intent on developing its position on the
world stage.
MARKET DEVELOPMENTS
The size of the market and the ambition
of its projects cannot be overstated.
Saudi Arabia is the UK’s largest trading
partner in the Middle East and has been
designated a ‘High Growth Market’ by
UK Trade & Investment. In 2014 over
6,000 UK firms actively exported £7
billion worth of goods and services.
As the largest free market in
the
MENA region and one of the world’s
fastest-growing economies
in
terms of income per capita, Saudi
Arabia is creating opportunities for
both exporters and investors. The
population is growing at about 3%
p.a., driving expenditure on new
cities, housing, transport, power,
desalination, healthcare, and education.
Petrochemicals and mining are
diversifying the economy away from
its historical dependence on
oil and gas
and currently account for about 25%
of GDP.
KEY PROJECTS
A key project social investment project
is the creation of new transport links
between urbanising towns and cities,
The Magazine of the Middle East Association
www.the-mea.co.uk
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OPPORTUNITYarabia
along with the expansion of the public
service provision. The rail network
project is estimated to be worth
$97 billion by 2040, and should see
15,000km of track laid.
Jeddah is now a major construction
hub, as the airport is being expanded
dramatically. Accommodating six
times more passengers, this project is
part of a broader agenda that sees the
Kingdom investing in its infrastructure
potential.
One hundred Colleges of Excellence
are currently being set up with the aim
of improving vocational training and
education across the Kingdom. So far
UK companies have secured $1 billion
worth of contracts (40% of the awarded
College provision) but there are future
bids in the pipeline.
OPPORTUNITY ARABIA
Now in its twelfth year, the MEA
intends for the Opportunity Arabia
conference to live up to its name
as it has done historically, offering
delegates the chance to network
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www.the-mea.co.uk
with Saudi business leaders, British
companies, and government figures.
Always an extremely popular and
well-attended event, this year the
conference takes place at One Great
George Street, London, on Monday 14th
September, and provides delegates
with the space to learn more about the
thriving Saudi market and potential for
investment.
Keynote speeches in the plenary
session include addresses from the
Minister for the Middle East, Tobias
Ellwood, and the Ambassador to Saudi
Arabia, Simon Collis. There are panel
discussions on key sectors, addressing
real business opportunities in the
Kingdom and how UK exporters can
access them – including applying for
the Aramco Approved Vendors list.
Practical workshops on entering
the market are taking place, and
panels will explore and demystify
the challenges that might present
themselves to SMEs starting out in the
region. Understanding the visa regime,
the process of Saudisation (Nitiqat)
and the requirements of the Saudi
Arabian General Investment Authority
(SAGIA) are all necessary first steps to
building a secure and solid platform in
the Kingdom. This conference offers
delegates the necessary insights into
this process and provides detailed
and specific information as to how
companies can tackle the ‘dos’ and
‘don’ts’ of the Saudi marketplace.
‘2015 marks a turning point in the
Saudi Arabian economy’ says David
Lloyd, Senior Consultant at the MEA
and lead organiser for the conference.
‘Like its other GCC partners, the
Kingdom is continuing to diversify.
Despite the fall in the oil price, the
Saudi government is keen to press
ahead with its ambitious plans for
development. This is the fundamental
message and theme of the conference.
The vast infrastructural projects
that are currently in development
offer UK businesses the chance to
become a partner in the country’s rapid
development, and we want to be top of
the cooperation list.’
The Magazine of the Middle East Association
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saudiarabia
‘Commit, don’t commute’:
The secret to winning in
Saudi Arabia
T
he Kingdom of Saudi Arabia
has not had a quiet year: the
accession of King Salman,
two new Crown Princes, a new young
Defence Minister, military operations
in Yemen, waning oil prices and
contentious visits to the French
Riviera are but a few of the topics
that have drawn the usually lowprofile Kingdom into the headlines.
Yet for foreign companies, faced
with contracting or stagnating
domestic markets, Saudi remains a
land of opportunity; not surprising
when considering that nearly half
of all MENA GDP comes from this
one country. The statistics speak for
themselves:
Largest population in the Gulf
Education sector spending
represents 25% of all
government expenditure
l Medical budgets increased
50% in 2015
l $80bn government defence
and security budget in 2015
l Multiple mega-projects such
as the Riyadh Metro at $22bn
l
l
The Magazine of the Middle East Association
So why is Saudi so often left out
of carefully considered Middle East
strategies? For many years Saudi has
been viewed as ‘just too difficult’ with
companies preferring to enter the
Middle East through the UAE, Qatar
or Bahrain.
Things are changing however, and
more foreign companies are seeing
success in Saudi, either directly
or through local companies. The
evidence can be seen across all the
major cities with new business parks
not just being built but already fully
occupied with Western companies
proudly displaying their logos for all
to see.
In Riyadh the recently opened
Business Gate boasts tenants such as
Boeing, Microsoft, Clifford Chance
and Alcatel Lucent. And smaller
foreign companies are entering the
Kingdom like never before, taking
advantage of opportunities that
dwarf neighbouring markets.
Of course challenges remain
and success is often hard won but
there are common themes and
characteristics to the approaches
adopted by foreign companies who
have seen success in Saudi:
PLAN – planning can seem an endless
cycle but the reality is that setting
out clear goals, strategy, budgets and
timescales is vital.
PATIENCE – there is a wealth of
opportunity but it is important to
be realistic and build a pipeline of
qualified, validated opportunities;
setting the right expectations to
company leadership avoids corporate
fatigue.
PRESENCE – there is no substitute
for being on the ground. Managing
the market remotely is almost
impossible and many Saudi clients
are unsympathetic towards those
who try to win business from bases
elsewhere in the Gulf. Being in
Saudi does not necessarily mean
setting up an entity or forging an
exclusive local partnership; there are
various operating models for foreign
companies which are low-risk and
low-cost.
PARTNER – the perceived need for
a local partner often animates legal,
compliance and tax departments.
There are many examples of foreign
companies supplying goods or services
without a local partner. Equally, there
are examples of highly successful
partnerships forged over time and,
critically, on the right terms.
PAYMENT – payment risk is often a
major concern of foreign companies.
Mitigation is best achieved by close
relationships with customers and
partners.
In essence the differentiator
between success and failure is
commitment: commit to the market
and reap the rewards.
Of course, a foreign company must
source professional, independent
advice and this must come from
consulting practices that are on
the ground in the Kingdom and can
provide practical advice rather than
just regurgitate regulations from the
internet.
For UK companies a good start is
to contact the UKTI team in Riyadh
or the highly active Middle East
Association.
With the right advice you will turn
your Saudi plans into Saudi projects.
Author: Stuart D’Souza, Chief
Executive Officer, AEI Saudi
www.the-mea.co.uk
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retail
Kingdom of Saudi Arabia:
Retail sector in the spotlight
Dr. Florence Eid-Oakden and the Arabia Monitor team of analysts.
D
espite the challenges of youth
unemployment, rising utility
costs and local employment
quotas, the outlook for the Saudi retail
sector remains optimistic, led by a
positive mix of economic, social and
demographic factors.
through local partnerships.
Retail sales are expected to reach
US$ 104.4bn this year (13% of
GDP), representing a 5.6% increase
from 2014. Retail sales per capita
are forecast to reach US$ 4.1K, a
50% increase from 2010. However,
Consumer spending on food, beverages and tobacco in
Saudi Arabia rose by an estimated 5.9% in 2014 to USD
64bn, about 60% of total retail sales
The country’s retail sector is mainly
driven by its young population, rising
disposable income and resilient
consumer confidence. The market is
becoming increasingly competitive
with the entry of international retailers
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www.the-mea.co.uk
retail space per capita is currently
lagging compared to other regional
markets such as Dubai, thus providing
ample scope for expansion of retail
infrastructure in the future. The sector
saw profits rise 15.5% in Q1 2015
after a royal grant spurred consumer
spending. The outlook remains positive
after Ramadan.
Saudi Arabia’s retail sector is
the largest in the GCC. In 2014, it
represented 45% of the GCC retail
market, followed by the UAE (26%)
and Qatar (11%). The country’s share
in the GCC retail sector is expected to
increase to 47% by 2018. The UAE’s
share is expected to fall to 24% while
Qatar’s share is expected to increase
to 12%. Saudi Arabia ranked 17th out
of 30 countries in the 2015 AT Kearney
Global Retail Development Index.
Saudi Arabia’s ranking reflects that its
market is large and unsaturated for
retailers looking to expand.
Food is the largest retail sub-sector
The Magazine of the Middle East Association
in Saudi Arabia.
Consumer spending on food,
beverages and tobacco in Saudi Arabia
rose by an estimated 5.9% in 2014 to
US$ 64bn, about 60% of total retail
sales. The growing purchasing power
of Saudis, combined with a rising
population, will ensure further growth
in spending in the coming years.
Supermarkets contribute 26% of food
retail sales in the country. Increased
demand for non-food items is leading
to the growth of hypermarkets, which
provides a comprehensive product
offering. The country currently has
over 90 hypermarkets located in
Riyadh, Jeddah and Dammam.
Arabia Monitor is an independent
research firm specialised in economic
and market analysis, and strategy
advisory on the Middle East and North
African region, which it views as the
new emerging market.
For more information, please visit
www.arabiamonitor.com or email
[email protected]
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retail
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A focus on qatar
A Focus on Qatar
The MEA has conducted a range of activities and meetings on this developing market
over the past few months, with a full programme ahead.
W
ith a prosperous
relationship existing
between the UK and Qatar,
export trade has nearly doubled over
the last few years. Designated as one of
UK Trade & Investment’s High Growth
Markets, Qatar has one of the largest
rates of GDP per capita in the world and
a high rate of economic growth.
The primary source of Qatar’s wealth
is the country’s vast reserves of oil
and natural gas –holding the world’s
third largest natural gas reserves
– which have made it one of the
richest countries in the world. Careful
management of these resources
has produced considerable fiscal
surpluses that are being funnelled
into an economic diversification and
development programme. Investment
has been driven into energy-related
industries, health, education, real
12
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estate, and infrastructure both in Qatar
itself and throughout the world.
Qatar’s economic diversification
and investment in human capital – as
laid out in the Qatar Vision 2030 –
continues to generate opportunities for
UK businesses across a wide range of
sectors. Qatar is the UK’s third largest
export market in the Middle East and
North Africa region, with exports
of goods rising from £1.31 billion in
2013 to £1.53 billion in 2014, a 16%
increase. This strong trade continues
into this year with trade figures
reaching £1.14 billion within the first
five months of 2015, representing
an increase of 34% compared to
the same period last year. In light
of the enormous opportunity Qatar
represents for British business, the
MEA has a full list of events focusing
on Qatar for 2015.
On 10th July the MEA was honoured
to host a Breakfast Briefing with
Her Majesty’s Ambassador to Qatar,
Nicholas Hopton. A distinguished
Ambassador having previously served
as Head of Post in Yemen, Mr. Hopton
detailed the strength of the UKQatari relationship and provided key
insights on industry opportunities in
the region. In June, CEO of the MEA,
Peter Meyer, led a session at RUSI for
a delegation of early career Qatari
diplomats on the importance of trade
and investment considerations in
diplomatic relations. He was joined
by former Ambassador John Hawkins
to examine the interplay between
commerce and government activities.
Following this, the MEA held
‘Opportunities in Qatar’, a briefing on
potential business around the World Cup
2022 on the 12th August in conjunction
with Major Events International and
ADS. The event was hosted by Simmons
& Simmons, who have had an established
office in Doha for over ten years. Panel
discussions with leading government
and industry figures highlighted
developments and opportunities in the
region for UK business surrounding
Qatar 2022. Speakers included MEA
members Eleanor Gillespie from Crossborder Information and Jamie Ingram
from IHS.
On October 29th we are pleased to
announce an Ambassadorial Lunch with
HE Mr Yousef Ali Al-Khater, the Qatari
Ambassador. The Ambassador has had
a significant diplomatic career, serving
in many government posts including
Consul General of Qatar in Houston,
USA. He has an extensive knowledge
of Qatar and we eagerly await his
reflections on UK-Qatari relations
and thoughts on UK business options.
The event will be a great networking
opportunity for all involved and offers
a thought-provoking insight.
The Magazine of the Middle East Association
New Members
Welcome to the new MEA Members who have joined us
since January 2015.
AEI Saudi
HLB International
Assael Architecture
HR Wallingford
Axiom SL
Inspiral Design
Barclays
KBR
Berlitz Manchester
KPMG
Doha Bank
Lucy Electric
Firstdrill
Market Financial Solutions
Fluorocarbon
Middle East Minerals
G3 Systems
Natixis
Gabbitas Educational
Newland Chase
Consultants
PennWell
Gilkes Group
Unit Birwelco
MEA launches new Sector
Working Group initiative
T
he Middle East Association is
pleased to announce the launch
of Sector Working Groups as a
new feature of the annual calendar. The
working groups will be organised along
sector lines for the six leading areas of
MEA activities: Energy; Financial and
Legal Services; Defence and Security;
Education and Training; Construction
and Infrastructure; and Healthcare.
This initiative will then extend to other
sectors including Digital and Creative
Industries, and Retail. Working Groups
will be made up of 8-10 Members per
sector, who will be invited to attend a
Boardroom meeting once a quarter to
discuss significant sector issues for the
MENA region.
A Members-only event, the Working
The Magazine of the Middle East Association
Groups provide attendees with the
opportunity to explore potential
projects, share market intelligence,
and monitor sector developments.
The meetings will be chaired by
thought leaders in their field and will
be attended by VIP guests, including
video conferencing with Government
departments and Embassies. ‘The
Working Groups offer a fantastic forum
for highly influential individuals to
discuss business strategy with thought
leaders in their sector,’ says Peter
Meyer, CEO of the MEA. ‘Representing
an excellent environment for in-depth
discussion and providing direct input to
the MEA, these sessions will enable us
to support Members’ strategic plans in
the MENA region more efficiently.’
ome
MEANEWS
Trade
Missions
with the MEA
T
he upcoming calendar at
the Middle East Association
sees a full schedule of
Trade Missions to the region.
The MEA is taking delegations to
Oman, Kurdistan, and Sudan in
October, followed by Qatar and
Saudi Arabia in November. These
delegations offer a cost-effective
and hassle-free way of visiting the
countries in the region, providing
unparalleled opportunities to
explore market potential, gain
access to key decision makers, and
establish relationships with possible
business partners. Participants
benefit from the market expertise
and contacts of the MEA Mission
Leader and shared experiences of
other Mission members. Business
delegations are also offered advice
and assistance from local UK Trade
& Investment staff, as well as
networking opportunities through
key receptions and functions.
Our UK-based programme is
also extremely full for the coming
months. Catering to different
sectors and market interests,
our calendar offers attendees a
chance to network with influential
business leaders in the region and
gain crucial insider knowledge.
We will be hosting several lunches,
with guests of honour including
the Ambassadors from Egypt,
Turkey, Qatar, and HM Ambassador
to Kuwait before the year-end.
Several key one-day conferences
will provide delegates with the
opportunity for in-depth insights
and the potential to form key
contacts with influential business
figures and politicians from the
region. Please see the Diary of
Events on page 27 for further
information.
www.the-mea.co.uk
13
The Middle East Association invites you to
The Autumn Lunch
Thursday 26th November 2015
from 12-3pm
Grosvenor House, Park Lane, W1K 7TN
Join us for the most prestigious event in the Middle East
Association’s calendar.
Please reserve your seats with Jacqui Marshall
[email protected]
Middle East Association
signs up to support
IFB 2016
T
he Middle East Association has
agreed support for International
Festival for Business 2016 (IFB
2016). The partnership will promote
the festival and the benefits of
attending to its members based in the
MENA region.
Peter Meyer met with festival
director, Ian McCarthy, to officially sign
an agreement that supports IFB 2016’s
objectives to encourage international
businesses in manufacturing,
environment and energy, and creative
and digital sectors to attend the threeweek festival, which runs between 13th
June and 1st July 2016.
‘We are delighted to support IFB
2016 as international partner for the
MENA region. This area represents a
huge amount of opportunity, and we are
pleased to be working with the Festival
to develop business links and generate
new commercial prospects’.
14
www.the-mea.co.uk
Ian McCarthy, festival director of
IFB 2016, said: ‘To see the Middle East
Association join our growing network
of international partners is a great
honour. The MEA provides a vital link to
the international business community
throughout the MENA region.
‘We are also delighted that the MEA
recognises the benefits we offer their
considerable membership. But benefits
don’t just start when the festival
launches next year; numerous benefits
can be accessed by any motivated
business during the coming months
when they activate free membership
to our Business Club. Subscription
includes advice, guidance and
signposting to essential professional
services such as market research,
patents, banking and financial, as
well as international digital matching
service and a comprehensive Meet the
Buyer programme.’
The Magazine of the Middle East Association
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Meaevents
DIARY OF EVENTS
22nd September 2015
2nd November
Introduction to Export for the MENA
VIP Lunch with HE Mr Karwan Jamal
region (with Resultz)
Tahir, the UK High Representative
29th September
for the KRG
Ambassadorial Lunch with HE
3rd November
Mr Nasser Kamel, the Egyptian
Kuwait Investment Outreach
Ambassador
Summit
29th September
4th November
Evening Networking with Ras Al-
Ambassadorial Lunch with Matthew
Khaimah Free Trade Zone
Lodge, HM Ambassador to Kuwait
4th-8th October
9th-13th November
Trade Mission to Oman
UKTI Export Week
4th-8th October
9th-12th November
Trade Mission to Kurdistan
ADIPEC, Abu Dhabi
20th October
Ambassadorial Lunch with HE Mr
18th November
Abdurrahman Bilgiç, the Turkish
Financial and Legal Services Sector
Ambassador
Working Group
21st October
19th November
Defence and Security Sector
International Marketing Course for
Working Group
Services (with Resultz)
24th-29th October
22nd-25th November
Trade Mission to Sudan
Trade Mission to Qatar
24th-28th October
26th November
Trade Mission to NATRANS, Abu
Members Autumn Lunch
Dhabi
28th November-8th December
28th October
Trade Mission to Saudi Arabia
Education and Training Sector
30th November-2nd December
Working Group
CWC Kurdistan-Iraq Oil and Gas
29th October
Conference
Ambassadorial Lunch with HE Mr
7th-9th December
Yousef Ali Al-Khater, the Qatari
Ambassador
North Africa Oil and Gas Summit,
Algiers
11th April 2016
Mansion House Dinner
For further information email
[email protected]. To keep up to
date with our events, please visit
www.the-mea.co.uk on a regular
basis.
The Magazine of the Middle East Association
www.the-mea.co.uk
15
ome
Meanews
Members networking reception
with British Ambassadors
D
espite the Tube strike, the
MEA held a warmly-received
networking reception for its
Members in the garden of the Royal
Over-Seas League on 9th July, with
the British Ambassadors to the region
invited as guests of honour.
This was one of our final events
before September and the sunshine
provided an excellent atmosphere
for the occasion. The Ambassadors
were visiting for the FCO Leadership
conference, and it was a good
opportunity for Members to network in
an informal atmosphere.
MEA to Join
UKTI Explore
Export Tour in
November
T
he MEA is participating
holistically in the UKTI
ExploreExport tour for the first
time. In order to support the UKTI
Commercial Officers for the region,
our staff members will be travelling
with the team to provide advice
and direction to new and expanding
exporters.
ExploreExport will be visiting
eleven regions across the UK, making
it the largest event of its kind. If
you are looking for practical advice
on exporting, we hope you will take
advantage of this unique offering,
which will help to develop and grow
your business through expert advice.
16
www.the-mea.co.uk
140 UK Trade & Investment
Commercial Officers and
British Chamber of Commerce
representatives from 67 global
markets will tour the UK and offer
detailed export advice to a wide
variety of UK based companies. These
highly experienced market specialists
will provide valuable insights, direct
routes to market and present new
business opportunities.
Each regional event will offer the
chance to attend one-to-one meetings
with market specialists, participate in
engaging seminars and engage with
exhibitors that specialise in offering
export support to SMEs.
MEA
Accredited as
UKTI Trade
Challenge
Partner
T
he Middle East Association was
pleased to receive confirmation
from UKTI that we have achieved
Trade Challenge Partner status. The
Association is now one of 116 Partners
on Level One, and has now reached
Level Two. We hope to continue the
process to receive further recognition
of our relationship supporting UKTI’s
export goals.
MEA representatives attended the
most recent Trade Challenge Partners
conference on 9th July, and benefited
from the opportunity to liaise with
other accredited organisations.
Peter Meyer said, ‘We have been
working to align our initiatives much
more closely with the focus of UKTI,
both in the MENA region and the UK.
We look forward to close co-operation
in helping small to medium sized
corporations build their businesses.’
The Magazine of the Middle East Association
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northAfrica
Investors look to North Africa
T
he attack at Sousse on 26th
June and the impact of the
situation in Libya have meant
that UK companies have been
understandably reticent about moving
into North Africa. There is, however,
a huge variety in these markets, and
some significant business has been
announced. The opening of the second
Suez Canal channel, representing
some 35km of waterway, was a huge
achievement. Ambitious projections
from the Egyptian government expect
an increase from 49 to 97 ships per
day, thereby increasing annual revenue
from £3.2bn to £8.5bn by 2023. The
related infrastructure requirements
also represent key opportunities for
British companies.
In financial services, The Abraaj
Group, a leading investor operating in
global growth markets, announced on
24th August that its second dedicated
North Africa private equity fund had
reached its final close at US$ 375
million.
Abraaj North Africa Fund II targets
mid-market businesses in the core
geographies of Algeria, Egypt, Morocco,
and Tunisia that have demonstrated
robust growth and the ability to become
regional leaders in their field. The Fund
focuses on sectors such as healthcare,
education, consumer goods and
services, business services, materials
and logistics. 63% of the capital
committed to the Fund has come
from European and North American
investors, with institutional investors,
pension funds and development finance
institutions accounting for 86% of the
committed capital.
Arif Naqvi, Founder and Group
Chief Executive of The Abraaj Group
said, ‘The successful closing of our
second generation North Africa Fund
demonstrates the continued optimism
and belief of our investors in the
economic growth and development
of this dynamic region. North Africa
has the highest income level on
the continent, with a middle class
The Magazine of the Middle East Association
that is expected to double its total
consumption between 2014 and 2024,
leading to the creation of further
investment opportunities across
diverse sectors.’
Abraaj are not the only ones looking
to invest in the North African markets.
Google announced on 19th August that
its Android One will be available in
North Africa for the first time, with the
Infinix HOT 2 smartphone going on sale
in Egypt and Morocco, and an expected
50% price reduction on handsets to
follow shortly.
In a press release circulated on
12th August, Amec Foster Wheeler
informed the MEA that it had been
awarded a contract by Sonatrach, the
largest oil and gas company in Africa,
to supply engineering services for the
de-bottlenecking of the Hassi R’Mel
gas field, located approximately 550
kilometres south of Algiers.
Roberto Penno, Amec Foster
Wheeler’s Group President for Asia,
Middle East, Africa & Southern Europe,
said: ‘We are delighted to be working
with Sonatrach again on this major
development using our considerable
upstream and pipeline expertise, and
hope to further build the relationship
by supporting them with their future
plans in the region.’
‘The city of Oran in west Algeria has
won its bid to host the Mediterranean
Games in 2021. Oran has been
developing its infrastructure, and
welcomed over 12 million visitors in
August 2015 alone. The city features
18km of tram line, and construction
is underway for a new airport, due
for completion on 2017. Abdelghani
Zaalane, the Wali of Oran, said: ‘We are
ready to host any event for which our
country is committed. This is more than
a challenge. It is a commitment for all
of us, citizens and authorities.’
Capacity development is also a hot
topic in Morocco, in terms of creating
local jobs, expanding skillsets and
acquiring transferable technologies.
Energy is a focus sector on several
fronts. Three companies have just been
prequalified for a large hydropower
project. Masen, the Moroccan solar
energy agency, has announced a new
25MW solar project.
The MEA welcomes a business
delegation from Morocco on 14th-16th
September. Run by the British Chamber
in Morocco, the delegates are attending
The Energy Event exhibition at the
Birmingham NEC, and are then coming to
London to the MEA offices for a seminar
on renewable energy in the UK, followed
by networking and B2B meetings.
Photo credit: UK Trade and Investment
www.the-mea.co.uk
17
ome
SukUK & Islamic Finance
London: The place to
be for Islamic Finance?
A
t the London Sukuk Summit,
which took place at the
beginning of June this year,
the MEA met Dr Massoud Janekeh,
Head of Corporate and Structured
Finance and the Bank of London
and the Middle East (BLME). Having
recently taken on an expanded role in
the bank, Janekeh builds on his eight
years in the company and depth of
experience in Islamic Finance to move
the department forward.
‘Many aspects of the work we do in
capital markets require structuring
and developing solutions that
work in different jurisdictions or
across jurisdictions. This same
competency and skillset is required
for putting structured solutions to
our corporate clients as well’, says
Janekeh. ‘We support customers
from the Middle East looking to
make acquisitions in the UK. Our
mechanism of financing can be
offered to them as a solution for
leveraged and management buyouts. The techniques are not overly
18
www.the-mea.co.uk
common in the Middle East but
prevalent in the UK.’
A maturing market
Janekeh was part of the start-up team
at BLME in 2006. In the eight years
since its foundation, the attitude of
the bank towards Islamic Finance
has changed, and Shariah-compliant
solutions are now a much more
mature product. ‘It is still a niche, and
not as widely applied as we would like
it to be, but in the way the product
is presented and the way that our
staff can communicate its principles
and requirements, we are definitely
dealing with a much more mature
product altogether.’
This was a key theme at the Sukuk
Summit in June. Now in its ninth
year in London, the two-day event
saw business leaders from across the
world markets discuss key issues
and progressions internationally.
‘The Sukuk market continues to
develop with issuance averaging $120
billion a year. At the Summit, new
structures for Sukuk, meeting the
issuers’ requirements, are presented
by industry professionals, which
is a hugely valuable exercise,’ says
Mohammed Tariq, former advisor to
the President, Islamic Development
Bank (IDB).
Despite significant steps, there
is still room for development in the
UK corporate markets. ‘We still don’t
have the critical mass for companies
that specifically want Islamic
Finance. Our product sits alongside
many conventional products in a
very competitive way. What we have
seen, now that Islamic Finance in
terms of banking is about ten years
old in the UK, is that there is a core
Muslim requirement for products
and services,’ Janekeh comments.
‘It remains niche, but shows
longevity. This wasn’t a fad; the drive
represented a nascent demand for
Islamic Finance.’
International challenges
BLME and similar sized operations
The Magazine of the Middle East Association
‘Liquidity management for treasury
is still an issue. We don’t have such
measures in the UK yet, although the
Bank of England and the regulators
are looking at these things as we speak.
Having that sort of support for the
financial institutions is quite vital.
face a challenge of scale. Clearing
banks in the same market have
a presence which renders their
structures entirely different. Some
further challenges are widespread for
the Islamic Finance sector, regardless
of jurisdiction or geographical
location. However, Malaysia continues
to be an exemplar in the international
market; one excellent presentation
at the Summit detailed how Islamic
Finance has developed from Kuala
Lumpur – it now accounts for almost
one quarter of the banking activity in
Malaysia.
Janekeh went on to explain:
‘Liquidity management for treasury
is still an issue. We don’t have such
measures in the UK yet, although the
Bank of England and the regulators
The Magazine of the Middle East Association
are looking at these things as we
speak. Having that sort of support for
the financial institutions is quite vital.
We have to hold a lot of non-profit
earning cash on balance just to have
the liquidity, whereas conventional
banks use the repo bond markets and
money markets for that purpose.’
Another consideration for the
industry is liability. The Middle East
in general currently has surplus
liquidity, and Janekeh is clear that
the UK providers have to be more
innovative in terms of attracting that
liquidity, especially from Islamic
investors into products and services
that British firms can offer.
In their presentation at the Summit,
Oasis Investments noted that Islamic
assets under management are still
ome
SukUK & Islamic Finance
subscale. Thomson Reuters published
the findings of its Global Islamic
Asset Management Outlook in May at
the World Islamic Funds Conference
in Bahrain. The study found that
Islamic funds are a US$60 billion
industry, forecasted to grow to at
least US$77 billion by 2019, while the
latent demand for Islamic funds is
projected to grow to US$185 billion.
‘$60 billion Assets under Management
(AUM) is smaller than one of the
smallest funds at one of the insurance
companies. In order for us to offer
asset management and investment
solutions it cannot just be cooperative,
we have to diversify and provide
solutions that offer liquidity and
all the features that allow people to
properly diversify’, says Janekeh.
UK providers also face a currency
challenge. ‘As we operate in a GBP
environment, the level of investment
interest from countries with currency
hard-pegged to the dollar is naturally
different. So finding solutions that
allow investors to invest in British
pounds without taking so much
risk on currency is another area for
development.
Governmental support
The UK government has been
proactive in creating the legislative
www.the-mea.co.uk
19
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SukUK & Islamic Finance
framework that allows Islamic
financing in the UK to operate on a
level playing field with conventional
financing. Initiatives include treating
murabaha profits the same as interest
in accounting terms, and removing
some of the double taxation issues.
Janekeh praises UK initiatives as a
good example of how a government
can support an industry.
Sheikh Bilal Khan, Co-Chairman
at Dome Advisory says: ‘The debut
sovereign issuance by the UK
generated a tremendous vibe about
the potential for London, making
a serious case for the City’s place
as a global hub for Islamic finance.
Indeed London and the UK have all the
financial, regulatory, and intellectual
capital together with the necessary
political will that is required to make
giant strides and lead the industry.’
Banks that have been active in the
UK (largely in property financing)
have shown that there is in fact a
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www.the-mea.co.uk
stable industry for Islamic Finance.
Some, such as the European Islamic
Investment Bank, have changed
direction; Al Rayan Bank has shown
its platform is ready to be leveraged
and grown; and BLME and Gatehouse
Bank have now focused on the model
and the customer segments that they
are comfortable with, driving balance
sheet growth.
The industry is still small, but
Janekeh is cautiously optimistic about
growth prospects. ‘There are a lot of real
estate related transactions in Islamic
Finance, a proportion of which can be a
candidate for our form of financing. As
we grow and become scalable our offer
will become more competitive.’
Looking towards future
innovations
Janekeh also believes that the key
to innovation is in providing more
competitive offers for raising
funding from the Middle East. ‘The
British government bond issue has
demonstrated that the legislation put
in place works and can be challenged.
This has opened the way for
corporates to issue Sukuk. We need
to take that example and bring more
British corporates into the market
that can tap this liquidity – quite an
important area for wholesale banks.’
Innovation also lies in structuring
tax-efficient and release-back type
structures, or Islamic financing type
structures, that fit Sukuk. Short-term
liquidity instruments for the UK were
top of the agenda at the London Sukuk
Summit. Cagamas, the Malaysian
national mortgage corporation, can
now issue commercial papers, which
represent an important instrument
for managing short term liquidity.
BLME would like to see some of the
commercial paper/trust receipt
issuers in the UK be able to do this in
a Shariah-compliant way in order to
further develop the domestic industry.
The Magazine of the Middle East Association
London calling
London is a leading centre of Islamic
Finance, and the type of engagement
and discussion seen at the Sukuk
Summit can build on current
success. To date the London Stock
Exchange (LSE) has seen over US$51
billion raised through 57 issues
of alternative finance investment
bonds. The LSE also has a vibrant
market in Exchange Traded Funds
(ETFs) including four Shariahcompliant ETFs based on Islamic
indices. MEA Members DDCAP won
awards for Best Shariah Compliant
Asset Facilitation Platform and Best
Facilitator of Secondary Market
Sukuk Transactions at the Sukuk
Summit Awards on the first night of
the conference.
‘English common law and the
London Stock Exchange are rightly
the preferred choice of governing law
and international listing for a great
number of Sukuk issuances. Most of
the legal and financial advisory work is
done by British firms and institutions,
so London and the UK are contributing
significantly to the global Sukuk
market and indeed the wider Islamic
finance industry’, stated Sheikh Bilal
Khan, a leading Shariah scholar with
Magic Circle law firm training.
There have been some remarkable
innovations in the UK industry in
recent months. BLME, along with
Lloyds Bank, arranged the world’s
first Islamic-structured ‘pre-delivery
payment’ helicopter in landmark
financing deal announced in July.
• BLME was the original Islamic
facility participant under
a master murabaha facility
agreement, and the multi-year
financing agreement covers over
US$250 million worth of Airbus
Helicopters assets for LCI.
• Emirates Airline issued a
US$917.03 million Sukuk on the
31st March 2015, guaranteed by
UK Export Finance.
• The first global Women in Islamic
Finance Forum, a conference
attended by over 200 people,
recently took place at KPMG in
London.
The Magazine of the Middle East Association
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SukUK & Islamic Finance
‘English common law and the
London Stock Exchange are
rightly the preferred choice of
governing law and international
listing for a great number of
Sukuk issuances.
At the close of the Sukuk Summit
in June, participants were already
awaiting next year’s forum. NasrEldin Ayoub-Bey, Director, ICGEvents and organisers of the London
Sukuk Summit said: ‘Sukuk and
Islamic Capital Markets products are
growing from strength to strength
in existing and new markets, with
exciting issuances earmarked over
the course of the remainder of the
year and next which will provide
excellent material for continuing
the dialogue and exploring the
opportunities at next year’s Summit.’
http://www.sukuksummit.co.uk/
www.the-mea.co.uk
21
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exportfinance
Boosting UK Exports
The MEA met with Tahir Ahmed, Head of Civil and Defence Underwriting at UKEF, to
discuss innovative services, new provisions, and support for business.
U
K Export Finance (UKEF) is the
UK’s Export Credit Agency,
designed to complement the
private sector in providing finance
and insurance for British companies
looking to export. Formerly known as
ECGD, UKEF has a new focus on small
and medium-sized companies, and has
been improving its service in this area.
With an extensive range of products,
and on-cover for over 200 countries,
UKEF provides capacity when banks
and commercial lenders cannot offer
their services.
Tahir Ahmed, Head of Civil and
Defence Underwriting at UKEF, and
his team manage the span of UKEF
projects, from initial enquiry to
closure of the deal and signature of
the financing documentation. Working
closely with other teams in the
department, including legal and credit
risk, the UKEF business team presents
itself as a one-stop shop, offering an
initial reply to most enquiries within
48 hours.
Traditionally, the agency has
provided overseas financing in
the form of conventional buyer
credit guarantees, and this remains
the flagship service for overseas
borrowers looking to buy UK goods
and services. British exporters can
also take out export insurance policies
when trading with international
markets. Ahmed highlights the fact
that UKEF has developed the provision
to help to raise bonds, by sharing
risk with banks, and also offers
bond insurance. He says ‘UKEF can
‘We are open to projects in all sectors, and our remit does
not allow any discrimination between sectors – we cover
projects in water, construction, buses, satellites, defence, oil
and gas, as well as other areas.’
Picture credit: UK Trade & Investment
22
www.the-mea.co.uk
also work with banks that provide
working capital facilities – which
can be especially attractive for SME
exporters.
‘We are open to projects in all
sectors – we cover projects in water,
construction, buses, satellites, defence,
oil and gas, as well as other areas.’
Direct lending was launched in 2013,
and marks a new initiative for UKEF.
A revamped facility for the service
was announced by the Chancellor in
early 2014 and the offering enables
UKEF to leverage government funds
at long term fixed interest rates
in support of exporters. These are
understandably attractive to a number
of overseas buyers and borrowers,
and can therefore secure business
for UK companies. Transactions can
be supported for up to 10 years, for
project finance up to 14 years, and
for water and renewables projects,
up to 18 years. For a repayment
period of five to eight and a half
years, the interest rate (known as the
Commercial Interest Reference Rate
or CIRR) is currently (at time of press)
The Magazine of the Middle East Association
set at 2.63% for USD and 2.45% for
GBP –extremely favourable rates.
New powers received due to
changes made in the Small Business,
Enterprise and Employment Act 2015
allow UKEF to do more in supply
chain financing, intellectual property
exports, and, most interestingly,
provide the ability to support complex
contract structures. ‘Especially in the
Middle East region it is important to
have local-to-local contracts as part
of an overall project, and this new
facility will give us ability to support
local contracts as part of the overall
financing’, says Ahmed, ‘and that
flexibility has the real possibility
to make a big difference to UK
exporters.’
UKEF has seen some considerable
successes from its offerings over
recent years. ‘One particular milestone
project for us was the Sadara
development in Saudi Arabia that
UKEF supported in 2013’ says Ahmed.
Sadara was co-sponsored by Saudi
Aramco and Dow Chemical Company at
the Jubail Industrial City II in eastern
Saudi Arabia, and represents the
largest petrochemical facility ever to
be built in one phase. In many ways
a first for UKEF, this was the largest
project finance transaction that had
been supported by the organisation.
An overall loan of $870 million,
supporting contracts to the value of
about $1.3billion, was extended, and
significant benefits for UK companies
on this project was the first direct
lending transaction made by UKEF. A
buyer credit loan worth $110 million
was agreed, half provided by Deutsche
Bank with UKEF guarantee, and other
half through UKEF direct lending
with DB as the agent bank. Carillion
won the contract, including work for
a hotel, an office block and associated
infrastructure, but flow-down saw
38% of the contract value ($42
million) go to further UK suppliers.
‘We hope to build on this and support
phase two of the Trade Centre’,
comments Ahmed.
Like the rest of government, and
the UK, UKEF is closely watching
progress in the nation’s relations with
Iran. ‘It is a welcome development
that an agreement has been reached’,
reads an official UKEF statement.
‘We are currently off cover for Iran,
due to existing sanctions. In addition,
UKEF has outstanding claims on Iran.
However, assuming that substantive
progress is made on addressing
these sanctions-related claims over
the coming months we would look
to resuming support for short and
medium/long term business, provided
that the risks on new business are
deemed acceptable. We will be
initiating a review of Iran to assess
creditworthiness, in light of the new
agreement, and the expected positive
effect on the Iranian economy.’
Innovations are already being made
in the service. In 2015 UKEF developed
‘UKEF can also provide working capital facilities – which
can be especially attractive for SME exporters.
followed. Contracts were awarded to
Fluor, Jacobs, and Foster Wheeler for
substantial work, and a further 160 UK
companies in a supply chain of those
main contractors also benefitted from
the support.
The direct lending facility enables
UKEF to support further complex
projects of this type. The Dubai World
Trade Centre is the largest events
facility in the Middle East, attracting
more than 2.2 million visitors a year.
A commitment to supporting work
The Magazine of the Middle East Association
a facility that allowed Emirates airline
to raise funds from investors in Sukuk
– Shariah-compliant Islamic bonds.
Heralded as a new gold standard for
Shariah-compliant asset finance,
UKEF guaranteed US$913 million
of trust certificates. The proceeds
have funded the acquisition of four
Airbus A380 aircraft, and UKEF can
potentially now offer its new product
to other overseas buyers of UK
exports.
In their annual Benchmarking
ome
exportfinance
Report published in October 2014, the
British Exporters Association (BExA)
marked UKEF 9/10 for product
range, against an EU average of 7.9.
UKEF intends to boost its support for
exporters on the back of this product
range, and particularly the direct
lending facility. With significant
capacity in its £3 billion overall
ceiling for direct lending, there is
plenty of opportunity for companies
of all sizes to take advantage of the
products on offer.
UKEF has regional Export Finance
Advisers throughout the UK, all
of whom can be found on their
website. There is also a network of
UKTI international trade advisers.
Companies can also call the UKEF
customer helpline for inquiries.
www.the-mea.co.uk
23
ome
digital
Digital Levant
T
he rapid digital uptake in the
MENA region over the past five
to ten years has created a wealth
of opportunities and unprecedented
access to communities. A white paper
published last year by the Mohammed
bin Rashid School of Government
concluded that ‘135 million individuals
[are] using the Internet in the 22
Arab countries. This is coupled with a
mobile penetration rate of around 110
percent on a regional level; and more
than 71 million active users of social
networking technologies.’
The figures are impressive,
but development across the
region is uneven. The Deloitte
report on Technology, Media, and
Telecommunications Predictions Middle
East for 2015 expects total Internet
penetration for the region to reach 38%
24
www.the-mea.co.uk
this year, but mobile and smart phone
penetration is much higher. The GCC
typically tends to receive much greater
coverage of its digital industries, but
there is scope for development and
commercial involvement across other
parts of the MENA region.
As a method for building capacity and
developing local economies organically,
the digital and creative sector
represents a good investment in the
Levant, with rapid scale-up possibilities,
low start-up costs, and the transfer of
technical expertise. It also provides
some opportunities that more traditional
sectors do not necessarily offer, in terms
of remote working, thought leadership,
and industry development solidly rooted
in local contexts.
The UK is at the forefront of
international partnerships helping to
support and promote these new and
innovative industries. On 30th April
2015, the outgoing British Ambassador
to Lebanon, Tom Fletcher, launched the
UK Lebanon Tech Hub in Beirut. This
joint initiative is a partnership between
the UK government and the Banque du
Liban, run through the latter’s Circular
331 scheme – a $400 million equity fund
started in 2013 ‘to encourage banks
to invest in the knowledge economy
through direct investments or venture
capital funds.’ Under the scheme, the
Banque du Liban covers 75 per cent of
investment by commercial banks.
Situated in the Beirut Digital District
free zone, the Tech Hub functions as
mentoring facility for Lebanese startups
working in the knowledge economy, ICT,
and creative design industries. Across a
two-year programme, which officially
The Magazine of the Middle East Association
began on 12th June, the initiative aims
to develop the entrepreneur landscape
and support the promotion of SMEs in
order to ultimately increase GDP and
provide employment. A global outlook
is embedded in the scheme from
the outset. 45 companies with high
growth potential have been selected
for mentoring, up to 15 of which will
benefit from a six-month secondment in
London, facilitated by UKTI.
The initiative also looks at the
whole ecosystem of the industry.
Four additional streams included in
the scope of the project are designed
to increase impact regionally and
internationally.
• A signposting programme will
create links with potential British
partners, clients, and suppliers, as
well as contacting the Lebanese
diaspora working in the same field.
• A capacity building programme
will reach out to investment
professionals to increase awareness
of the Circular 331 investment
provision and the management and
funding of technology companies.
• An outreach programme will
support strategic partnerships
with the UK and work to develop
entrepreneurship in Lebanese
schools and universities.
• Finally, a marketing and
communication programme will
raise the profile of Lebanon as a tech
hub, and showcase the success of
Lebanese entrepreneurs worldwide.
The Lebanese tech sector has grown
by an average annual rate of 7.9 per
cent since 2009, reaching a market
size of US $381 million in 2014. To
further develop capacity, the Beirut
Digital District (BDD) was launched
in September 2012 to host the tech
community, and provides the platform
and the premises for the UK Lebanon
Tech Hub to flourish. The co-working
space is conducive to this type of
knowledge sharing, mentoring, and
creative thought.
Some of the teams currently working
with the programme include: Netiks,
an online banking CRM, eTobb, an
online interactive health network,
and NavLeb, a GPS navigation and
The Magazine of the Middle East Association
ome
digital
The Lebanese tech sector has grown by
an average annual rate of 7.9 per cent
since 2009, reaching a market size of
US $381 million in 2014.
addressing platform.
In a country dealing with severe
infrastructure challenges, an influx
of displaced persons, and immense
institutional pressures, it may seem
an odd deployment of resources, but
UKTI is confident that the development
of this Tech Hub will deliver a high
impact: employment opportunities,
an alternative framework for solving
problems, and an energetic and inclusive
sector focused on the future. Writing in
his FCO blog in February, Ambassador
Tom Fletcher said: ‘Innovation in
development will work best where
it creates wider win/wins, not least
economic growth… and triggers new
ways of building Lebanon 2020. One way
we want to encourage this is through the
UK Lebanon Tech Hub.’
Lebanon is not alone in this digital
development. A forthcoming DutchPalestinian Bilateral Cooperation
Forum on ICT and digital provision
provides a spotlight on the
opportunities in the Palestinian
market. There have been several recent
tech successes in the West Bank, and
a young, highly educated workforce
with limited travel opportunities
offer an attractive incentive for
ethical investment, despite the
political obstacles that can occur when
conducting business in the Occupied
Palestinian Territories.
The Forum in The Hague at the end
of October will profile case studies
from several Palestinian technology
companies ready for investment. A
delegation of 90 Palestinians in the
fields of ICT, recycling, food processing,
and renewable energy will attend.
Thirteen Palestinian universities
have ICT faculties, which produce
2,500 graduates per year. The domestic
industry is also developing in line with
this expertise, and 300 ICT-related
companies are currently operating
in the oPt. ASAL Technologies is one of
these. It has been active in Ramallah in
the West Bank since 2000, delivering
ICT services outsourcing to international
clients including Cisco Systems, Volvo
IT, and Mellanox Technologies. Other
www.the-mea.co.uk
25
ome
digital
Palestinian digital successes in this
challenging environment include Exalt
Technologies, a company that creates
custom mobile apps, and Al Tariq Systems,
a software developer based in Gaza.
There is funding available, and
the business case for investment is
growing. In early 2014, DFID and
the EU launched a £15.3 million
programme over six years, designed
to help Palestinian SMEs across the
oPt. The remit includes matching
grants to help companies improve their
products and break into new markets.
The overall aim is to ‘help Palestinian
businesses to reduce the risk associated
with product development and entry
into new markets; identify market
failures and facilitate market players
to respond to market opportunities;
and to strengthen foreign and
domestic investment through technical
assistance to investment promotion
bodies, mobilisation of the UK
Palestinian diasporas, and providing
training to commercial representatives.’
There is also scope for involvement
from UK companies, and potential
business opportunities are developing.
By 2019, the DFID project is expected
to help 600 Palestinian firms (with 20%
managed or owned by women) in creating
and improving 281 new products, in
order to enter 321 new markets.
Dominic Jermey, at the time CEO
of UKTI, made a visit to the oPt is
September 2014. He met with private
sector companies and business leaders
to discuss entrepreneurship and the
efforts undertaken to support the
economy. In a press release issued on
his return, UKTI said, in support of the
ICT sector, ‘by offering thousands of
direct and indirect jobs, and through
offering quality services and products;
the whole economy will flourish.
This experience can also offer the
Palestinian sector with great chances
to develop sustainable partnerships
with British counterparts.’
Jordan is another market to consider.
ICT is the third largest contributor
to the economy, with revenues
representing 14% of total GDP. There
are opportunities for UK businesses
in outsourcing, telecommunications,
26
www.the-mea.co.uk
Jordan is another market to consider.
ICT is the third largest contributor to the
economy, with revenues representing
14% of total GDP.
e-health, and ICT solutions. Indeed,
some innovative digital companies
currently work successfully out of
Jordan, including SoukTel, which
builds custom mobile apps for the
development sector, Syntax, an
international branding and web design
agency, and Na3m, a gaming and
transmedia incubator.
The Jordanian government also
has ambitious plans to support
development in the sector. It was
announced in August by the Ministry
of Information and Communications
Technology that the country’s
governorates would be developed
into ‘smart zones’, providing big data
and intelligent services, particularly
for travel management. 4G was only
launched in Jordan in February, but
there are now three providers in
the market. Oxford Business Group
reported: ‘Jordanians will have
greater access to online tools like
e-government, e-education, and
e-health…The upgrade to 4G also
promises to yield dividends for a wide
variety of Jordanian ICT firms and
other service providers, ranging from
retailers to video streaming sites.’ The
Levant does pose some infrastructure
challenges for UK investment, but the
low start-up costs and rapid industry
development promise an evolving
digital ecosystem in which tech
companies can operate.
The Magazine of the Middle East Association
ome
MENASassociates
Yemen in Brief
A
fter fleeting hopes for a better
Operation Golden Arrow has driven the
Yemen Facts and Figures
future, Yemen has returned to
Huthis and their allies from Aden and
the civil conflict of its past. The
several southern governorates. It has
26 million population, growing 3% per
history of the modern Yemeni state
been a dramatic and surprising turn of
year. 120,000 villages
has been one of a struggle to satisfy its
events – and the forward momentum
GDP per capita = US$1,100
many different groups within a single
is being maintained. Aden has been
40% youth unemployment. Limited
political framework. Tribal loyalties
designated as the main airport and
emigration
endure, as do those to particular sects,
seaport for humanitarian aid and
45% living below the poverty line
localities or individuals. There are
civilian traffic, replacing Sana’a and
60% in need of humanitarian support
regional rivalries, some a legacy of
Hodeida port, which has been hit by
Limited state capacity
the unification of the north and south
heavy air raids and naval shelling.
1.43m Newly displaced since March
which created Yemen in 1990.
Oman is sponsoring peace
(OCHA (as of Jul 2015))
The question of how its unity can be
negotiations in Muscat but it seems
12.9m Number of food insecure people
preserved is now as pressing as ever. The
unlikely that the coalition will
(OCHA (as of Jul 2015))
country’s Huthi minority, a Zaydi Shi’a
participate actively until they make
group whose heartland is in the northern further gains and threaten Sana’a. The
and the Hadhrami coast, but has failed
province of Sa’dah, advanced to capture
Saudis and President Hadi insist on the
to penetrate Wadi Hadhramaut where
the capital Sana’a by September 2014
full implementation of UN Security
pro-Hadi military forces are in control.
and most of the north of Yemen during
Council Resolution 2216, which requires ISIS is increasingly active but AQAP
the following winter. When, by the
major and probably unacceptable
remains much stronger. Both are trying
spring of 2015 the Huthis pressed their
concessions by the Huthis. Fighting will
to use the anti-Huthi drive to enhance
advance into the south of the country,
thus continue and further exacerbate
their presence.
a military coalition of regional Sunni
the humanitarian problems and inflict
Yemen Focus is published monthly
powers led by Saudi Arabia intervened
more damage on Yemen’s infrastructure
by Menas Associates, explaining the
with airstrikes against them.
and kill and maim more of its people.
profound changes taking place and
Since
14 July,Access
the UAE-spearheaded
AQAP
remains
influential
in Mukalla
the
implications for business.
YEMEN:
constraints and people
targeted
for
humanitarian
assistance
(as of 7 July 2015)
SAUDI ARABIA
Number of people targeted
for humanitarian assistance
11.7 million
Sa'ada
Hadramaut
Al Jawf
Hajjah Amran
Amanat
Marib
Al Mahwit Al Asimah
Sana’a
Raymah
dah
uday
Al H
Red
Sea
Al Bayda
Marib
Shabwah
Dhamar
Al Dhale'e
ERITREA
Al Maharah
Humanitarian Needs
237,209
142,325
Humanitarian needs
20.4 M
Abyan
44,176
42,724
13,300
3,899
Drinking water and sanitation
15.2M
Taizz
Lahj
2,000,000
1,784,452
976,247
969,103
800,000
648,504
618,372
588,599
548,371
486,240
398,984
351,030
275,083
274,884
260,994
256,320
Raymah
Al Mahwit
Al Maharah
Socotra
Al Bayda
Ibb
Amanat Al Asimah
Taizz
Hajjah
Al Hudaydah
Aden
Sa'ada
Ibb
Al Dhale'e
Lahj
Amran
Sana'a Gov
Dhamar
Al Jawf
Shabwah
Hadramaut
Abyan
Healthcare
12.9M
Aden
Severity of Access
# of people targeted
No or very few access constraints
2.9M
Education
1.6M
Major access constraints
Severe access constraints
www.unocha.org/yemen
DJIBOUTI
The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations.
Creation date: 7 July 2015 Sources: a: IDP Task Force b: UNHCR c. YHRP 2015 Feedback: [email protected]
yemen.humanitarianresponse.info
Boosaaso
The Magazine of the Middle East Association
11.4M
Protection of civilians
Some access constraints
Moderate access constraints
Obock
Emergency food and
livelihoods assistance
Women and children in
need of nutrition
1.2M
Emergency shelter and NFI
www.the-mea.co.uk
27
Whatever your
viewpoint...
it’s a land
of opportunity!
The Saudi British Economic Offset Programme brings together overseas companies with local
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British Offset offers a unique package of advice, support and project financing to companies
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