Faisal AlKhudairy \  فيصل الخضيري / Foter.com / CC BY-NC-SA

With Gulf economies poised for growth on the back of strong macroeconomic policies, regional stock markets are also set for growth. READ MORE HERE

By Rushdi Siddiqui, Global Head of Islamic Finance, Thomson Reuters

Dear Dr. Ahmad Mohamed Ali, President, Islamic Development Bank (IDB) Group:

Asalaam Alaikum:

The Islamic finance world welcomes your comments on the ‘Mega’ Islamic Bank to effectively compete against well capitalized conventional financial institutions.

“…The ‘Mega Islamic Bank’ comes as an initiative of the Islamic Development Bank in its efforts to address the dearth of senior financiers, the absence of the Islamic tools of stock exchange and the absence of market liquidity between Islamic banks.”

However, $1 billion, with $500 million in paid capital by the three founders (IDB, Dallah Albaraka and Qatar Government), is smaller than three existing Islamic banks, which have never addressed themselves as ‘mega.’ The three include Saudi Arabia’s Al Rajhi, Qatar’s Mashraf Al Rayan and Kuwait’s Kuwait Finance House (KFH). Furthermore, it seems the ‘mega’ story may be incomplete without Malaysia’s participation.

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With Gulf economies poised for growth on the back of strong macroeconomic policies, regional stock markets are also set for growth.

The two most liquid GCC markets - Dubai and Saudi Arabia - are both up well over 20% since the start of the year, with the Egyptian market also rising an astonishing 33%. READ MORE HERE

Nobody even considered looking at MENA states last year, as news of Arab Spring-related crisis, instability and the Iran conflict dominated the headlines.
But buried amid the negative headlines was the regional governments’ resolve to continue pumping funds into their respective economies. READ MORE HERE

It will be no mean feat to outpace Qatar’s amazing GDP growth, but that’s exactly what Saudi Arabia is estimated to accomplish in 2012.
The tiny gas giant has been posting double-digit growths for the past six years, but Saudi Arabia, the region’s largest economy may eclipse the country this year, if current trends continue. READ MORE HERE

It has been a massive quarter for stock markets around the world. The S&P 500 - arguably the most influential indicator of global stock market health - had its biggest quarter since 1998. In the first three months of 2012, the Dow Jones industrial average gained 8.1%, the S&P rose 12% and the Nasdaq advanced 19%. READ MORE HERE

There is limited upside to the Saudi rally, according to Jadwa Investment, but EFG-Hermes expects a further 15% growth before the end of the year, with a second phase of the rally led by large caps. READ MORE HERE

Middle East markets had a phenomenal February. Find out which stocks performed outstandingly well, and which failed to get investors enthused.

February was the month when Middle East markets roared back to life. READ MORE HERE

Feb 17, 2012

Saudi Arabia launched projects worth SAR270-billion last year. No wonder there is a shortage of cement. Expect more shortages as the construction boom kicks off in earnest.

The Saudi Ministry’ decision to ban cement exports to ensure there is plenty of supply available for the local market is a sign of hectic construction activity in the Kingdom. READ MORE HERE

Thirty-three Middle East banks are among 500 of the world’s most trusted banks, according to a new study. READ MORE HERE

Ellie Brewster /Foter

Booz & Company addresses ways in which the GCC’s private sector can address nationalization and unemploymentby hiring the region’s highly educated female population

Private-sectorcompanies in the Gulf CooperationCouncil (GCC) have an opportunity to address several pressing issues, includingnationalization imperatives and local unemployment, by attracting morenational women into their workforce. Booz& Company has developeda framework to help companies in this effort.

Looming Changes in the GCC Workforce

Private and semi-private companies inthe GCC are under enormous pressure to nationalize their workforce, owingto a combination of high regional unemployment and a currently outsizedproportion of expatriate workers in the region.

Thus far the talent pool of women employeesin the region remains largely untapped, due to social, occupational, andlegal challenges. Private and semi-private organizations in the GCC donot rely heavily on GCC nationals to fill their employment needs, and theyrely even less on women as a group.

GCC governments have taken a numberof steps to improve this situation, such as Saudi Arabia’s national policies,including a five-year plan, Human Resources Development Fund (HRDF) programs,and royal decrees, and the women’s leadership center that Qatar is establishing.

However, to achieve the goal of greateremployment among national women in the regional workforce, companies willneed to implement internal programs to recruit, develop, and retain womenemployees. This will require solving a number of social, occupational,and legal challenges, with roots in long-standing and sensitive culturalattitudes in the region.

“There are clear benefits to be claimed.The companies that take the lead in this issue will help address the GCC’sunemployment problem among nationals. They will also assume a key rolein shaping the future of women in the region,” said RamezShehadi, Partner with Booz & Company. “Mostsignificant, they will tap into a base of talented national women thatis well-educated and eager to join the workforce, giving these companies a long-term competitive edge.”

A Three-Part Framework for Change

Booz & Company has undertaken substantialresearch in this area, includinga comprehensive survey and client work. We have also developed a frameworkto address these issues, in order to help GCC companies more successfullyintroduce national women into their workforce in greater numbers.

Our framework consists of three elements:1) defining an overall corporate vision for employing women based on asolid case for change; 2) developing a talent management strategy and operatingmodel to source, train, promote, and retain women; and 3) implementinga change management strategy to engage with and secure the support of internaland external stakeholders.

1. Women’s Employment Vision

One thing is clear from the effortsof companies worldwide to attract and retain talented women: Implementingdiversity for diversity’s sake does not work. To begin successfully integrat­ingwomen into their workforce, GCC companies must have a senior champion whocan make a business case for the need to do so.

“Creatingsuch a business case is not without challenges. There is little in theway of objective, broad-based research that clearly establishes the importanceof integrating women into the workforce, and nonethat is specific to the region,” said Dr. Leila Hoteit, Principal withBooz & Company. “However,anecdotal evidence from a multitude of companies shows the value that astrong female talent base can engender. A business case could be basedon any of three elements: workforce,customers, or suppliers.”

Workforce: A dedicated effortto recruit and retain women does more than just fill talent gaps. A diverseworkforce leads to higher employee engagement across the board. More than100 studies have demonstrated the correlation between employee engagementand business performance: Engaged employees are far more productive andcommitted, and they are more likely to make progress toward company goals,as well as the goals of their own group

Customers: Companies in a wide variety of sectors will need to more effectively target women as this keydemographic’s spending power continues to grow.To do so, companies need to ensure not only that they have women on staffbut that women are in the right positions to enhance the company’s go-to-marketstrategy with their insights, such as R&D, product development, marketing, and sales.

Suppliers: Companies need womenin the right roles to raise awareness about potential new suppliers, usetheir networks to build these relationships, and maintain the relationshipsover the long term. One company found annual cost savings of $2 millionto $4 million when it focused on women-owned businesses by categorizingall third-party orders and enhancing the competitiveness of each category.

2. TalentManagement

The second element of the frameworkrequires developing a comprehensive approach to hire the most promisingwomen candidates, invest in developing their technical and soft skills,evaluate them objectively, and retain them.

Talent acquisition: Companiesshould apply a unified process for attracting qualified talent from allavailable sources. This includes hiring entry-level candidates directlyfrom the ranks of recent graduates of women’s colleges and vocationalinstitutes. Another key channel for young talent is to sponsor students.Still another source, particularly for experienced professionals and managers,is the region’s recruiting firms.

“Companiescan partner with leading technology training institutions to establisha pipeline of women professionals with specializedtechnical experience,” said Dr Kamal Tarazi, Principal with Booz &Company. “For example, the Womenin Technology (WIT) program, a collaboration between Microsoft and localwomen’s organizations, teaches computer skills to women in nine MiddleEast and North Africa countries. Since its launch in 2005, WIT has trainedmore than 3,500 women throughout the MENA region.”

The company should ensure the same clearobjectives and criteria are used in recruiting women as in its usual recruitingprocess, and avoid making subjective judgments about, for example, a femalecandidate’s age or number of children. It should also seek to have strongfemale representation in recruiting to project an image of a company thatfully embraces and values diversity.

Learning and development: Inaddition to recruiting and hiring female candidates, companies must implementa training program to develop women employees in technical areas and softskills. Companiesshould consider a mentorship program that pairs less experienced stafferswith more experienced women. In addition to serving as role models, thementors would offer junior women an opportunity to share their concernsand issues.

Performance management: To supportthe integration of women into the workforce, companies must establish anobjective system for evaluating their performance. This process needs tobe clearly communicated and strictly implemented to ensure fairness. Allscores should be objective and measurable, based on specific outcomes (suchas turnover and employee satisfaction in the HR function, or sales numbersfor the sales department), and the evaluation process should include multiplesources of input—e.g., managers, colleagues, and subordinates. Althoughthis is good practice for all employees, recent experience has shown thatit is difficult to implement when evaluating women employees in a male-dominatedenvironment. For example, in some job appraisals, women receive referencesto personality traits—they are “shy” or “emotional”—rather than specificdescriptions of behaviors or quantitative assessments of their job impact.At other times appraisals may reflect an inherent, though unconscious,bias regarding women employees’ long-term commitment to the company inthe context of family obligations.

Retention: Once the company hastaken these measures to recruit, hire, develop, and evaluate the womenin its workforce, it should devote equal effort to retaining women employeesand ensure that they stay professionally fulfilled and motivated. Thisis critical, given the scarcity of skilled resources in the market andthe investment that would be needed to hire and develop a new employee.We advocate a balance of traditional incentives and “pride builders,”or less quantifiable and concrete benefits.The first category, incentives, consistsof fairly traditional HR levers: rewards such as compensation and benefits,opportunities for career advancement, and a work–life balance that offerssuf­ficient flexibility to attend to personal obligations while also pursuinga career. The introduction of resources such as family-friendly policieswould go a long way in helping retain talent: For example, employees mayseek part-time work, or the opportunity to telecommute certain days orfor a finite period of time, as long as the job’s requirements allow forit.

3. ChangeManagement

“Becauseincreasing women’s par­ticipation is a complex initiative with potentialramifications for the entire organization, companies will require an extensivechange management strategy in order to succeed,”said Shehadi. “Atthe outset, all relevant stakeholders,both internal and external, mustunderstand the program and its objectives. This may require overcomingmisguided but still prevalent perceptions among some about the roles ofwomen in society, or their ability to succeed in the private-sector workplace.”

Because these perceptions can be stub­born,changing them within companies must start from the top. Companies mustline up support and commitment from the board and executive vice presidents(EVPs), who must lead by example. Senior management should actively monitorkey metrics through dashboards or score cards that track turnover, thenumber of women in senior positions, and other relevant indicators.

At lower levels, the company shouldidentify middle management champions for the program. These champions canbegin spreading awareness of the program in advance, along with motivatingtheir staff to embrace the change. They can overcome unforeseen obstaclesat that level—through a performance-driven approach—and identify andcommunicate challenges up the chain of command.

Finally, companies will need to adda diversity-management component to the slate of mandatory training requiredof all employees. It is not sufficient to simply prepare women to jointhe labor force; management must prepare the rest of the employees to makethe integration of women a company-wide success as well.

The entire company should build on smallsuccesses, potentially through recognition via in-house communicationssuch as internal magazines or newsletters, or through awards given to thedepartment that has the greatest proportion of women employees, or thelargest number of women in leadership roles.

“Introducing women into the GCC private-sectorworkforce will not be easy, and there is a risk of moving too fast. Eventhose companies that are most aggressively pursuing nationalization cannotsimply replace one skilled and experienced expat worker with one nationalwoman,” said Dr Hoteit. “In the longer term, this change is inevitable.Attitudes in the region are changing, and many companies are now activelyworking to define their strategic vision for how women will fit into theirworkforce. Women have the education and—more important—the desire toplay a more central role in the region’s labor market.”

Reaping the Rewards

The entrance of more women into theregional economy will serve as an economic multiplier, creating benefitsfor each nation as a whole.

“Booz & Company’s research onthe “Third Billion” — the billion women worldwide who are poised tohave an impact on the global economy as workers and consumers — showsthat these new engines of economic activity create vast markets and increasethe size and quality of the talent pool,” concluded Tarazi. “In periodsof relative prosperity, their aspirations and persistence are engines forgrowth. In slower periods, they represent pockets of economic activitythat ameliorate the impact of decline.”

For private and semi-private organizationsin the region, nationalization and regional unemployment provide an opportunityto tap an underused talent pool. Defining a strategic vision to betterintegrate women, developing a comprehensive talent strategy to do so, andcarefully managing the transition will be critical for companies that wantto capitalize on this opportunity. Companies that adopt an intelligentstrategy to manage this transition will gain a competitive edge, througha workforce that is more engaged and better reflects the GCC populationat large.

Riyadh and Jeddah had a stellar 2010-2011, clocking the second and third highest growth rates in the world according to The Brookings Institution’s 2011 Global MetroMonitor.

Their performance was only bettered by the Chinese economic engine Shanghai, which saw its income rise nearly 10% during the 2010-11 period. READ MORE HERE

January 8, 2012

By Fitch Ratings

Spending by the Kingdom of Saudi Arabia in 2012 will likely be higher than budgeted, but the country will still run a fiscal surplus of 4% of GDP, says Fitch Ratings.

Spending growth will moderate in 2012 compared with last year. In 2011, spending growth reached 24%, the highest in a decade. The government raised public sector wages, created government jobs, injected capital into state-owned lenders and pledged more resources for housing. Capital spending - mainly on infrastructure - exceeded 12% of GDP.
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Kuwait-based KAMCO sheds light on the future economic outlook of the GCC based on 2011 and 2012 GDP growth expectations. In addition, the report incorporates growth analysis of consumer loans in Saudi Arabia, Qatar and Kuwait for 9M-11. GDP in Saudi Arabia, Qatar and Kuwait is expected to post growth rates for 2011 and 2012, by 29% and 7% in Saudi Arabia, 35% and 7% in Qatar, while Kuwait is expected post growth of 25% and 12%, respectively, supported by the growth in oil GDP.
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Opec countries will rake in $900-billion this year. But these outstanding figures mask great turmoil facing group members in the next few
years.

With Brent crude comfortably over $100 a barrel, oil exports of OPEC countries this year will amount to nearly $900 billion, a 38%
increase over 2010, according to the Centre for Global Energy Studies. READ MORE HERE

In the first part of the 2012 regional economic prospects, a look at oil-rich countries’ efforts to manage their citizens’ expectations, economic slowdown and regional and domestic political upheavals in the New Year.

The year 2011 was probably the most unexpected for the Middle East in decades with not just the magnitude of changes unravelling in the region, but also the sheer number of those cataclysmic changes. READ MORE HERE

By Alon Ben-Meir

Due to a host of common denominators in the Arab world including the lack of traditional liberalism, the tribes’ power, the elites’ control of business, the hold on power by ethnic minorities, the military that cling to power, and the religious divide and Islamic extremism, the Arab Spring could sadly turn into a long and cruel winter. These factors are making the transformation into a more reformist governance, slow, filled with hurdles and punctuated with intense bloodshed. At the same time, each Arab country differs characteristically from one another on other dimensions including: history and culture, demographic composition, the role of the military, resources, and geostrategic situations. This combination of commonality and uniqueness has had, and will continue to have, significant impacts on how the uprising in each Arab country evolves and what kind of political order might eventually emerge.

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By Rushdi Siddiqui, Global Head of Islamic Finance at Thomson Reuters

The time has arrived to take a deeper dive on better understanding of Shariah compliant companies in an Islamic (or Shariah compliant) equity indexes. To many informed and uninformed observers of Islamic equity investing, it seems to imply investing in publicly listed companies in Muslim countries.

The end results contradict the assumptions. This also rebuts the often heard allegations by many from the anti-Shariah movement that Islamic investing is about investing in companies linked to terrorism or financing terrorism. The largest companies in the S&P Global BMI Shariah include ExxonMobil, IBM, Chevron, Nestle, Microsoft, etc.
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• 25 Rapid Growth Markets (RGMs) to grow by an average of 6.2% this year and by 5.9% in 2012, compared with 1.6% growth for the Eurozone this year falling to 0.6% next year.

• Qatar had the highest nominal GDP (US$) per capita at PPP in 2010 among the 25 RGMs and has also been the fastest growing economy over the last decade, with an average growth of 13%.

The dynamics of the global economy have changed with a new set of fast-growing markets challenging the position of the established advanced economies. The rapid growth markets (RGMs) are expected to grow collectively by 6.2% this year, almost four times more than the anemic growth expected in the Eurozone according to Ernst & Young’s new quarterly Rapid Growth Markets Forecast (RGMF).
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rickz /Foter

Read the ten major forecasts from Opec’s latest World Oil Outlook, ranging from the challenges and prospects for oil developers to the intense competition they will face over the next 25 years. READ MORE HERE

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The allegations against two Iranians soliciting a Mexican drug cartel to assasinate the Saudi Ambassador to the United States has been received with widespread skepticism:
Read More

The alleged involvement of Iranians in a plot to kill the Saudi ambassador in the United States adds another layer of uncertainty in the region and escalation of tension between Riyadh and Tehran.

It doesn’t take long for sunny Middle East to turn dark.
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The Saudi Ministry of Labour’s recent efforts to tackle Saudi’s highunemployment rate which has hit half a million poses a major threat to alarge number of Saudi organizations, a fifth of which stands in the dangerof being classified under the red zone.

According to the Minister of Labour one in five private companiesoperating in Saudi are a long way away from meeting the Saudization targets.The curb in renewing visas of red zone company employees’ builds worry andfear as people panic about their job security. At the same time thecompanies in the premium and green zones will enjoy numerous incentives andbenefits from September 10th for their efforts in implementing the Nitaqat program.

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Forget Arab Spring. If Saudi Arabia’s spending patterns and economic policies don’t change, it could be staring at a breakeven oil price of an astonishing $320 a barrel by 2030, says Jadwa.

With $562-billion in net foreign asset, the second largest oil reserves in the world after Venezuela (according to the latest Opec bulletin), and the second largest oil output in the world after Russia - Saudi Arabia’s future looks rosy and solid. READ MORE HERE

The list of the largest financial institutions in MENA based on The Banker data reveal a tough year for regional banks and how they still lag in many areas compared to their global peers.

The number of Middle East banks in the 2011 edition of The Banker Top 1,000 World Banks 2011 slipped to 83 from 90 in the 2010 rankings. READ MORE HERE

The Gulf states will need to create 3.3 million jobs over the next ten years, meanwhile the MENA region will need to create 30.7 million jobs by 2020, according to Al Masah Capital.

Unemployment in the Middle East stands at 10.3% and North Africa at 9.8%. While that may seem comparable or even favourable to some OECD countries - (U.S. 9.1% unemployment, Spain 21.3%), joblessness in MENA is a structural problem. READ MORE HERE

The Saudi King’s speech had 21 royal orders but very little to comfort reformists. It appears that the authorities have used its biggest political crisis to launch an economic bailout. Read More

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As events in Egypt change faster than you can update them on Twitter or Facebook, regional authorities are looking at the short-term and long-term impact of the crisis on their own economies. Read More