Gulf Business - November 2020 by Motivate Media Group

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UAE-Israel: Are the business floodgates ready to open?

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Driving ahead: Is the luxury auto industry changing gears? BD 2.10 KD 1.70 RO 2.10 SR 20 DHS 20

NOVEMBER 2020

Supporting the SME bounceback The 20 recipients of Motivateâ€™s $1m SME Revival initiative

SPECIAL REPORT: WEALTH MANAGEMENT - HOW TO GROW YOUR FORTUNE

Gulf Business

CONTENTS / NOVEMBER 2020

The Brief An insight into the news and trends shaping the region with perceptive commentary and analysis

Special Report: Wealth management With a variety of investment options now available in the market, which assets should make their way into a balanced portfolio?

Cover Story: Standing with SMEs Motivate Media Group, along with an expert panel, has selected these 20 SMEs as the beneficiaries of its $1m initiative

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November 2020 3

CONTENTS / NOVEMBER 2020

30 Exclusive insights Dubai Chamber’s CEO on supporting startups

34 Talking about money Do SMEs have greater access to capital?

“Covid-19...has also created an opportunity for smaller businesses to experiment, innovate and reinvent existing business models” -Hamad Buamim, president and CEO, Dubai Chamber of Commerce and Industry

42 Profitable partnership How businesses can benefit from the UAEIsrael peace deal

Editor-in-chief Obaid Humaid Al Tayer Managing partner and group editor Ian Fairservice Group director Andrew Wingrove andrew.wingrove@motivate.ae Acting editor Aarti Nagraj aartin@motivate.ae aartinagraj Deputy editor Varun Godinho varun.godinho@motivate.ae varungodinh Tech editor David Ndichu david.ndichu@motivate.ae Contributor Zainab Mansoor editorial.freelancer@motivate.ae Senior art director Olga Petroff olga.petroff@motivate.ae Art director Ángel Monroy angel.monroy@motivate.ae angel__monroy Photographers Jitendra Jangir Cover: Ángel Monroy. Illustration: Getty Images/Malte Mueller

General manager – production S Sunil Kumar Assistant production manager Binu Purandaran Production supervisor Venita Pinto Chief commercial officer Anthony Milne anthony@motivate.ae Group sales manager Manish Chopra manish.chopra@motivate.ae Senior advertising manager Ravi Dutt ravi.dutt@motivate.ae Group marketing manager Dominic Clerici dominic.clerici@motivate.ae Group marketing manager Anusha Azees anusha.azees@motivate.ae

Vol. 25. Issue 7. November 2020 Printed by Emirates Printing Press, Dubai

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4 November 2020

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CHRONOMAT

CONTENTS / NOVEMBER 2020

72 The future is electric The luxury car industry braces itself for a new era

Vivo X50 Pro

Donna Benton

Reviewing its design, performance and camera

The Dubai-based entrepreneur launches a new swimwear company â€“ Caha Capo

Bremont ionBird The British watchmaker collaborates with Rolls-Royce

6 November 2020

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Excellence requires success, experience and tradition. The LLB has developed outstanding expertise over the 150 years of history. As a strong partner, we always keep an eye on your wealth. Our award-winning banking ensures solid values in all areas of finance. www.llb.li/me Liechtensteinische Landesbank AG (DIFC Branche) is duly licensed and regulated by the Dubai Financial Services Authority (DFSA). The products and services are only available to Professional Clients as defined by the DFSA and no other person should act upon this.

Restricted skies

The Brief 10 11 13 15 16

Number of countries nationals can visit visa-free

January October

Russia

185

119

India

NOV

Brazil 170

Singapore 190

SOURCE: THE HENLEY PASSPORT INDEX: Q4 2020 REPORT

ILLUSTRATION: GETTY IMAGES/KLAUS VEDFELT

Technology Startups F&B Social Finance

Decline in travel freedom in 2020

Seeking silence Hereâ€™s why your brain will do the heavy lifting when you are in a state of solitude p.18 gulfbusiness.com

November 2020 9

The Brief / Technology

passengers have had a coronavirus shot and helping to distribute vaccines to priority groups first. The certificates, to be tested in a pilot project, will be based on the blockchain technology that underlies electronic currencies like Bitcoin. The Baltic country said that it had approved a pact with the WHO. The news may offer hope to companies around the world whose businesses have been ravaged by lockdowns. Cybersecurity firm Guardtime, which was founded in Estonia and is headquartered in Switzerland, will lead the 12-week pilot by enrolling “pathfinder”

ILLUSTRATION: GETTY IMAGES/MALTE MUELLER

WITH NO VACCINE FOR THE CORONAVIRUS AVAILABLE YET, THERE HAVE BEEN PROPOSALS THAT PEOPLE WITH ANTIBODIES COULD BE ISSUED AN “IMMUNITY PASSPORT”

A N A LY S I S

Digital shot Blockchain technology will help create digital vaccination certificates

he World Health Organization is tapping the know-how of one of the world’s most digitised nations to help ungum global travel and prevent unequal treatment once a vaccine against Covid-19 has emerged. The WHO is teaming up with Estonia, the European Union state that helped give birth to Skype and where citizens use the internet to vote in elections, to create digital vaccination certificates proving international 10 November 2020

countries to test how well the solution can be scaled globally, including in poorer regions, according to Ain Aaviksoo, head of the company’s unit in Tallinn. “Most other blockchain solutions are lab-projects, but it’s a challenge to scale them to billions of people,” Aaviksoo said. “What we’re offering to the WHO is speed. The solution has been tested by the US government, telecoms companies and others in terms of onboarding a massive number of parties and the stability of the system.” Aaviksoo estimates Guardtime’s lead over rivals on implementation speed to be at least a year. With no vaccine for the coronavirus available yet, there have been proposals that people with antibodies could be issued an “immunity passport” allowing them to travel or return to work, on the assumption that they’re safe from re-infection. But the World Health Organization cautioned in April that protection against a second infection among those people may not be sufficient for the idea to be effective. “The WHO isn’t doubtful about “certificates” in general but about what’s being certified,” Aaviksoo said. “When a vaccine has been cleared for the market, it should be effective, so it makes sense to certify vaccination as a fact and set rules based on it.” Bloomberg gulfbusiness.com

ILLUSTRATION: GETTY IMAGES/ALINA KVARATSKHELIA

The Brief / Startups

A N A LY S I S

PACING AHEAD

Whip up Online food ordering has effectively altered the dynamics of the F&B ecosystem, writes Zainab Mansoor

isruptive technologies have upended the world, with digital adoption and e-commerce at the forefront. As consumers gained comfort with shopping over the internet, online food ordering followed as an organic next step. Customers who grew accustomed to e-shopping expected the same convenience when it came to ordering meals. Subsequently, the online food delivery segment took flight. This also rallied the evolution of backend technologies. Foremost among those technologies are cloud kitchens – commercial facilities that produce and deliver food, supported by third-party service providers. They are built on a delivery-only business model, and food brands operating within them are commonly known as virtual restaurants. gulfbusiness.com

On the back of their flexibility and scalability, cloud kitchens have swiftly paved the way for a new realm of online restaurants and new brands. Restauranteurs can either expand an existing concept or curate a new virtual brand at minimal costs. The numbers add up: The global cloud kitchen market, worth $43.1bn in 2019, is estimated to reach $71.4bn by 2027, a report by Allied Market Research suggests. The GCC region has cottoned onto the trend as well, with the UAE reigning as a hotspot for startups in this sector. “The growth prospects of the cloud restaurant and cloud kitchen industry and ecosystem are huge in the UAE and globally. Cloud restaurants, along with cloud kitchens and delivery apps will continue innovating the customer experience through to 2021 and beyond. The delivery-only foodtech industry is the fastest growing and the wmost exciting space in food and beverages globally today,” opines Ziad Kamel, CEO of Cloud Restaurants, a Dubai-based delivery-only, online restaurant company. “Our restaurants are 100 per cent online restaurants, so we don’t have a dine-in service. Currently, we operate our 10 brands in seven cloud kitchens across Dubai and we’re growing rapidly with more brands,” adds Rowan Kamel, its chief brand officer.

Big order

The global cloud kitchen market is set to explode

2019 $43.1bn

2027 $71.4bn

SOURCE: ALLIED MARKET RESEARCH

In the days and weeks following the Covid-19 outbreak, the online food delivery space witnessed an upsurge due to isolation protocols and operational restrictions at restaurants. However, this trend promises to gather force in the post-Covid world too, given the scaling demand for international cuisines, widespread internet connectivity, social media engagement as well as the evolution of the food preparation and ordering system. “As logistics capabilities and cloud kitchen infrastructure develop, we should be prepared to see delivery apps, cloud kitchens and virtual restaurants extending their geographic reach by operating in new countries, cities, and towns – and not just in the major capitals,” says Kamel. “We will see brands hyper-targeting customers per delivery radius, addressing very specific demands for the demographics of each delivery zone. “Even within the same city, a delivery radius in a university town has very different food delivery needs than a delivery radius in a family-only gated community. We will also see international chain restaurants develop their virtual restaurant delivery capabilities to adapt to the online restaurant world or risk becoming irrelevant.” November 2020 11

The Brief / Q&A INTERVIEW

Muhammad Chbib CEO, Tradeling

Explainer: What is the scope of growth for the GCC’s B2B e-commerce industry? The pandemic has helped boost digital marketplaces in the region The pandemic has propelled the use of e-commerce in the region and globally. What are the key trends you have seen?

The most significant trend is the growth of homegrown capabilities in e-commerce in the region. Globally, while e-commerce has been recording strong growth – accelerated no doubt by the pandemic – the region has witnessed a transformational growth in the evolution of the digital economy. Not only have our homegrown companies demonstrated strong resolve to meet the needs of the people and support them, we have seen a tremendous amount of entrepreneurship – with new startups entering the market and building their own niche. The second trend is more consumers warming up to the possibilities offered by e-commerce. While

digital commerce was gaining momentum, one of the factors that has stymied its growth in the region is the relatively lower credit card penetration in some markets. There have also been typical concerns associated with conducting everyday business online. However, one thing the pandemic has brought about is the adoption of digital payments and the increased confidence of consumers to shop online and conduct e-commerce transactions. In the B2B e-commerce space, how high is the penetration in the GCC market? Has it grown significantly this year?

While B2B e-commerce was evolving at a slower pace compared to consumer-oriented digital business, this year has witnessed a real transformation. I believe it is a case of supply and demand. What matters is that in the new reality, business customers too want to access products and services easily, quickly and efficiently. We see a growth in the B2B marketplace – here in the UAE – and growing enquiries from across the GCC. Which are the verticals within the sector where you see most scope for growth?

ILLUSTRATION: GETTY IMAGES/TARRAS79

It is really a matter of bringing more options to the customer, whatever the vertical. Customers like to shop around and feel they get value for money and exemplary service. But it is also a matter of sourcing new products and services that aren’t in the region yet. For those entering the digital B2B industry, what are the main challenges?

The main challenges are finding the right talent with expertise and insights into the B2B sector, which is a different terrain compared to B2C e-commerce. An in-depth understanding of the 12 November 2020

gulfbusiness.com

The Brief / F&B Placing orders

Online shopping in the MENA region has increased since the Covid-19 outbreak More frequently

global market is essential in addition to knowledge of the trading dynamics. You must be flexible and agile to overcome any unprecedented situation. It is also a matter of understanding the customer – the B2B customer is very different from the B2C customer. Our priority is making the customer journey seamless, taking away their pain points and streamlining processes to ensure efficiencies that save them time and money. Tradeling launched in April, in the midst of the lockdown – how was your experience? Do you have any immediate plans to expand?

We created Tradeling during the pandemic to connect regional and global suppliers to MENA-based business demand. Today, we have close to 400 suppliers from over 25 countries with gross merchandising value increasing from zero to a high two-digit million figure in just three months.

DIGITAL MARKETPLACES CONSTITUTE THE FUTURE OF RETAIL AND IN THE NEW REALITY, THEY WILL RECORD A STRONGER RATE OF GROWTH COMPARED TO BRICK-AND-MORTAR RETAIL The key to overcoming the challenges was to enhance market confidence and we took decisive steps in this regard. Today, we have gone from a team of 40 to nearly 100 people and we continue to hire. From logistics to financing support to ensuring a fully secure payment gateway, we are the first of our kind B2B platform across the region. This is our USP and this integrated approach to business has enabled us to address the challenges. Looking ahead, what is the future of digital marketplaces in the region?

Digital marketplaces constitute the future of retail and in the new reality, they will record a stronger rate of growth compared to brick-and-mortar retail. But the key for success is to define your own unique niche for the marketplace; increasingly, we see online aggregators trying to capitalise on the opportunity, which will only lead to market fragmentation. What we need is bold, innovative ideas that will help accelerate the momentum of e-commerce growth in the region. gulfbusiness.com

UAE

Lebanon

29%

19%

34%

33%

19%

22%

35%

I rarely or never do it

22%

47%

Egypt

Jordan

No change

48%

Saudi Arabia

Morocco

Less frequently

13%

17%

29%

19%

20%

23%

19% SOURCE: STATISTA

Aamer Sheikh President and general manager, PepsiCo MENA and Pakistan

COMMENT

At the click of a button Why e-commerce is primed for the palate in the regional F&B sector

Healthier habits

A survey found that Covid-19 has had a positive impact on food habits of MENA consumers Eating healthier 54%

SOURCE: IPSOS

ince the emergence of Covid-19, we’ve all seen many more charts, curves, graphs, changing forecasts, trends and stats than we probably thought we would see when 2020 arrived. The food and beverage industry is no different and as countries locked down, mobility decreased, and traditional shop access reduced, we’ve seen our share of changed forecasts, revised projections, and the dawn of the ‘new normal’. The day-to-day lives of people have changed tremendously. As organisations try to navigate this uncharted territory, the MENA consumer has – and continues to – evolve at unprecedented speed. Consumers are rethinking their finances, freedom, fitness, shopping preferences, and purchase experiences, with unconventional recipes, home entertainment and social media defining people’s quarantine indulgence. As restrictions gradually lifted, upon interpreting changed consumer behaviour, two main themes have emerged. One, a renewed focus on health and hygiene will remain. This extends from tamper-proof packaging and trusted supply lines, to paying digitally November 2020 13

The Brief / F&B COMMENT

ILLUSTRATION: GETTY IMAGES/MALTE MUELLER

and consuming more thoughtfully. An Ipsos survey researching the impact of Covid-19 on food habits of MENA consumers found that 54 per cent are eating healthier. PepsiCo’s Q3 earnings mirror this trend – with more consumers eating breakfast at home, the Quaker business has seen an uptick, and consumers are eating more consciously than ever before, choosing healthier and more balanced meal options. Two, spurred on through necessity – the pandemic has forced a much greater reliance on e-commerce for our everyday needs. It is now the preferred shopping behaviour. According to Statista, 68 per cent of the UAE’s population and 73 per cent of Saudi Arabia’s population is currently shopping online, up by 3 per cent and 4 per cent respectively since last year. People are spending more time at home – and more time online, seeking increased convenience, better accessibility and an extra layer of safety. The MENA consumer, and notably the GCC consumer, is among the most connected and digitally savvy in the world. The UAE and Saudi Arabia have some of the highest levels of internet, smartphone and social media penetration globally, while Egypt has one of the highest levels of time spent online. Shopping online is a natural extension of this, but the pandemic has transformed a growing behavioural preference into a much more permanent habit. We’ve essentially jump-started the learning curve by two-three years.

14 November 2020

E-COMMERCE IS NOT JUST ABOUT SELLING ONLINE – IT IS ABOUT CREATING THE RIGHT SHOPPING EXPERIENCE FOR THE RIGHT VALUE

For many brands, swift, decisive and quick-thinking action has limited disruption – as much as could be. Delivery aggregators also offer a great solution for brands that don’t have an e-commerce presence and want to test the waters without heavily investing in IT solutions. But e-commerce is not just about selling online – it is about creating the right shopping experience for the right value. While the shift in consumer behaviour is one aspect, the essence of a good e-commerce experience lies in securing last-mile delivery, something aggregators have achieved with great success. It’s a race for who can deliver their products to the shopper the quickest, offer the best experience, and at the best value. It’s not as ‘straightforward’ as building a directto-consumer offering or simply expanding your digital presence. Businesses need to recognise that shoppers need to be lured in seconds and hence they have to build a superior, seamless, and secure e-commerce experience. Shoppers expect brands to know their needs and play a role in their lives, stepping outside of the traditional space they once occupied. This means building end-to-end solutions. As an example, we launched PantryShop.com, a direct-to-consumer offering globally in May, which was developed by our e-commerce team in less than 30 days. These solutions have the potential to be deployed globally, but their success is market and ecosystem dependent – so the key lies in knowing when to launch them. That means building, testing, and refining new capabilities, investing in the right talent, and marrying this with consumer data to offer a unique and relevant offering to the shopper. What lies in the future? No one knows specifics with absolute certainty. Global consumer confidence may be the lowest in eight years and social distancing will change the way the industry operates in the future – whether that’s enriching the in-home experience to create more shared moments, making health and safety a bigger priority than ever before, leveraging the power of technology to grow the business, or walking the talk when it comes to protecting the planet and people. There is no turning back. gulfbusiness.com

The Brief / Social Zaib Shadani Founder and managing director of PR and social media agency Shadani Consulting

COMMENT

can be tracked and analysed, helps greatly in demystifying how to best market to Generation Z customers. Here are a few of the best techniques to engage with this predominantly online audience:

1. ‘Stop ’em in their tracks’ video content Having been born at a time when social media and the use of technology is the norm, Gen Z are used to consuming short-form content delivered via video snippets. Instagram stories, TikTok, Snapchat and YouTube are the medium of choice, with atten-

HAVING GROWN UP WITH THE INTERNET, GEN Z IS VERY FAMILIAR WITH ONLINE MARKETING AND SELLING TACTICS tion grabbing visuals, musical backgrounds, visual effects and filters being the standard modus operandi. Anything bland or visually mediocre will be passed over, in favour of a trending video or viral challenge.

Marketing to Generation Z What you need to know to ensure the future of your brand’s survival

ust when brands had thought they had figured out millennials, we now have a whole new generation of consumers to deal with: Generation Z, which typically refers to the generation that was born between 1996-2010 and succeeds the millennials. This generation has been raised on technology, the internet and social media and will soon represent the largest group of consumers – estimated at 40 per cent of global consumers – this year. And yet, many companies are woefully behind in preparing marketing strategies to engage with this very powerful and idiosyncratic demographic. Marketing to a younger demographic is not as easy as it sounds, especially as one needs to throw out the traditional tried-and-tested marketing techniques that have worked so far. A whole new generation requires a whole new way of thinking. However, not all is lost – the fact that they are perpetually online and their purchasing and browsing patterns gulfbusiness.com

2. Never sell a product – sell the benefit Having grown up with the internet, Gen Z is very familiar with online marketing and selling tactics. They are very aware customers who can spot inauthenticity and a ‘hard sell’ a mile away. Instead, they seek an understanding of the benefits and experiences that a product (or service) will give them, and respond well to content that is aimed at offering something experiential and value-oriented, over simply showcasing a product or offering. Advertising, in the traditional sense of the word, does not work on them.

3. Be creative, interactive and engaging to capture their attention

40%

of global consumers are estimated to be Generation Z this year

Gen Z has grown up on social media as a way to get entertained, as well as stay informed – they are not passive consumers of content but active participants and expect to be able to tap, swipe, comment or click. Brands that are seeking to engage with this audience must ensure some element of interactivity or engagement, whether through a poll, quiz, question, the use of filters, music or stickers on their videos or posts. November 2020 15

The Brief / Finance COMMENT

4. Instant response is a must Gen Z is not patient – it wants an almost instantaneous response to queries, feedback and comments. In many cases, the speed at which a brand responds is considered a barometer of their importance – a faster response makes the follower feel important and validated. Negative feedback is a very important area and plays a critical role in the success of any brand. Hence brands must ensure timely and personalised responses to any and all complaints that are shared on social media. Twitter is one of the leading platforms for sharing complaints and many brands have even gone as far as creating separate accounts for customer complaints.

5. Influencers are ok – but not the ‘inauthentic’ ones Gen Z is used to being marketed to via its favourite influencers – whether it is through Instagram, Snapchat and TikTok ambassadors or YouTubers. Studies indicate that Gen Z is more likely to discover a product on social media, especially through Instagram. Additionally, they are less susceptible to digital ads and more inclined towards ‘authentic’ content that isn’t covertly promotional and instead, is openly endorsed or clearly a paid promotion. Micro-influencers, in particular, are a great way to engage with Gen Z, which responds well to ‘real’ content, which is less curated and less orchestrated to perfection.

A N A LY S I S

Seamless payments Increased online activity in the wake of the Covid-19 outbreak has led to a rise in digital payments, writes Zainab Mansoor

he outbreak of the Covid-19 virus has proven to be an ‘inflection point’ for much of the world. Of all the changes that have taken place to mitigate and manage the crisis, digital adoption by consumers and businesses has arguably remained the most profound, compressing years of technological transformation into months. Organisations expanded their digital offerings, while consumers increased their reliance on online and mobile channels to conduct day-to-day activities. Increased digital activity also drove up the volume of digital payments. Months after the outbreak, digital payment transactions not only form part of the ‘new normal’ but are expected to outlive it too.

16 November 2020

FAVOURABLE TRENDS

Few trends will shape the payments industry globally over the next five years. The Covid-19 pandemic will accelerate cash to non-cash conversion and boost e-commerce growth in select categories, while industry consolidation will continue to shape the competitive environment, a new report by Boston Consulting Group (BCG) predicts. “In the short term, most players in the payments industry are likely to see revenue growth contract. But favourable trends such as the shift to contactless payments, the growing adoption of digital wallets, and the more widespread use of business-to-business (B2B) payments automation will lift the industry’s prospects longer term,” the report explains. Regionally, the GCC countries have

witnessed considerable growth in digital payments over the years. This trend has continued to gather force in the current year, despite underlying economic conditions that may have dented consumer spending. Governments, financial institutions and payment service providers are also expanding their offerings to underpin this sector’s growth. A survey by Dubai Police, Dubai Economy and Visa earlier this year revealed that 68 per cent of respondents in the UAE have reduced shopping in-store since the outbreak of the pandemic, while 49 per cent shop more online. Meanwhile, 71 per cent are using digital payments over cash in case of in-store shopping. Consumers’ behavioural patterns may well be enduring – 43 per cent of the surveyed consumers believe that they will continue to use contactless payments more in-store after the pandemic too. While the payments industry may be evolving rapidly, there are areas that need to be addressed. Companies in this space that address five imperatives will emerge as the winners in the post crisis world, the BCG report explains. These priorities include: rebalancing the product and customer portfolio; pursuing strategic M&A, partnerships, and ecosystem opportunities; becoming a data-driven organisation; reinforcing risk management; and accelerating digital transformation.

gulfbusiness.com

The Brief / Media 1941-2020

OBITUARY

Ibrahim Al Abed, an inspirational journalist

WAM, which he ran for many years. He became an adviser to successive ministers of Information and Culture, including Sheikh Ahmed bin Hamed, Khalfan Al Roumi and Sheikh Abdullah bin Zayed, moving on to become director general of the National Media Council in 2004. He held that post until 2015, when he became adviser to the NMC’s chairman. Over the decades, Ibrahim Al Abed not only did all this; he also built strong relations both with local media and with foreign journalists, with a contact list that ran into the thousands. He used those links to tell the story of the UAE’s development to the world, ever ready to help with advice and with opening doors to allow the media to write their stories. He also worked closely with local publishers of magazines and books, helping them to navigate the often complex and changing waters of an evolving regulatory system. He was a firm believer in the principle that a vibrant and lively media was an essential component in the process of the UAE’s economic and social development. In that context, he was a source of wise counsel to Motivate Publishing for nearly 40 years.

Ibrahim Al Abed, founder of the Emirates News Agency WAM passed away on October 20. He was a respected writer and believed in the power of media, says Peter Hellyer

brahim Al Abed, founder of the Emirates News Agency WAM and former director general of the National Media Council (NMC), died at home in Abu Dhabi on October 20. He was 78. The tributes paid to him on his death reflected the respect with which he was widely held. His contribution to the UAE media scene and his knowledge of the country is unparalleled. His dedication to the country is well-known. His generosity of spirit and his humility made him an inspiration to all of those who had the good fortune to work with him. Born in the village of Sephoria, near Nazareth, in 1941, Ibrahim Al Abed became a refugee in 1948, when his family fled to Lebanon. He grew up there, being educated in UNRWA schools and then at the American University of Beirut. After graduating, he worked as deputy director of the Palestine Research Centre before moving to the United Arab Emirates in 1975 to take up the post of head of the External Information Department at the Ministry of Information and Culture. In the 45 years that followed, he first established gulfbusiness.com

Right: Ibrahim Al Abed with Motivate’s Ian Fairservice

Ian Fairservice, founder and managing partner of Motivate Media Group says: “Ibrahim was a wonderful journalist and a highly-respected writer. Dedicated to his craft, he was inspirational and provided invaluable guidance and encouragement during the many years that I had the honour of knowing and working with him.” An accomplished author, Al Abed had already written over a dozen books before coming to the Emirates. For many years, he was co-editor or editor of the annual yearbooks produced by the Ministry of Information and Culture and the National Media Council and also co-edited United Arab Emirates – A New Perspective, an important collection of essays on the country’s history and development. Among many awards and honours, he received the Abu Dhabi Award in 2018. Peter Hellyer first met Ibrahim Al Abed in 1969 and had been a close colleague and friend since they both arrived in the Emirates in 1975 November 2020 17

ILLUSTRATION: GETTY IMAGES/KLAUS VEDFELT

The Brief / Future

COMMENT

Rehan Khan Principal consultant for BT, an educator and novelist

Scheduling solitude Solitude is a practice of deliberately removing oneself from daily distractions to become more reflective and calm

ome years ago, I felt myself becoming busier and busier, and yet this wasn’t resulting in improved quality of work. In fact, the opposite was happening; the busier I got the more my work deteriorated. Frustrated, I began to study what was happening to my performance at a cognitive level and one of the changes I put in place was to build periods of solitude into my schedule. Within a few weeks, I noticed myself become calmer, more reflective and the deliverables I produced were far superior to anything I had done before. Now I was in even more demand, but this time, I made the firm decision to decide what work I wanted to take on and said no to everything else. Slots of solitude speckled throughout my day indeed proved to be a game-changer.

18 November 2020

Feeling blue

HNWIs have struggled with poor mental health during this time

70% experienced poor mental health

SOURCE: BUPA GLOBAL

I mention this because insurance firm Bupa Global recently announced the findings of its Executive Wellbeing Index, which examined the impact of the coronavirus on global business leaders and wealth creators. The research, undertaken among 2,000 high net worth individuals (HNWIs) based across Europe, North America, the Middle East and Asia, reported that seven in 10 experienced poor mental health during this time – with the figure rising to eight in 10 among business leaders. As a result, many were looking to initiate shifts to re-calibrate work-life balance, with a greater focus on overall wellbeing. Yet I wonder how many have considered solitude and its relationship with wellbeing. Now, I want to make a clear distinction between solitude and loneliness, as various research has demonstrated that loneliness is associated with a range of health problems – such as addiction, depression, heart disease, and premature death. The economist Noreena Hertz makes a strong case against the dangers of loneliness in her book The Lonely Century (2020). Loneliness arises when you want to make real physical connections with people but aren’t able to do so for whatever reasons. However, solitude is a practice of deliberately removing oneself from the daily digital bubble-bath we immerse ourselves in and stepping back to ponder, think and reflect more deeply. When building solitude into my diary, I often go for walks, wherever possible outside, or even around my house. If I happen to be close to some form of nature – grass, plants, trees, sand – I wander off into these environments. The American philosopher Thoreau, writing in Walden (1854), believed that there was a fundamental connection to nature and the thriving of human life. He wrote: “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.” When I’m off on one of these walks or simply sitting still looking out the window, I have no devices on me, thus avoiding notifications that would in any way disturb my cognitive frame. I let my mind wander, with no particular intention of where it should be going. And yet every time I come out of these moments of solitude, I’ve often resolved some professional problem which would have been gnawing at me. Perhaps it was a strategic issue, or a formula in a spreadsheet, or even how to respond to an emotive email. Your brain will do the heavy lifting when you are in a state of solitude, as it purrs away in the background making connections you haven’t yet seen or noticed. The hardest thing is actually having the discipline to schedule time in your diary for solitude wherever you are – just being with yourself with no digital or real distractions around you. gulfbusiness.com

PARTNER CONTENT

Golden touch

Retail group Atkinz is seeking to grow its regional presence by creating unique luxury products, reveals Mojtaba Shekofteh, the group’s founder and CEO As a diversified conglomerate, what kind of impact has Covid-19 had on your operations? The Covid-19 pandemic and the subsequent lockdown measures implemented by some countries have had an adverse impact on business operations and supply chains for most FMCG companies, and our company is no exception. We experienced disruptions to both the supply chain as well as the retail network. After the global outbreak of Covid19, we were somehow blinded by a paucity of suppliers and geographic risk. The pandemic brought the fragility of our global supply chain into sharp focus. As a result, we are rethinking our strategy around the world in order to be able to thrive and evolve when the next Black Swan disruption strikes.

Coming to the UAE, how has regional business been in 2020? Swident, one of our brands, produces premium quality toothpaste products in Switzerland such as Genuine Gold toothpaste and Pearl Powder toothpaste. We had planned to launch these Swiss-made luxury toothpaste products in the UAE in September 2019, but among the many things that didn’t go to plan, was the pandemic that led to delays throughout our supply chain.

Right: Swident produces premium quality toothpaste in Switzerland such as Genuine Gold toothpaste Below: Mojtaba Shekofteh, founder and CEO, Atkinz Therefore 2020 became ‘year zero’ for our company in the GCC. Our former assumptions for the UAE market no longer remain relevant, and consequently we are now reconsidering our business model to mitigate the risks in the UAE market and to find out whether the existing business model is flexible enough to reduce both short-term and long-term costs and help in recovery. We have honed in on being agile to bring in necessary changes in our financial plans and supply chain whenever and wherever needed. We are working on new business models, which assess the inherent risks of the pandemic crisis and define effective responses.

Talking about luxury products such as Gold and Pearl Powder toothpastes, do you see strong demand for such products in the region? Despite post-pandemic economic uncertainty, the GCC in general and the UAE in particular, remain the most important hotspots for luxury retail. UAE consumers are also highly conscious about their choice of luxury oral care cosmetics and spend time researching about these products online. Hence, for our luxury line of oral care products, we have zeroed in on online sales and promotion to drive demand and educate consumers about the importance of oral hygiene on having a healthy lifestyle and the unique benefits of genuine gold and pearl in our toothpaste on having brighter teeth, fighting gum disease and cavity protection a lot more effectively.

Are you planning to launch similar uberluxurious products in the near future? Yes. We are working on bringing design and

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fashion into our luxury line of oral hygiene products. We aim to position toothpaste and toothbrush as inseparable items of a travel bag and a cosmetic box. It wasn’t long ago that toothpaste and toothbrush were perfunctory products which were meant to just clean, whereas now customers, especially women interested in luxury and frequent business travellers are looking for more chic oral care products, and we seek to fulfil such aspirations.

Sustainability has been a key focus for the company. Can you elaborate on the measures you are taking in this regard? We understand the social responsibility of our businesses. For our dental and oral care products, we are developing an eco-friendly and sustainable packaging design – especially for our toothpaste products in a way that doesn’t affect their durability while being transported or stacked on shelves. We are also reconsidering and developing our toothpaste formulas with safe ingredients to protect our customers from everyday exposures to potentially toxic chemicals.

Looking ahead, what are the plans for Atkinz Group in the GCC? Our short-term plans include expanding our supply-reach to Qatar by the end of next year. We are also looking into expanding our reach across neighbouring markets in the GCC and West Asia, especially Turkey. We are planning to examine the European market starting with a pilot test for our luxury line in the UK in the near future. Serious negotiations are in progress with potential 3PLs and distributors in Turkey, China and Canada.

November 2020 19

The Brief / Infographics

Arab voice of change A vast majority of Arab youth consider the UAE as a model nation and one that they would like their countries to emulate, according to Asda’a BCW’s latest annual Arab Youth survey

“We say to them [Arab youth]: The UAE is everyone’s country. We have tried to build a successful model. Our experience and our doors and books will remain open to all” Sheikh Mohammed bin Rashid Al Maktoum Vice President and Prime Minister of the UAE and Ruler of Dubai

SHOWING TOP 5 COUNTRIES

UA E

46%

33%

27%

27 % 30

an erm

Canada

22 % 20

The UAE: A model nation Which country in the world would you like to live in?

Top 5 countries to live in For the ninth year running, the UAE remains the country of choice for Arab youth 2012

2014

2016

2018

2020

UAE

France

Canada

Germany

Canada

Turkey

KSA

Qatar

Canada

Germany

20 November 2020

WHICH COUNTRY WOULD YOU LIKE YOURS TO EMULATE?

Positive image Top three phrases Arab youth associate with the UAE 44% Safe and secure

52% UAE

36% Work opportunities 32% Generous salaries

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Corruption, uneven perception Have considered emigrating to another country, but not actively trying to leave 27%

Youth in the Levant and North Africa say government corruption is widespread Widespread government corruption Some government corruption No government corruption

Actively trying to emigrate to another country 15%

Potential tide of emigrants Two in five young Arabs have considered leaving their country

41%

77%

36%

of all Arab youth report there is government corruption in their country

26% 51%

61%

69% 44% 38% 23%

Have not considered emigrating, but could do so in the future 25%

I would never leave my country 32%

All

GCC

5% North Africa

(Not including ‘Don’t know’)

THE WAY THE GOVERNMENT IS HANDLING THE RESPONSE TO COVID-19 71% Approve

Don’t know 1% MIGRATION DESIRE IS MOST DOMINANT IN THE LEVANT

COUNTRIES WITH HIGHER POTENTIAL OF YOUTH EMIGRATION

63%

Employment and entrepreneurship

77% Lebanon

47%

Concerned 87%

69% Libya 66% Yemen

13% GCC

2% Levant

North Africa

Young people are overwhelmingly concerned about employment

65% Iraq

Levant

Gender equality Nearly two in three young Arab women say they have the same rights as men in their country (AMONG WOMEN)

52%

Men and women have the same rights 64%

Of Arab women think men and women have the same professional opportunities

Don’t know 1%

Not concerned 12%

12%

Of Arab women believe that getting quality education is easier for girls than boys

MANY, PARTICULARLY IN THE GCC, COULD PURSUE ENTREPRENEURSHIP Among all GCC

Women have more rights 11%

A WOMAN CAN BENEFIT HER FAMILY MOST IF SHE… Men have more rights 25%

76% Works

24% Stays at home

North Africa Levant 0

20%

40%

60%

SOURCE: ASDA’A BCW ARAB YOUTH SURVEY 2020

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November 2020 21

PHOTO: CHRIS MCGRATH/GETTY IMAGES

The Brief / Lightbox

22 November 2020

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In this aerial view from a drone, five luxury cruise ships are seen being broken down for scrap metal at the Aliaga ship recycling port on October 2, 2020 in Izmir, Turkey. Some cruise operators have been forced to cut losses and retire ships earlier than planned due to the Covid-19 crisis gulfbusiness.com

November 2020 23

AARTI

NAGRAJ

SME REVIVAL: SUPPORTING THE ECOSYSTEM Motivate Media Group, along with an expert panel, has selected these 20 SMEs as the beneficiaries of the $1m initiative

ILLUSTRATION: GETTY IMAGES/ASTAMAIS

s we approach the end of 2020, the monumental impact of the Covid-19 pandemic is now palpable across all sectors. One segment that has arguably been among the hardest hit is the small and medium enterprise (SME) ecosystem. While some have struggled to stay afloat, others have been forced to put their expansion plans on hold. In such an environment, SMEs have understandably hesitated to allocate budgets towards marketing and advertising. However, it is imperative for companies to remain visible and market themselves during this period. In a bid to support such SMEs, Motivate Media Group is offering $1m worth of free advertising and marketing to homegrown UAE small businesses. The initiative, which has received approval from the Dubai government’s Department of Economic Development (DED), is offering 20 SMEs upto $50,000 free advertising space each across Motivate’s brands including Gulf Business, What’s On, Emirates Woman, Campaign and Identity. As part of the initiative, Motivate has also pledged to support five tech SMEs in partnership with the Sharjah Entrepreneurship Center (Sheraa). The SMEs have been chosen by an expert panel including: Badr Al Olama, executive director, Mubadala Aerospace; Dr. Amina Al Rustamani, executive board member, director and COO, AW Rostamani Group; Hamdi A Osman, chairman and CEO, Ho Holding; Mona Ataya, CEO and founder, Mumzworld; Ahmed Ramdan, group CEO, Roya International; Donna Benton, founder, The Benton Group; and Ian Fairservice, founder and managing partner, Motivate Media Group. gulfbusiness.com

FEATURES / SME REVIVAL

Bayzat

technology company that aims to change the way people live and work, Bayzat has built innovative HR, payroll and insurance technology. As a licenced insurance broker, the company hopes that by simplifying HR administration, it will create more efficient acquisition channels and product stickiness. This will in turn convert platform users to group health insurance customers at a significantly higher conversion rate than any other broker in the UAE. The company is also focused on engaging with and providing value to employees directly via work, finance and medical benefits. As an HR platform, it is also able to acquire proprietary datasets, allowing the company to improve risk underwriting, product design and cross-selling. Bayzat’s mission: Make a world-class employee experience accessible to everyone.

The Box

he Box started in 2006 to bridge a gap in the UAE market for self-storage. It began by offering solutions enabling consumers to rent storage units of any size ranging from 16 sq ft lockers up to 1,000 sq ft mini-warehouses with flexible contracts starting from a week. It also provided users options to upsize or downsize depending on their requirements. The Box has since expanded to include local and international shipping, packaging, order fulfillment and related services, although the core focus remains self-storage – accounting for 80 per cent of the business. Its mission: Hassle free, first-time right and personalised for every user.

Up And Running (UAR)

stablished in 2010, UAR is a Dubai-based sports medicine and rehabilitation facility. Staffed by senior practitioners, the company currently operates three centres in Dubai. A key USP is the quality of care and professionalism – the team only

From top: Bayzat, The Box, Up And Running (UAR) and Trukker Technologies

November 2020 25

FEATURES / SME REVIVAL

treat what is necessary and avoid prescribing unnecessary treatments and operations where possible. The centres offer patients a large range of treatments including sports medicine, physiotherapy, chiropractics, fitness testing, osteopathy and clinical pilates, among others. Its mission: Provide the highest quality of care with a focus on ethical, personalised, effective treatments. The ultimate goal is to ensure that patients are quickly and effectively “up and running”.

The Camel Soap Factory

s its name suggests, Dubaibased The Camel Soap Factory (TCSF) produces skincare products that use camel milk as the primary ingredient and are free of preservatives, parabens or palm oil. All products are designed, formulated and manufactured in its 8,000 sq ft unit in Dubai Silicon Oasis with core ingredients primarily sourced from local and regional suppliers. TCSF’s product range, which began with a focus on the souvenir market, has since grown into the everyday skincare segment and is now available in over 100 outlets across the UAE. Selected as one of the exclusive licensed product providers for Expo 2020 Dubai, TCSF’s mission: Provide locally made products with sustainability at the core.

Trukker Technologies

rukker operates on an aggregation model offering truck rentals and long-haul movements across the GCC. With a member network of over 18,000 trucks, it offers users instant booking, clearly disclosed rates and consistent performance standards. Trukker uses technology to handle aspects such as driver allocation and vehicle positions while also measuring performance data and analytics. The company aims to solve core problems in the business such as price transparency, route optimisation, in-transit tracking, service quality and timely delivery assurance along with a significant push towards digitisation of documents. Its mission: Constantly pushing the boundaries to build the next generation logistics ecosystem.

Core Direction

one stop solution for all things related to corporate wellness, Core Direction has a platform and app that provide a wide range of fitness, health and wellness services to corporates. Core Direction assigns key account managers to each individual corporate client to deliver bespoke wellness programmes that build team spirit, reward participation, improve productivity, reduce sick days and increase employee fitness and health. Programmes range from office chair meditation and yoga to outdoor team hikes and sports. Through its platform, it also offers realtime reporting to clients. Its mission: Reduce diseases associated with a sedentary lifestyle by promoting healthy living.

DGrade

Grade designs and produces eco-friendly clothing and accessories made from recycled PET plastic bottles. The company collects plastic waste in the UAE and processes it into PET flake. The flake is then shipped to partners in Southeast Asia where it is processed into fibre, spun into yarn, dyed and woven into fabric. The final product is then stitched either in Southeast Asia or in the UAE. All stages of the process are audited. DGrade, which has a range of 200 fabrics, also offers contract manufacturing to retail labels. Its mission: Reduce plastic bottles going into landfill, contribute to a cleaner environment and support a circular economy.

26 November 2020

From top: DGrade, The Camel Soap Factory, Virtuzone and Gymnation

Virtuzone

ounded in 2009, Virtuzone helps companies to set up in the UAE, providing end-to-end administrative services as well as business support services such as bookkeeping and accounting, PRO and branding solutions. Working with startups, small gulfbusiness.com

FEATURES / SME REVIVAL

businesses and entrepreneurs requiring their own trade licences, Virtuzone takes care of the setup process in the UAE mainland and in free zones. The company has helped more than 40,000 entrepreneurs and almost 90 per cent of its clients renew their trade licence every year. Virtuzone’s mission: Remove the complexities of company setup in the UAE so that its clients can focus 100 per cent on running their businesses.

Lightblue

creative experience agency that focuses on an omnichannel approach, it delivers solutions across experiential marketing, events and activation, brand strategy, content creation, creative services and design distribution channels. Founded in 2007, the agency also offers a targeted approach with a focus on ‘smartsocial’, connecting clients with existing and emerging audiences to accelerate growth. With a focus on increasing creativity, Lightblue has designed sales boosting platforms and award-winning work for brands such as Adidas, Estée Lauder companies, Heineken, Tom Ford Beauty, Porsche and Sony PlayStation. Lightblue’s mission: Build a space at the intersection of arts, entertainment and technology by believing in human intelligence and embracing creative courage.

Clockwise from top: Core Direction, Lightblue and The Cobbler

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Gymnation

ymnation calls itself the UAE’s ‘most affordable and flexible’ gym, with memberships starting from Dhs99 per month and no-contract-cancel anytime options. All of its gyms are open 24 hours a day, 365 days of the year, to cater to those who work unconventional hours or enjoy training late at night. Each Gymnation facility is over 30,000 sq ft, has over 500 pieces of equipment and offers over 200 free fitness classes per month. Gymnation’s mission: Make sure that health and fitness in the UAE is accessible to everyone and that everybody has access to an affordable and welcoming gym. November 2020 27

FEATURES / SME REVIVAL

The Cobbler

aunched in 2011 to address the gap in the market for upscale repair services and quality formal footwear for men, The Cobbler uses the French apprenticeship practice ‘compagnon du devoir’ in its workshop. Its formal shoes are manufactured in Northampton UK and Spain, and its sneakers in Portugal. With four stores across Dubai and Abu Dhabi, The Cobbler also offers accessories and shoe-care kits. In the words of its founder Sibylle Arnold-Shish: “Our idea was to bring a true expertise, based on traditions and heritage, to deliver the best standards of services while offering a premium quality and decently priced retail range.”

Suraasa

n AI-based edtech platform, Suraasa seeks to assist teachers throughout their professional journey – from acquiring internationally recognised qualifications to finding relevant jobs across the world. The platform, which has more than 8,000 teachers enrolled on it, offers the professional graduate certificate in teaching and learning (PgCTL), a UK level 6 teaching qualification designed to help teachers accelerate their professional growth. Suraasa’s mission: Redesign the teacher skills education system, uplift the prestige of the teaching profession, and address the shortage of qualified teachers.

Gulf Seafood

stablished in Dubai in 1993, Gulf Seafood supplies frozen seafood products, catering specifically to the foodservice channel including premium hotel chains, fine dining and QSR restaurants, catering companies, flight kitchens and institutional customers. Local users can also buy seafood products online with free delivery across Dubai, Sharjah and Abu Dhabi. Additionally, the 28 November 2020

company exports produce to the GCC, US, Canada, Mexico and North Africa. Gulf Seafood also recently diversified its portfolio to include import and distribution of frozen bakery products and frozen flatbreads to the foodservice channel. The company’s vision: To be the best-in-class regional seafood processing company, providing premium quality products.

SHERAA NOMINEES

Healthigo

Rise

Al Rafie Building Maintenance Establishment

Joi Gifts

ealthigo helps healthcare providers gain, engage and retain more patients by connecting the entire ecosystem on a single platform and bridging the gaps between patients, providers and insurance. Disrupting the concept of connected care by focusing on partnerships, Healthigo facilitates higher visibility and discovery, better engagement and experience, improved response and care, as well as enhanced community and social collaboration. Healthigo lists over 5,000 healthcare providers with more than 18,500 doctors, mapped to over 100 insurance providers in the UAE. Its mission: Build a smarter, healthier community together with its ecosystem partners.

l Rafie is a UAE-based company that renovates old buildings and homes. Due to factors such as the extreme climate in the region, structures need to be rebuilt in roughly two decades. Hence Al Rafie shifted its focus from routine building maintenance to completely refurbishing old buildings and villas, catering primarily to property owners in the UAE. Owners can reduce the costs of demolishing and rebuilding new structures, with refurbishing costs generally 60–70 per cent less than building a new structure. Its mission: Support the local ecosystem – in the words of its founder, “There is no point in growing if the people around you don’t grow”.

ubai-based fintech Rise democratises access to essential financial services for expatriate workers. Privately founded in 2017, the platform creates fit-for-purpose financial products based on the needs of overseas workers in the GCC market, to empower expatriates with increased transparency and control over their own finances. Rise has so far helped tens of thousands of modest-income workers gain access to bank accounts, remit money globally, understand their financial health, set financial goals and gain access to credit. The company has partnered with financial service institutions regionally and globally to build relevant financial products and uses its AI driven platforms to distribute them. Rise’s mission: To put migrants in control of their finances.

oi Gifts is an online platform that offers a range of gifts including fresh floral arrangements, chocolates and cakes, gourmet gift baskets, jewellery as well as personalised gifts. The platform also offers same-day delivery and a ‘singing telegram’ that can be used for birthdays, anniversaries, weddings and other special occasions. Featuring brands such as Magnolia Bakery, Godiva Chocolates, Chateau Blanc and Carluccio’s, Joi now operates in six cities across the UAE, Jordan, Saudi Arabia and Egypt. Its mission: Create a seamless and enjoyable experience from start to finish to offer the true art of gifting. gulfbusiness.com

FEATURES / SME REVIVAL

Clockwise from top: Al Mentor, Finyal Media, Eyewa, Rise and Joi Gifts

Finyal Media

Eyewa

AI Mentor

inyal Media is a podcast network based in Dubai which creates content for young Arabs across the MENA region. In the words of its founders: “We strongly believe that the current media landscape is not championing our local culture in a modern way that is relatable to the younger generation.” The company began broadcasting what it claims is the region’s first original drama podcast series called The Basement, in September. The Arabic language series is available on all major platforms including Apple Podcasts, Google Podcasts, Anghami, Deezer and Spotify. The company’s mission: Tell stories that help young people reconnect with the Arab world. gulfbusiness.com

ounded in 2017, Eyewa has now grown to become the largest online eyewear retailer in the UAE and Saudi Arabia. The company specialises in the online retail of sunglasses, eyeglasses, prescription contact lenses and colour contact lenses. It offers a customised user experience throughout the shopping, ordering, packaging and delivery process. Last year, it was also selected as one of the top 100 Arab startups by the World Economic Forum for its contribution to the region’s digital transformation. Eyewa’s mission: Simplify the eyewear shopping experience by providing an easy, affordable and trustworthy platform.

n online learning and selfdevelopment platform serving the Middle East and Africa, it offers video courses and motivational and informative talks in Arabic and English. Featuring a library of exclusive training video courses, motivational talks and video clips for professionals, AI Mentor’s network helps users develop human skills and capabilities. Some of the featured mentors include the likes of Diego Maradona and Egyptian actress Ragaa Elgedawy, among others. Its mission: To inspire Arab self-learners to excel, reach their potential and achieve their professional and personal goals. November 2020 29

FEATURES / ECONOMY

DUBAI: STARTING UP AGAIN

In an exclusive interview, the president and CEO of Dubai Chamber of Commerce and Industry outlines the emirate’s recovery from the Covid crisis and the growing focus on startups Aarti Nagraj

his has been a tough year across the world – the global spread of Covid-19 has meant that no region or country has been immune to its adverse social and economic impact. However, the way the crisis has been handled has differed widely worldwide. While lockdowns were initially common in most nations, subsequent measures have been largely decided on an individual basis. Looking at Dubai, the emirate was quick to introduce precautionary measures as it reopened the economy and continues to Hamad Buamim, president and CEO of Dubai Chamber of monitor the situation closely, with violators Commerce and Industry facing stiff penalties. The first in the GCC region to welcome tourists in July, Dubai has now resumed most business activities. All this has helped ignite the recovery process for companies operating in the emirate. Business conditions in Dubai’s non-oil private sector improved for the third straight month in September, IHS Markit’s monthly Purchasing Managers’ Index (PMI) found. With a rise in activity and new business, Dubai’s PMI rose to 51.5 in September from 50.9 in August, remaining above the 50 mark that indicates growth. Although the travel and tourism sector continued to decline, it was at the slowest pace since February, the report found. “Just like many other major cities around the world, Dubai has gone through a major transition over the last six months with its economy and business landscape reshaped by Covid-19,” says Hamad Buamim, president and CEO of Dubai Chamber of Commerce and Industry. “This is a pivotal moment for Dubai as the emirate is just beginning to restart its meetings and events industry after reopening its borders to tourists only a few months ago.” Trade has already been increasing – exports by Dubai Chamber’s members had a combined value of more than Dhs45bn between June and August 2020, a 7.4 per cent increase compared to the March-May period. The average number of exporters over the three months ending in August also stood at 4,630, up almost 14 per cent during the same period. But while some economic sectors faced challenges due to restrictions this year, others such as e-commerce, logistics and healthtech have thrived in recent months, 30 November 2020

driven by digital transformation. “Companies are reinventing their business models and fast-tracking digital strategies as they prepare for a post-pandemic recovery,” says Buamim. As a non-profit that seeks to support businesses in Dubai and promote the emirate as an international hub, Dubai Chamber has remained “fully engaged” with its community to keep them informed of the latest economic developments, market trends and global opportunities, the CEO states. “A few months ago, we launched the Business Connect portal – which has helped companies deal with the impact of Covid-19. Through this experience, we have learned the importance of investing in innovative solutions and adapting to new market conditions,” he adds.

THE STARTUP FOCUS A big emphasis for Dubai Chamber has been the small and medium business sector. Although many SMEs have been hit hard by the crisis, Buamim asserts that several new opportunities have also opened up. In line with market trends, a growing number of startups are emerging in the fintech, healthtech, education, e-commerce, sustainability, wellness and supply chain spaces. “While Covid-19 has posed some challenges for startups and SMEs in Dubai, it has also created an opportunity for young and smaller businesses to experiment, innovate and reinvent existing business models. B2B technology startups, in particular, have demonstrated greater resilience as they capitalised on new market opportunities and benefitted from the various programmes, initiatives and support offered under Dubai Startup Hub, which is Dubai Chamber’s entrepreneurship arm,” he explains. Established by Dubai Chamber in 2016, Dubai Startup Hub aims to encourage entrepreneurship in the emirate. In the first half of 2020, it supported 1,200 startups through various initiatives such as gulfbusiness.com

PHOTO: AFP VIA GETTY IMAGES/KARIM SAHIB

FEATURES / ECONOMY

organising over 20 webinars focusing on topics such as funding, banking, global expansion, market research and data. This year, it also held the first edition of the Emirati Development Programme – an initiative delivered jointly with Dubai Technology Entrepreneur Centre (DTEC) to provide Emirati startups with one-on-one mentorship support. The programme saw 30 Emirati entrepreneurs graduate with 88 per cent of them “furthering their business ideas after graduation”, states Buamim. “Another interesting trend we have seen this year is a growing interest in Dubai among startups from other countries such as India, China and several African markets. We have capitalised on this demand with the recent launch of the first-ever Dubai Tech Tour, a virtual trade mission organised in co-operation with Dubai Chamber’s Mumbai office, which is joined by 15 Indian scale-ups specialising in fintech and healthtech,” he explains. Dubai Startup Hub also held the annual Dubai Smartpreneur competition – now in its fifth edition – which concentrated on the areas of mobility, sustainability and opportunity this year. It received 300 applications, a 23 per cent increase compared to the previous cycle, with 82 per cent of the business ideas submitted by UAE-based startups. “This is an indication that the entrepreneurial spirit in the UAE remains very strong, while these young startups are bringing unique business concepts that fill market gaps and drive sustainable growth,” gulfbusiness.com

Business conditions in Dubai’s non-oil private sector improved for the third straight month in September

Dhs45bn Combined value of exports by Dubai Chamber’s members between June and August 2020

states Buamim. Overall, the amount of funding secured by Dubai Startup Hub’s members in the first half of 2020 accounted for 90 per cent of the full year of 2019. “This is a positive sign that businesses are looking to startups to kick-start new projects and take digitalisation efforts to the next level. There is now a renewed sense of optimism among startups as business gets back on track and companies prepare for a busier and more eventful fourth quarter,” says Buamim. Dubai Chamber is currently preparing to launch a new programme for more established startups (scaleups) in Dubai, as well as a new edition of the Dubai Startup Hub networking series to offer guidance on how to launch startups in particular sectors. It also plans to launch a comprehensive report on the startup outlook for 2021 by the end of this year. Looking ahead, the prospects in Dubai and the UAE remain strong for startups, stresses Buamim. The recent reshuffling of the UAE government is a “strategic move aimed at harnessing the power of the digital economy in the post-Covid era”, with the appointment of a new minister of state for Entrepreneurship and SMEs - Ahmad Belhoul Al Falasi - highlighting the sector’s importance. “Startups will have a major role to play in advancing these efforts by driving innovation and supporting the country’s transition to a digitally-driven economy,” adds Buamim.

November 2020 31

PA R T N E R C O N T E N T

Digital inclusion: A driver of change Investing in payment digitisation will drive financial inclusion, economic growth and wellbeing in today’s new reality, states Elias Aad, vice president, Business Development and Government, MENA at Mastercard

hile countries and cultures around the world may differ in many aspects, governments are united in their quest for economic growth. As we gradually transition into a postCovid-19 world, this will become even truer. Amidst the resurgence of economic activity will be hopes for inclusive growth, an improved standard of living, lower unemployment, and a movement towards a more equal society. More than ever before, all of these now rely on a digital infrastructure to thrive. Even before this pandemic, emerging markets in particular were increasingly recognising the need to digitise their payments economy and reduce cash dependency as a way to achieve financial inclusion and citizen wellbeing. In this context, I believe payment digitisation will undoubtedly not only alleviate many of the downsides of cash, but also create avenues for growth and innovation for people and businesses to thrive. A study that I conducted with my team at Mastercard reinforces this statement. The research found that cash continues to represent 85 to 90 per cent of all consumer transactions globally, and often comes with significant direct and indirect costs including lost tax revenues as well as production, handling and transport costs. Cash is also the main currency of a shadow economy, which weighs down governments with indirect costs due to crime, corruption and associated law enforcement operations. A 1 per cent decrease in the shadow economy decreases corruption by 0.81– 1.14 per cent. Our study calculated the total cost of excessive cash usage at 3.2 per cent to 4.5 per cent of global GDP. Payments digitisation allows governments, businesses and citizens to thrive in an ever-changing, pressurised and complex global economy by

“Even before this pandemic, emerging markets in particular were increasingly recognising the need to digitise their payments economy and reduce cash dependency as a way to achieve financial inclusion and citizen wellbeing” Elias Aad Vice president, Business Development and Government, MENA at Mastercard

– counterintuitively – carrying less cash. To elaborate, when an unbanked member of the community begins to move from cash transactions to digital payments, and becomes financially included, their future starts to brighten and the whole economy begins to thrive. Take for instance farmers who are able to sell their produce on a marketplace app that allows their payments and receivables to be recorded digitally, thus enabling them to access credit facilities. This in turn helps them buy more seeds or land, growing their produce and business in the process. According to a study by Moody’s Analytics, each 1 per cent increase in the use of digital payments produced an average annual increase of $104bn in the consumption of goods and services. This represents a 0.04 per cent increase in GDP in developed markets and a 0.02 per cent increase in developing ones. Every contribution will count when commercial activities resume in earnest. At Mastercard, we’re working with governments on digitising their economies to benefit from the associated economic growth, and offer citizens and visitors a seamless digital journey. We partner and work with central banks, cities, ministries and government authorities to advise and streamline implementation of digitisation initiatives, supported by our global network of specialised partners. We focus on fostering public-private sector collaboration and partnership, as it’s unrealistic to expect governments to pursue economic development alone. We achieve

ILLUSTRATION: GETTY IMAGES/BOBMADBOB

this by understanding their expressed and unexpressed needs, and consequently engage with them to develop their digital payments economy blueprint through our proprietary advisory methodology: Mastercard’s PEDD (Payments Ecosystem Design and Development). PEDD leads to the development of the strategic initiatives required to develop cashless programmes that accelerate digital innovation initiatives and modernise national payment infrastructures. It builds and deploys solutions and digital platforms. Our white paper ‘Cashing Out: Economic Growth through Payment Digitisation’ discusses this in detail. Additionally, we focus on making tech work for people, particularly for events such as Expo 2020 Dubai, via our Mastercard urban collaboration model, City Possible, and Mastercard Lab for Financial Inclusion. Such initiatives are also starting blocks for future smart cities as they digitise the citizen journey within the payments value chain, thereby creating a seamless experience.

$104bn

Of average annual increase in the consumption of goods and services for each 1 per cent increase in the use of digital payments produced, according to a study by Moody’s Analytics

Take for example Mastercard’s active role in supporting the Central Bank of Egypt to develop its strategy for the digital payments economy coupled with the Egyptian government digital payroll solution. This initiative has financially included millions of citizens and blue-collar workers, and has grown into one of the largest such programmes in the world. Also in Egypt, Mastercard built an interoperable mobile ecosystem and digital wallet – the first of its kind globally. Launched in partnership with the Central Bank, it serves more than

13 million users in the country, enabling more than 30 per cent of the Egyptian population to engage with electronic financial services. Earlier this year, we also launched phase 1 of our smart city vision that we developed for the city of Beirut, enabling inhabitants to pay their municipal fees digitally and seamlessly. A digital future provides a range of choices in a competitive society, usually leading to a happy nation. One of the choices to make is to be digitally and financially included in an economy. This gives consumers and businesses, banked or unbanked, a choice in payment methods, as well as easy ways to retrieve and view their funds. They will have better access to credit, the ability to access seed capital to launch a small enterprise, and the opportunity to conduct business in the palm of their hands. It is the right time to focus on digital inclusion. Through partnerships, we can achieve a digital payments economy that includes the economically disadvantaged, mitigates the costs of cash, and achieves the economic growth and wellbeing that we want for our societies.

SHAPING THE FUTURE OF SME BANKING BY

ZAINAB

MANSOOR

Small and medium enterprises have come a long way in terms of financial inclusion and economic growth, driven by access to capital, bespoke products and digital enablement

mall and medium enterprises (SMEs) play a defining role in most economies. They represent around 90 per cent of businesses and over 50 per cent of employment worldwide, and are a core engine for job creation, economic diversification and social stability. Understandably, the development of the SME ecosystem ranks high for most economies. This trend is expected to gain further force as 600 million jobs will be needed by the year 2030, according to World Bank estimates. Regionally, the SME sector has grown substantially, driven by government initiatives. In the UAE alone, supporting SMEs has been a priority for the government, as part of a broader plan to diversify the economy and generate employment opportunities. 34 November 2020

As per the Central Bank, UAE banks provided Dhs93.4bn worth of loans to SMEs during the first quarter of 2020, marking an increase of 4.3 per cent compared to Dhs89.5bn in Q4 2019. Meanwhile in Saudi Arabia, SMEs currently contribute 21 per cent to the GDP, and one of the objectives of Vision 2030 is to increase it to 35 per cent by 2030, a KPMG report states. “Recognising the strategic importance of the SME sector, the Saudi government has launched multiple programmes to solve its recurring issues and leverage its growth potential. The Saudi Industrial Development Fund is focusing on growth of the industrial sector SMEs and has developed a business resource centre, modernisation centre and financing facilities for SMEs. The Ministry of Finance has launched the SME loan guarantee

programme ‘Kafala’, to facilitate bank lending to SMEs,” the report expounds. Meanwhile, Bahrain’s Ibdar Bank, Labour Fund Tamkeen and the Islamic Corporation for the Development of the Private Sector launched a $100m fund to invest in Bahrain’s SMEs. The kingdom also reportedly consented to award 10 per cent of all public contracts to SMEs. “We have always regarded SMEs as the engine of economic growth and the entrepreneurial spirit is one of the most important economic drivers as it breeds new opportunities through innovation. The SME market in the Gulf region is projected to be worth as much as $920bn in 2023 with an employment potential of 22 million. As such, there will be a growing demand for financial partners to step in to support their needs and growth aspirations,” says Rehan Ali, head of Business gulfbusiness.com

ILLUSTRATION: GETTY IMAGES/CSA IMAGES

FEATURES / FINANCE

gulfbusiness.com

November 2020 35

FEATURES / FINANCE

Banking at National Bank of Fujairah (NBF).

GROWING PORTFOLIO Banks in the region have widened their product offering for SMEs, complemented by digital transformation. Mature regulatory infrastructures, customised financial products, greater transparency and adoption of innovative technologies have deepened the connect between the SME and banking ecosystems. Last year, Dubai-based Emirates NBD launched E20., a digital bank for entrepreneurs and SME businesses, helping them furnish their banking requirements through a mobile app. Mashreq Bank also launched its digital banking proposition, NEOBiz. “Our NEOBiz product is a fully digital business bank primarily for startups, entrepreneurs and small businesses, and provides a fully digital onboarding experience with a 20-minute account application,” says Rohit Garg, executive vice president and head of NeoBiz at Mashreq Bank. “But we also recognise that a one-size fits all model often doesn’t work because of how diverse the SME market is – you simply can’t serve them all the same way. We take the time to get to know our customers’ businesses and address their unique needs and challenges with bespoke solutions, from tailor-made business banking accounts, and trade and working capital solutions, to FX and insurance services.” Meanwhile, National Bank of Fujairah launched ‘NBF Connect’, a banking platform for SMEs, offering access to a set of services, solutions, and knowledge-sharing capabilities. “The response to NBF Connect has been very positive so far. Our main objective was to digitise the sector as well as foster a community in which SMEs can thrive. More so, we wanted to create a one-stop shop for SMEs,” notes Devid Jegerson, head of customer experience at NBF. The digital revolution has been further compounded by the onset of the Covid19 pandemic. As the virus spread, forcing small businesses into near hibernation, multiple banks stepped up their digital game to lend support to the SME sector. 36 November 2020

UAE-based Emirates Islamic offered its business banking debit cards to eligible SME clients, for free, to support their cash flow requirements. First Abu Dhabi Bank too partnered with Etisalat Digital to launch a digital invoicing solution for SME merchants, enabling them to accept card payments in a secure manner. “During times of crises, SMEs are often the most vulnerable, and this has been no different during the pandemic. I think we’ve been very fortunate in the UAE though, as the Central Bank acted quickly and effectively, announcing sub-

“AS THE VIRUS SPREAD, FORCING SMALL BUSINESSES INTO NEAR HIBERNATION, MULTIPLE BANKS STEPPED UP THEIR DIGITAL GAME TO LEND SUPPORT TO THE SME SECTOR” stantial stimulus packages which helped banks extend support to customers and provide much-needed relief,” opines Mashreq’s Garg. Ali at NBF adds: “The massive disruption caused by Covid-19 has really impacted demand across many industries including the SME sector. When the pandemic hit, we did a number of things to help our customers. We deferred liability payments, as well as interest and reduced interest rates to help SMEs reduce their overall financial expenses. We also extended incremental facilities to clients who needed to kick-start their business and offered financial support by helping them to pay their employees’

salaries, utility bills, as well as rent through short-term bridge facilities.”

CHARTING THE FUTURE COURSE

SME enterprises have faced several barriers in recent years that impeded their financial inclusion. Lack of capital to start, sustain and grow the business – primarily due to credit and transparency concerns of lenders – dented the prospects for many businesses. However, the provision and usage of responsible financial products and services through digital channels could be a game changer for SME financing, a report by the World Bank Group explains. The delivery of digital financial services can be furnished via a number of players: fintech firms; banks and financial institutions that either adopt these new products and services or partner with fintechs to deliver them; dominant technology companies; and mobile network operators, the report adds. “We view fintech companies as important partners, not competition, and are constantly looking at ways to collaborate with them to enhance the customer experience,” says Garg. “In the past, banks were certainly more wary of the perceived threats that fintechs posed, but as time has gone on, it’s become increasingly clear how much value they bring to the table. We strongly believe collaboration and cooperation with fintechs is the right approach, helping us to drive financial inclusion as well as launch innovative products for businesses.” Furthermore, collaboration between technology-driven entrants and traditional lenders may help form a data-driven financial ecosystem. “As a bank, we recognise and appreciate the growing role of fintechs in the industry. We don’t perceive their presence as a threat, but rather as an opportunity that allows us to join forces with them to deliver easy and user-friendly experiences. We have collaborated with fintechs before and will continue to do so as we are working towards a common goal which is centred on enhancing user experience and equipping our customers with the most innovative and efficient tools to navigate their business journeys,” says NBF’s Jegerson. gulfbusiness.com

PARTNER CONTENT

Understanding the ‘new normal’ for financial services Organisations that accelerate their digital strategies are likely to be the businesses that will see an effective economic ‘bounceback’, says Keith Pearson, senior director of Financial Services at ServiceNow

or financial s ervices organisations, finding the balance between tech innovation versus regulatory and compliance obligations has, understandably, favoured the latter. However, as the current pandemic has shown, businesses need both flexibility and resilience to adapt to rapidly changing conditions, with the correct infrastructure underpinning the operational approach. We have to take a long-term view because the current situation is unprecedented. The much discussed ‘new normal’ that emerges in the coming months will be characterised by an increased focus on operational resilience, a need to ensure the safety of employees and the suitability of their environment, and an acceleration of tech-enabled solutions and digital workflows that address the needs of a semi-remote workforce. The complicating factor in this picture is that we are likely to be living with low interest rates for some time to come. This constrains the ability of financial institutions to invest in these solutions. Along with what may become the worst recession in living memory, reduced interest rates will drive financial services institutions to become more efficient, reduce silos and get smarter about how they deliver digital transformation. Investment budgets may be slashed, and the programmes that do go ahead will need to deliver rapid time to value. This is where ServiceNow has a huge role to play. As we continue to release solutions specifically designed for financial services, we can help organisations slash development times for new services – optimising investment by giving them the ability to build something or create a prototype – rather than spending months pondering business cases or detailed designs. ServiceNow has been working hard to help

gulfbusiness.com

Keith Pearson, senior director of Financial Services at ServiceNow businesses navigate the impact of Covid-19. At the heart of our efforts is a new suite of capabilities released as part of our Covid-19 Customer Care Programme, developed to support our customers in managing the impact of the crisis while maintaining our commitment to deliver. We have also been developing solutions for financial services specifically, recognising that the pandemic has brought about unprecedented challenges for banks and insurers particularly.

MANAGING THE CRISIS AND ITS ‘LONG TAIL’ An example is the new small business loan management that has been released by our partner INRY, based on ServiceNow customer

service management (CSM) technology. It’s designed to help streamline the process of getting much-needed financial help to businesses impacted by the pandemic. The app was developed directly in response to the challenge many financial services providers in the US faced in dealing with the sheer volume of applications they received from the SBA paycheck protection programme. Banks faced a very immediate problem, so the app needed to be built quickly. It was – total development time was four weeks from the app’s conception to deployment with customers. The app is now readily available to help any bank or lender manage the huge influx of applications they are experiencing. The need now moves on from loan application to loan maintenance, and in some cases forgiveness. The app is also designed to help banks manage the inevitable long tail of enquiries, disputes and resolutions that can result from these government schemes. Digital transformation has never been more important. The organisations that accelerate their digital strategies are likely to be the businesses that will come out of the recovery best, with an effective economic ‘bounce back’ being driven by those who can effectively harness powerful technology-enabled solutions. With these new tools, ServiceNow is helping financial organisations find the balance they need between the optimisation of investment and the speed and flexibility required by the ‘new normal’.

The complicating factor in this picture is that we are likely to be living with low interest rates for some time to come November 2020 37

FEATURES / TECHNOLOGY

TURNING THE TIDE

The economic future of the GCC looks bright as startups drive change through advanced technologies By David Ndichu

he Middle East was late to the first, second and third industrial revolutions. Recognising that it cannot afford to be behind the curve for the fourth, it is now leading the charge. Underlining the fourth industrial revolution is the growing application of emerging technologies such as AI, cloud computing, robotics, blockchain, IoT, and 5G. And a new generation of innovative entrepreneurs in the GCC is leveraging these technologies to disrupt industries, and ultimately, economies. Take motor insurance, an industry fraught with fraud, incessant disputes, and buried under reams and reams of paper documentation. A Dubai-based startup seems to have found a solution to this intricacy through blockchain. After a motor accident, insurance A pays for repairs and then claims money from insurance B, in a process called recovery. It typically takes upwards of six months to recover such funds between insurance companies even for a minor accident. According to Walid Daniel, co-founder and CEO of blockchain startup Addenda, Dhs1.8bn per year is stuck in recovery in the UAE alone, due largely to the incredible volume of manual paperwork involved. “Resolving even a minor car accident would involve up to 20 documents on either side, including discharge notes, invoices for repairs, quotations, police reports, and others,” Daniel observes. Addenda has digitised that process from start to finish on the blockchain, allowing insurance companies to have a single point of truth when reconciling with each other, he says. Motor insurance fraud is also a major problem in the region and elsewhere. In the UAE, 10-15 per cent of claims are fraudulent, Daniel reveals, in what has almost become the accepted cost of doing business. Addenda also aims to solve this problem. The company has thousands of accident reports, hundreds of thousands of photos of car crashes and car repair costs already on its blockchain. “So ultimately, we intend to use business logic and to use algorithms to flag suspicious transactions. By applying several fraud indicators, you can identify a pattern for per year is stuck in fraud,” Daniel adds. insurance recovery The company already counts the biggest insurance in the UAE mainly companies in the region including Oman Insurance, because of the ADNEC, Noor Takaful, Watania Insurance, Oriental volume of manual Insurance, and AXA, among others as clients. paperwork involved

Dhs1.8bn

38 November 2020

CHANGING CARE A crisis tends to see the rise of startups that can fill market gaps and it has been no different during the current Covid situation. Okadoc is a UAE-based startup that provides an instant doctor booking platform. Patients can see the real-time availability of doctors and book an appointment at any time of the day. The process takes less than 30 seconds, in contrast to the lengthy process of phone booking which may take up to 10 minutes and is typically available only during working hours. At the onset of Covid-19, hospital switchboards were inundated with worried patients asking questions about the new virus. Digital platforms such as Okadoc stepped in to ease the strain on overwhelmed hospital call centre operators, says Fodhil Benturquia, CEO and founder at Okadoc. A few weeks later countries went into lockdowns, and hospitals faced a separate predicament – patients were not allowed to get to hospitals unless in emergency cases. To continue interacting with their patients, telemedicine became the new imperative. Okadoc unveiled a telemedicine platform in April, accelerating the rollout by about a year. Within weeks, Okadoc had signed up more than 500 doctors on the telemedicine platform, says Benturquia. “We have gained at least five years of adoption through Covid-19,” he adds.

AI CHATBOTS Universities and colleges registration offices go through a familiar cycle every year. The beginning of the academic year sees a surge in activity as students enrol and then there’s a lull for the rest of the year. To streamline and simplify that process, Batterjee Medical College in Saudi Arabia now allows students to enroll via WhatsApp. The Jeddah-based college has a Dubai-based startup, Arabot, to thank for this shift. Arabot has built an AI-enabled chatbot to deliver Arabic-language chat functions on WhatsApp. For prospective students, registration has now been reduced to something resembling a cordial chat gulfbusiness.com

FEATURES / TECHNOLOGY

Supporting what is arguably a disparate and uncoordinated industry in Saudi Arabia – the vehicle value chain sector – is a new SaaS platform, Speero. The startup aims to exploit the industry’s potential by digitising the vehicle purchase, insurance, repair, and resale process. “Now Saudi Arabia has a digital platform that can be used by all stakeholders in the automotive value chain including insurance companies, suppliers, repair shops and customers,” says Abdullah Bin Shamlan, co-founder and MD at Speero. The next objective for Speero is to introduce maintenance to complete the entire customer journey by making repairs a more transparent affair.

ILLUSTRATION: GETTY IMAGES/JORG GREUEL

CHALLENGES

between friends; for the college, relief from an arduous task no one looks forward to. Organisations of other stripes routinely receive numerous inquiries regarding office location, working hours, CV applications, etc. These are fairly mundane inquires that can be automated using a chatbot. “We identify the top inquiries coming to the call centre or through digital channels, such as Facebook or Twitter or WhatsApp, and then automate the interaction process end-to-end using the chatbot,” explains Abdallah Faza, co-founder and CEO of Arabot. Faza claims Arabot built and is managing the largest Arabic WhatsApp chat in the world for logistics giant Aramex. Starting with Facebook Messenger in 2016, the chat service shifted to WhatsApp in 2018. Today the Aramex chatbot reaches over six million customers. Arabot is also building a chatbot service for Yas Island Abu Dhabi, that will eventually manage customer interactions and experiences at the leisure destination. gulfbusiness.com

With these technologies yet to completely gain ground, startups still have to navigate unfamiliar terrain. For AI, the sheer amount and quality of data required to teach AI models is a major challenge in the region. In the case of Arabot, recognising all Arabic words and their context requires feeding machine learning algorithms with massive amounts of data. “The region lacks enough data, and even less so, data with low noise – noisy data is data with a large amount of meaningless information in it,” explains Faza. Although funding for startups has increased by leaps and bounds in recent years, the region still lacks the vibrant ecosystem of more mature startup hotspots such as Silicon Valley. “We have solutions. The next stage is for investors to believe in what we are doing,” says Speero’s Shamlan. Change management is another serious challenge, says Daniel. In the case of insurance, the ability to convince industry players to adopt tech is tough when many insurers have no business continuity plans. How the industry responded to Covid-19 is indicative of this laxity. Many insurance companies almost shut down completely as most don’t even allow remote access to their systems. “Disruptive technology on its own is insufficient. If it allows for a sufficient reduction in overheads and cost-cutting, only then will companies be interested in being on board,” says Daniel. If there’s a silver lining to the Covid-19 pandemic, it is how it has lifted most people’s familiarity with technology. Telehealth is one such example. “Telemedicine is safe and it’s efficient. Covid-19 has boosted the acceptance of this new way of providing healthcare,” Benturquia explains. Emergent technologies in the hands of innovative startups are a powerful tool as the GCC countries seek to take the reins of technology-driven post-oil economies.

November 2020 39

BRAND VIEW

Phi Trends: Why gaming stocks are hitting big The global gaming sector has transformed from being merely a form of entertainment to a booming industry that has strong investment potential, opines entrepreneur and investor Shailesh Dash, who shares his market perspective in this monthly column

he world has seen a dramatic shift in need and preference due to the higher proliferation of technology in our daily lives. New social connectivity platforms and monetisation streams are making activities that were once considered fringe to be more mainstream. One of the best examples is the gaming industry, which has grown significantly over the last couple of decades. Once limited to arcade style games, the industry has now evolved into a graphically striking and more immersive form of social engagement. The online gaming ecosystem has been largely enhanced with technology applications like virtual reality (VR) and blockchain, which are likely to become the cornerstone of the industry’s long-term growth. It has been further aided by the growing popularity of multi-functional gaming consoles, the latest trend in the ‘plugand-play’ gaming platform. As such, the global gaming industry has transformed from being merely a form of entertainment to a booming industry that is not only luring a wider audience across ages and geographies but also engaging businesses to mobilise the channel for sponsorships and brand endorsements.

It is estimated that there are currently more than 2.7 billion gamers across the globe, an incredible two-fold increase in just five years. Moreover, the global gaming industry is now considered to be larger than the TV, movie, and music industries combined. In 2019, the gaming industry generated revenues of over $145.7bn according to Newzoo, eclipsing global box office ($43bn) and record music ($19bn) revenues. The dynamics driving the industry were further amplified by the Covid19 pandemic, which has compelled people to stay home and fueled a rise in interest towards gaming. The rate of adoption of online gaming has increased as a new medium for entertainment and social interaction. Consequently, video game playing times have surged multifold across the world with revenues anticipated to reach approximately $159.3bn by year-end. It is further projected to reach $200.8bn by 2023, signifying unprecedented growth that will continue to challenge traditional entertainment platforms. Of the three major online gaming types (PC, console, and mobile), mobile gaming platforms are likely to account for the largest share, of which smartphone games are expected to contribute

Performance of top gaming stocks Company Name

Activision Blizzard

Market Cap (USD bn)

Revenue (USD bn)

EPS (USD)

P/E Ratio

P/B Ratio*

EV/ Sales

62.2

6.5

2.3

35.5

4.5

8.1

EV/ EBITDA

22.1

Tencent

697.0

56.1

1.4

44.3

8.7

1.6

Nintendo

72.5

12.4

1.4

19.9

4.5

4.4

NetEase

61.2

8.9

24.8

24.0

4.7

0.8

2.9

Take-Two Interactive

19.2

3.1

2.3

74.7

7.3

4.9

21.7

10.9

6.2

89.9

24.5

25.8

76.9

Nvidia *Note: Data as of October 16, 2020

340.9

5.2 16.1

over 80 per cent in revenues. With the 5G era already in place across major economies, the mobile market will transform the online gaming industry to newer heights. Hence, the outlook for the market remains robust due to strong fundamentals, which have spurred investor interest in recent years. Major gaming stocks have witnessed healthy growth in 2020, with positive YTD performances. This further highlights the industry’s appeal and resilience despite pandemic-induced challenges. Activision Blizzard, which owns prominent gaming franchises (such as Call of Duty, Candy Crush) has taken several strategic initiatives during the pandemic such as introducing freeto-play models and esports to gain traction. As a result, its user base grew 31 per cent yearon-year to 428 million active users in Q2 2020, while its revenues surged 270 per cent y-o-y to reach $993m. Notably, the company’s free cash flow surged 494 per cent in Q2, while its EPS rose 53 per cent. Tencent Holdings, with major operations in e-commerce, digital payments and online gaming, has also emerged as an outperformer during the crisis period. Heavy reinvestments into its businesses have enabled strong earnings growth, and in Q2 2020, the company’s revenue rose 29 per cent y-o-y to $16.2bn. The impresStock Price 52-Week sive results, along with (USD) High Low the company’s acqui80.62 87.7 50.5 sition plans (Sogou) depict its resilience 72.7 74.2 40.0 in the worst-affected 68.9 72.8 35.8 periods of 2020. 88.5 103.5 53.2 Consequently, Tencent’s stock has 168.2 180.6 100.0 surged roughly 51 552.5 589.1 180.7 per cent YTD, and demands a strong SOURCE: BLOOMBERG, YAHOO FINANCE P/E of 44.3x. Similarly,

Shailesh Dash

global gaming giant Nintendo has emerged as a winner during the pandemic as its video games saw massive sales in 2020 (hardware, software, and net sales surged 167 per cent, 123 per cent, and 108 per cent y-o-y in Q2, respectively; while EPS climbed 541 per cent). NetEase also recorded a strong financial performance, with net revenues and net income surging 26 per cent and 32 per cent y-o-y respectively in Q2. Analysts expect the company’s revenue and earnings to further rise 24 per cent and 15 per cent, respectively, during the year. Meanwhile, Take-Two Interactive has more than doubled its revenues over the past two years with profits growing even faster, primarily driven by the Grand Theft Auto (GTA) franchise. This has pushed the company’s stock price up 366 per cent since 2018. The company has also built diverse new titles, and in June 2020 was recognised for having three of the top 10 selling games globally. Already trading at an expensive P/E of 74.7x, its

upcoming GTA V update, coupled with strong expansion potential within mobile platforms, esports and in-game spending, are likely to boost margins, sales and profitability over the next few years. Lastly, graphics-chip maker Nvidia is also a lucrative buy in the current environment, as an enabler of growth in the online gaming sphere. The company recently launched a host of new products related to AI, data centre operations and collaboration tools, which pushed its stock remarkably higher. Moreover, the company’s $40bn acquisition of chip designer Arm is another strategic move that will strongly position it for further growth and expansion in the gaming sphere. NVIDIA now boasts of a P/E at nearly 90x, and analysts expect its EPS to grow by over 17 per cent annually over the next five years. Poised for success, gaming companies are increasingly lining up for public listings, and the long list of upcoming IPOs present a strong opportunity for investors to benefit from companies

Technology is driving limitless possibilities in the online gaming market, making the industry a charm for populations of all ages and connecting people across continents with significant growth potential. Notably Playtika, backed by prominent Chinese investors and competitor of gaming major Zynga, is currently planning a $1bn IPO that will value it at $10bn, while Roblox, another gaming success that is on track to double its revenues in 2020, is also eyeing a listing. Many more upcoming IPOs from companies including Guild Esports, AppLovin and Skillz present unending opportunities within this arena. It is prudent for investors to maintain appropriate cash positions at all times to capitalise on any downside in recommended stocks with a medium to long-term horizon. Technology is driving limitless possibilities in the online gaming market, making the industry a charm for populations of all ages and connecting people across continents. Furthermore, high levels of player engagement within global gaming franchises is leading to the transition of a recurring-revenue subscription offering that enhances the industry’s appeal. This structural change in the industry has started drawing increased attention from investors, especially towards esports, video streams and mobile gaming. Thus, as a leading entertainment industry, the potential of the gaming market can no longer be underestimated. Imminent advancements in terms of performance through graphic design, VR/AR integration and programming will stand as a testimony to the long-term growth prospects of the industry. Accordingly, investors that join the rally in its infancy will undoubtedly reap rich benefits in the long-term.

Disclaimer: This column is purely for academic and educational purposes. Nothing mentioned here should be taken as solicitation to trade or a recommendation of a specific trade. The author has direct exposure in recommended stocks.

FEATURES / UAE-ISRAEL

FORGING NEW TIES

In an exclusive interview, co-founders of the UAE-Israel Business Council Fleur Hassan Nahoum and Dorian Barak outline how the peace deal will alter the bilateral economic landscape Aarti Nagraj

“I

t feels like we are dating” – those are the words that Fleur Hassan Nahoum, Jerusalem’s deputy mayor uses when describing the new relationship between the UAE and Israel. “In all our conversations and the new friends we’ve made, what is really clear is that both sides have a real thirst for a warm peace. And I’ve never experienced that. I think we are living in historic times, we are curious about each other and we want to get to know each other. It’s so interesting and exciting – we are really making history here,” Nahoum, who is also co-founder of the UAE-Israel Business Council, tells Gulf Business. There has been a strong momentum following the signing of the historic Abraham Accords between the UAE, Bahrain and Israel in the US in September. Last month, the first-ever official delegation of UAE ministers visited Israel, where a number of landmark agreements were signed across sectors including investment, tourism, financial services and technology. The UAE, US and Israel have also jointly established a $3bn Abraham Fund to help stimulate private sector-led investments across the region. The fund will bolster regional trade, enable strategic infrastructure projects and increase energy security. From a business perspective, it is almost as if the floodgates have been opened in terms of potential collaborations between the UAE and Israel, opines Dorian Barak, also a co-founder of the UAE-Israel Business Council. The council, which was established in June of this year – prior to the peace treaty being signed between the countries – aims to foster economic cooperation and business partnerships between the two sides. “I think there are three specific areas where you are really going to see the floodgates open. The first is employing the UAE – and Dubai in particular – as a hub [by Israeli companies]. It is an unparalleled hub for Israeli companies to tap the greater Middle East, 42 November 2020

Fleur Hassan Nahoum, Jerusalem’s deputy mayor

Dorian Barak , cofounder of the UAEIsrael Business Council

South Asia, East Africa and in fact the entire Indian Ocean base. I think you are going to see a lot of Israeli companies establishing themselves in this remarkable business hub,” he states. “The second is the direct export of technologies here in a much more organised and open way in areas where Israel is traditionally strong such as agricultural technologies, clean technologies, solar and other renewables. “Another area which is going to be interesting is that there is going be a lot of opportunities for Emirati businesses in Israel. Emiratis are very advanced when it comes to the hospitality industry, real estate development, construction, infrastructure – those are the areas where I think Israel will directly benefit from Emirati investors in a very broad way,” he adds. Currently, roughly 250 Israeli companies conduct trade with the UAE according to the council, with Barak estimating that number to double by the end of 2020. “By the end of the year you are going to have at least 500 Israeli businesses actively working here and this goes beyond all the interest we have had in the Jerusalem innovation ecosystem. Israel is a small market – so most companies have an international orientation. But there are companies that have been exploring the Emirates and the Gulf for quite some time and it will be those companies that will be the first out of the gate and first here in the UAE. Similarly, it’s those large very forward-thinking groups that you are going to see coming out to Israel very soon,” he adds. Some prominent UAE businesses have already announced plans for the Israeli market. Last month, UAE’s Al Naboodah Group announced that it has partnered with Israeli venture capital fund OurCrowd to form a $100m fund to support bilateral technology investments. Meanwhile Dubai-based Al Habtoor Group has revealed plans to open a representative office in Israel. Locally, Al Habtoor Hotels has also partnered with Elli’s Kosher Kitchen to introduce 24×7 kosher in-room dining food and beverage services at three of its properties in Dubai. gulfbusiness.com

PHOTO: ANADOLU AGENCY VIA GETTY IMAGES/MATTY STERN

With the two countries now signing bilateral visafree travel agreements and announcing plans to soon begin 28 weekly flights, tourism is another segment expected to receive a big boost from the deal. According to a report from Israel’s Tourism ministry, it is hoping to attract up to 100,000 tourists a year from the UAE. “Tourism is something which is very important to Israelis and Emiratis. And now we can travel on holiday just two to three hours away – in our own region – for the first time,” explains Nahoum. “We are also looking forward to receiving a new type of tourism – to Jerusalem in particular – which is Muslim pilgrims coming to pray in Haram Al Sharif. So the tourism ties are very significant and can bring a lot of accompanying benefits from it. At the council, we are not just facilitating these conversations, but we are actively looking for the opportunities to build deals that will be game changing for both countries.” She is also hoping that the deal will support another area that she has been advocating – the development of her city’s Arab sections. “Jerusalem, the largest Arab city in the country in terms of its population, is the perfect platform for building the bridge between the UAE, Bahrain and Israel. We have a part of the city that needs an influx of development and good job opportunities. We have a budding gulfbusiness.com

“Tourism is something which is very important to Israelis and Emiratis. And now we can travel on holiday just two to three hours away – in our own region – for the first time”

A press conference held to mark the first highranking official visit from the UAE to Israel in Tel Aviv on October 20

innovation atmosphere also in East Jerusalem with more Arab speaking engineers in the city than we have ever seen. All the pieces in the puzzle are in place and what we are trying to do in the council is put all the pieces together,” she says. Looking ahead, both of them believe that the deal could lead to the warming of ties with other countries in the Arab region. “We believe there’s going to be a domino effect...We hope that when they see the common prosperity and opportunity and the way that this goes very positively, others will jump into the fray sooner rather than later. We are very excited. The UAE gets the credit for really opening the floodgates,” adds Nahoum.

November 2020 43

PARTNER CONTENT

Preparing for tomorrow These three requirements are a must for the ‘new tomorrow’ in financial services, opines Martyn Crew, director of Solutions Marketing at Gigamon

hile the financial services industry is no stranger to unexpected events and their repercussions, the current global upheaval is creating unprecedented uncertainty. Faced with this, how should financial services organisations respond? First and foremost, they must focus on providing the best possible customer experience in terms of mobile and online application availability, performance and security. For network operations (NetOps) and information security (InfoSec) teams, this means delivering on three core mandates.

attackers are seeing new opportunities to exploit vulnerabilities and cash in on the changes being made in response to the pandemic. Financial services are particularly vulnerable and the current global climate is ripe for criminals ready to exploit an increased attack surface. KPMG has also warned that cyberattacks have surged and that financial services “firms will need to shore up their cyber defences”.

3. DO IT ALL WHILE OPTIMISING COSTS AMID SPENDING CONSTRAINTS

1 . D E P LOY A D D I T I O N A L CAPACITY AND SERVICES FASTER THAN EVER BEFORE Practically overnight, NetOps and InfoSec teams have to support a vastly different network landscape than before. They must ensure continuity and security while redeploying network resources to enable: Increased demand for mobile banking and online services: Work-from-home has made consumers and SMB customers increasingly reliant on mobile applications and online services. In response to this, financial services organisations have to quickly ramp up capacity for their existing capabilities. New online capabilities: At the same time, companies on a multi-year roadmap for digital transformation are condensing the plan to move up delivery of new capabilities within days or weeks as the situation evolves from work-from-home to return to work. Work-from-home: Many financial services companies closed their customer service call centres and transitioned their staff to work-from-home. Organisations that made this switch are now considering whether this will become a permanent model, and if so, what application, security and infrastructure changes are necessary to support this model.

44 June 2020

Financial services are particularly vulnerable and the current global climate is ripe for criminals ready to exploit an increased attack surface 2. SHIELD THE COMPANY FROM OPPORTUNISTIC CYBERCRIMINALS In this time of unprecedented change, the technology that financial services organisations and their customers depend on has never been more critical or more foundational. But with the world in flux and IT spread thin,

To deliver security, agility and scalability in a rapidly shifting environment and optimise costs with an uncertain budget, NetOps and InfoSec teams need a solution that provides: • Real-time visibility into all network traffic to understand and optimise performance and improve security • Analytics to optimise and manage network performance to accommodate and secure increasing volumes of data and traffic • A single pane of glass that simplifies network and security operations across physical, virtual and cloud environments • Threat detection and response to find and remediate threats on the network faster and minimise disruption

AUTOMATION IS KEY Industry analyst group Gartner identifies improvements in visibility and agility as one of the key benefits of what it calls NetOps 2.0, a set of principles that provide “new ways to operate networks” to keep pace with digital business. The firm recommends investing in network analytics and automation to reduce friction and improve collaboration between NetOps, InfoSec and DevOps teams, leading to the reduction of manual effort and streamlined value delivery. Adding network analytics and automation tools helps close the skills gap that exists in most organisations.

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FEATURES / ESPORTS

MONEY-SPINNING LEAGUE

Saudi DotA 2 League will conclude in December with a purse of over SAR2m

PHOTO: MICHAEL BOSKOVSKI ON UNSPLASH

David Ndichu

Lalit Vase, club director at Dubai-based esports club NASR Esports commended the initiative. “The league is a good thing overall because it shows the Saudi government is aware of how important esports is and that it is making the efforts through SAFEIS to support it. “Though it is limited to Saudi players only, it does set an example for other governments,” he adds. Edward Kondrat, sports executive at Empire Entertainment says the league is an important milestone for both the Saudi and GCC esports ecosystem. “One thing it proves is that there is a strong interest in building the industry and showering it with government support. It is going to be a great case study when we see the final numbers of viewership and quality of the broadcast,” says Kondrat. He says industry players will be watching closely to see the effect the huge investment will have on the regional esports industry. “Will it lead to a sustainable platform for teams and players to build their esports experience and grow to match the international level of play? Will it inspire new regional players to consider playing competitively? Will the overall perception of esports change in the region, especially when it comes to parents of these players? Answers to these and other questions will help us analyse the outcome of the league,” he explains. ESPORTS MAP

audi Arabia is hosting one of the most lucrative esports tournaments in the world this year. The Saudi Electronic League 2020, which started on October 9, will run to December 31 with prizes exceeding SAR2m ($533,000). The first tournament in the league is the Saudi DotA 2 League, involving eight professional esports clubs competing in the strategy game Defence of the Ancients 2. Six finalists will battle in the decisive round. Prince Faisal bin Bandar bin Sultan bin Abdulaziz Al Saud, the chairman of the gulfbusiness.com

Saudi Arabian Federation for Electronic and Intellectual Sports (SAFEIS) which is organising the tournament, said the federation aims through tournaments to increase the base of Saudi players involved in esports. The league will be available to watch for free via the SAFEIS Twitch and YouTube platforms, and there will be competitions for viewers. GOVERNMENT SUPPORT

GCC insiders expect the league to invigorate the regional esports scene.

The league is just one of several regional initiatives that are putting the GCC on the global esports map. Upcoming Saudi futuristic city NEOM will develop a major esports hub after the developers signed a deal with SAFEIS last year. The agreement calls for “initiatives aimed at making NEOM one of the world’s most prominent e-gaming hubs”. In the UAE, the Dubai Future Foundation is planning to build the region’s first esports-dedicated arena, the X-Stadium. In Abu Dhabi, an esports and VR gaming complex called Pixel is set to open in 2021 at Al Qana, an upcoming waterfront destination in the UAE capital. Beirut-based Robocom VR was signed to provide the content and technology for Pixel, which will also include an esports academy to train the next generation of UAE esports stars. The facility will also feature an events space to host tournaments as well as a games arcade. November 2020 45

FEATURES / TECHNOLOGY

How cloud platforms

ARE HELPING TO FIGHT THE COVID-19 PANDEMIC

New technologies are reshaping the way we live and work, writes Li Shi, regional president of Huawei Cloud and AI Business Group

he world has been severely affected by the pandemic triggered by Covid-19. All walks of life have been forced to overhaul their lifestyle and work habits, including nearly every industry within the Middle East. Such transitions would not have been possible without the proliferation of cloud-based services, which have enabled enterprises to swiftly alter their business models to catch up with the rapid pace of change. The new epidemic has changed people’s patterns of production and life, and it is a paradigm revolution. In the past, we often talked about promoting informatisation, from internet access to clouds and chains. This epidemic is a social phenomenon, which has forced production and life to change its mode. The situation has made it necessary to look at new technologies, industries and new business models in real scenarios. Many inflection points of business models have been reflected, such as e-learning, online healthcare, remote working, and digital conferencing. Imagine just for a moment if there was no cloud. The lockdown would likely have kept many businesses out of operation. Working from home would have been extremely tough. Online streaming services such as Netflix would not be entertaining so many people while delivery services also would have restricted reach. Instant messaging might have also had limited functionality. Behind the scenes, all of these real-world applications and services require robust cloud infrastructure to keep things running. 46 November 2020

Moreover, cloud-based services do more than just let people live as “normally” as possible amid these unprecedented times. The power of cloud has been shown in a wide range of scenarios, including complex tasks requiring a combination of AI and cloud computing. Take the example of digital governments. Data has become a production factor alongside land, labour, capital and technology, and is playing an increasingly important role in governance. Cities in China are exploring new governance systems, such as big data platforms and city ‘intelligent twins’. These allow governments to flexibly use big data resources and technologies to discover, analyse and respond to problems across economic and social operations from a broader perspective. They also optimise government management, services, and decision-making modes, and help build a new system that uses data to speak and make decisions. In terms of education, with so many students being schooled at home, online learning became essential – again requiring solid cloud-based infrastructure. On the healthcare front, new cloud-based AI research and development platforms are also being crafted to accelerate applications in genomics, drug discovery, and medical imaging. Looking more broadly at the region’s business community, enterprises of all sizes are receiving support to migrate their businesses onto the cloud to ensure continuous operations during the pandemic.

JOINT EFFORTS NEEDED Countries in the region have some of the most advanced ICT infrastructure, which has enabled governments, companies, schools, and other organisations to accelerate their digitisation initiatives and adapt more rapidly to pandemic circumstances. Cloud platforms in particular are becoming more widely applied, and as a result, nations are now increasing their investments in building digital capacity in recognition of it being a vital engine for driving post-pandemic economic recovery. Today, ICT companies in the region have a critical role to play in the evolution of digital economies working alongside governments, NGOs, and local communities to harness technologies like cloud computing to spur industrial innovation and investment. We also have a responsibility to create opportunities for exchanging commercial, policy and regulatory-related perspectives, and enabling knowledge exchange opportunities. Even before the pandemic, we often saw that people worked in silos with regards to technology development. This is something that must change in order for us to reap the plethora of opportunities that will be presented by a digitally-empowered, cloudenabled economy. gulfbusiness.com

FEATURES / TECHNOLOGY

numerous experts who can create customised solutions based on the unique requirements of anyone, from small to large enterprises or government entities. The value-added benefits of digital transformation are more prominent now than ever before, and we are eagerly stepping up and working with industry customers and partners to maintain stable network operations, accelerate digital transformation, and support efforts to reopen local economies.

ILLUSTRATION: GETTY IMAGES/ENDAI HUEDL

In your opinion, what are the main challenges to digital transformation?

In this interview, Huawei Middle East’s David Shi, president of Enterprise Business Group, talks digital transformation and how he expects the regional tech landscape to evolve What has been the impact of the Covid-19 pandemic on the regional tech landscape?

The Covid-19 pandemic has triggered accelerated digital transformation throughout the region, across all industries. Rapid adoption of new technologies has been necessary for many businesses to stay connected as seamlessly as possible during the restrictions of the pandemic’s lockdowns. ICT has become not only a crucial tool for combatting the virus, but also an engine for economic recovery. This year has brought to light the absolute necessity of technology’s role in society, for individuals, corporates and governments, and as such there is increased interest in building ICT capacity in all respects. While the pandemic-led crisis has accelerated the pace of digital transformation, are providers able to cope with the need?

Understanding and expertise in digitalisation and transitioning from legacy systems to digitalised infrastructure are often common challenges. However, these challenges can be overcome. As more enterprises and government entities recognise the need for digital transformation – especially in the region, where the governments are very proactive in pushing for an intelligent, connected society – they are appointing leaders with a digital mindset to spearhead the journey. This is increasing both the understanding and the acceptance of digitalisation. They are also turning to experts for advice and consultancy, as well as for products and solutions. In terms of transitioning from legacy systems to digitalised infrastructure, smart and innovative technology solutions are extremely flexible as well as scalable, and there are many possible scenarios that can be created to meet a variety of user requirements, allowing integration of ICT with core scenarios. For Huawei Enterprise, how has business been in the region so far this year?

2020 has been an extraordinary year, witnessing explosive growth in technologies together with reforms in different industries. We believe the tremendous potential of digital transformation is to be unleashed on the basis of synergy across five tech domains, in which connectivity, cloud, AI, computing, and applications develop in ways never seen before. This will empower industries to become more efficient as they progress in the fourth industrial revolution, while also enabling governments to become more accessible and deploy more streamlined operations. Looking ahead, what are your plans for the future? Are you looking at further expansion?

David Shi, president of Enterprise Business Group Huawei Middle East

Moving forward, Huawei will focus on applying ICT technologies to industries and providing scenariospecific solutions along with its partners to help enterprises grow their businesses and help governments achieve their strategic goals of boosting domestic industry, benefiting their constituents, and improving overall governance. Our ultimate goal is to build an open and sound industry ecosystem that will benefit all stakeholders and create new value for all industries.

Speaking in terms of Huawei’s capabilities, absolutely. We have an extensive portfolio of products and gulfbusiness.com

November 2020 47

FEATURES / TECHNOLOGY

Eyeing regional

TRANSFORMATION A business accelerator based on co-innovation will bring together government, researchers, tech companies and partners By David Ndichu

nnovation and partnership is in the DNA of Hewlett Packard Enterprise. The company has a rich history of pioneering some of the greatest innovations in modern computing, including the first programmable scientific desktop calculator, the first modern personal computer, the first LED, and many others. That commitment to discovery continues with the company’s launch of a global network of co-innovation hubs, dubbed HPE Digital Life Garage. The very first HPE Digital Life Garage was opened in Dubai earlier this year. The initiative aligns with the UAE Centennial Plan 2071, which centres on the improvement of communities and society at large through the use of technology, according to Rebecca Wright, director, Digital Life Garage, Hewlett Packard Enterprise, Middle East. “The UAE, and Dubai specifically, are at the forefront of shaping the future of the global economy by accelerating the adoption of innovation and ground-breaking technology, particularly through meaningful government and private sector cooperation,” Wright says. The HPE Digital Life Garage’s strategy is to build and maintain an ecosystem of local government, researchers, technology companies, service providers and others to jointly develop technologies that improve communities around the world. The centre also provides an opportunity for businesses and government agencies in the UAE to benefit from HPE’s AI, memorydriven compute and edge solutions, as well as opportunities to engage with the HPE 48 November 2020

projects, startups and service providers,” she adds. HPE’s regional partner Logicom got interested in the initiative after seeing HPE plans for the centre of excellence in Dubai. “We are excited to participate in a differentiated technology solution engagement with the partner ecosystem that can potentially drive significant value to our channel partners and their customers,” says Sajith Raj group director for Distribution – HP/HPE, Logicom Distribution. Logicom and its partners now have access to a state-of-the-art environment to create and test solutions before presenting them to customers. “The purpose of the engagement in the Digital Life Garage is to build solutions based on research and testing, in an environment where partners can join Logicom to use the facilities and infrastructure to collaborate and create with ecosystem partners,” says Raj. DIGITAL TRANSFORMATION

From top: The first HPE Digital Life Garage was opened in Dubai earlier this year; Rebecca Wright of HPE and Sajith Raj of Logicom Distribution

Global Network through worldwide programmes, products and services. “As a Silicon Valley company, HPE understands the value of a strong ecosystem of partners to deliver continuous innovation,” Wright says. “To allow flexibility, we offer a variety of different partnership models for customers, alliances, channel partners, research

HPE Digital Life Garage supports regional digital transformation efforts in various ways. For UAE government stakeholders, the centre will serve as a hub for scientific research and solutions to power technological innovations that help citizens. For businesses, it will provide technology to boost productivity and enable innovation, while also helping companies achieve competitive differentiation and a faster route to production. According to Raj, the centre will help position the company as one of HPE’s leading distributors in the region and elevate technology marketing by hosting technical enablement sessions for its stakeholders. “Access to the Digital Life Garage can also be a significant incentive for everyone involved in innovation and learning acceleration,” he adds. As the world continues to cope with Covid-19, HPE is using Digital Life Garage to develop Return to Work solutions to help companies manage the ongoing challenges from the pandemic. “Return to Work solutions will focus on enabling employees to work remotely and effectively managing the return to work sites,” Wright explains. The HPE Digital Life Garage is a major boost for the UAE’s and the Middle East’s digitisation efforts. As seen with the Return to Work solutions, the transformation is well and truly underway. gulfbusiness.com

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LOCKING IT IN Majority of firms plan significant investments to secure telework in the next two years David Ndichu

ecuring remote workplaces has emerged as an investment priority for businesses in the aftermath of Covid-19. According to the 2020 Remote Workforce Cybersecurity report by Fortinet, most organisations expect to invest more to secure telework long-term, with nearly 60 per cent of enterprises spending more than $250,000 in secure telework investments in the next 24 months. “During these times of rapid change, deploying fully-integrated security protections is a top priority for businesses,” says Alain Penel, regional vice president, Middle East at Fortinet. “With a hybrid work environment establishing itself as the new normal, businesses are working to put together the right combination of solutions to ensure their remote worker strategy can be managed efficiently, securely, and cost-effectively,” he adds. The report reveals the key areas in which enterprises are prioritising investments. The survey revealed that 65 per cent of organisations had VPN solutions in place pre-pandemic, but only 37 per cent of organisations had multi-factor authentication (MFA). While VPNs play an important role in ensuring secure connectivity, they are simply one part of securing access. Therefore, if not already in place, it is recommended that organisations consider integrating MFA into their remote security plans, says Penel. The report showed that 76 per cent and 72 per cent of organisations plan to either upgrade or adopt Network Access Control (NAC) or endpoint detection and response (EDR) solutions respectively. As employees work remotely, organisations face challenges to control the influx of non-trusted 50 November 2020

devices on their networks to enable remote work, creating new security challenges overnight. “By adopting NAC solutions, IT teams get increased visibility and control over the users and devices on their network. EDR solutions deliver advanced, real-time threat protection for endpoints both preand post-infection,” Penel explains. The study says 64 per cent of organisations plan to either upgrade or adopt SD-WAN, but specifically for the home office. “The critical advantage of extending secure SD-WAN functionality to individual teleworkers, especially super users, is that they can enjoy on-demand remote access as well as dynamically scalable performance regardless of their local network availability,” Penel says. According to the survey, 17 per cent of organisations made investments in Secure Access Service Edge (SASE) before the pandemic, and 16 per cent invested in SASE as a result of the pandemic. Still, 58 per cent

plan to invest in SASE to some degree going forward. “Although SASE is an emerging enterprise strategy, it is increasingly seen as an opportunity to combine network and security functions with WAN capabilities to support the dynamic, secure access needs of today’s organisations,” Penel says. TRAINING AND AWARENESS

Humans remain the weakest link in the security chain. Therefore, cybersecurity user awareness training is crucial. Each individual should be able to understand the role they play in protecting the network – something that only comes with training. “It is crucial that CISOs protect their organisations by including employee education and awareness in their cybersecurity strategy. By embracing this technique, leaders can ensure the workforce is prepared to face the various threats,” Penel explains. At the start of the pandemic, only 55 per cent of organisations had enough skilled IT workers in place to support the shift to remote work. And while 73 per cent of organisations stated their intention to invest further in skilled IT workers in the next 24 months, the historical lack of skilled IT security professionals could present a challenge. As a result of the transition to remote work, Fortinet made its online training courses free to help protect businesses against threats that exploit the Covid-19 pandemic. “Programmes like the Fortinet NSE Training Institute’s certification programme help teach new skills to upskill, or reskill security professionals to reduce the skills shortage,” says Penel.

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S P E C I A L R E P O RT

WEALTH MANAGEMENT

SPECIAL REPORT

The art of managing wealth BY ZAINAB MANSOOR

“W

hen money realises that it is in good hands, it wants to stay and multiply in those hands,” author Idowu Koyenikan famously said. Wealth management is not an avant-garde concept; wealth, in its primitive form, was measured in resources, cloth and often food. Before currency became a medium of measure and exchange, those in possession of rare metals and food items were considered wealthy. Naturally, those who owned ‘wealth’, wished to retain and grow it. However, conventional wealth management, similar to wealth, has gone through layers of evolution and disruption to morph into its current format: a specialised form of

investment advisory service, designed for affluent individuals with diverse needs. It is a discipline that broadly incorporates financial planning, portfolio management and aggregated financial services, largely to maintain and increase a client’s wealth based on his financial goals and requirements. Engaging the services of boutique firms, private banks, financial institutions and advisors, clients are increasingly keen on building value and wealth. As methods of managing wealth evolved, so did wealth itself. Today it has become an economic enabler, meriting a clear understanding of who retains it, how it is spent and where it is transitioned to better gauge potential economic scenarios. In 2019, the number of ultra-high-net-worth individuals (UHNWIs) – those with a net worth of $30m or more – totaled 513,244 worldwide. That figure is forecast to grow to 649,331 by 2024, Knight Frank’s The Wealth Report – 2020 suggests. “If we define ‘wealth management’ as the art of advising people on how to manage and invest their assets, the biggest changes from the viewpoint of the industry in recent decades would be the increase of regulation and digitalisation, combined with an increasingly complex market environment,” comments Ludovic Pernot, head of Private Banking Middle East, Liechtensteinische Landesbank AG. “Speaking for our clients, the core of what we do remains unchanged – that is, to establish a personal relationship between a client and a relationship manager in order to be able to give financial advice in a holistic and comprehensive way.” Each asset class has varied returns and correlates with broader economic conditions that prevail over different periods of time. Since no asset class has been found to outperform its peers constantly and perennially, therefore, it is critical to diversify and map a portfolio to the dynamic investment climate. The proportion varies depending on numerous factors including risk appetite and asset preferences. According to the Wealth Report Attitudes survey – which polled the responses of 620 private bankers and wealth advisors who manage over $3.3 trillion of wealth for UHNWI clients – property and equities formed 27 and 23 per cent respectively of an average investment portfolio of such clients.

Real estate: Rewarding prospect What do 90 per cent of the world’s millionaires reportedly have in common? Real estate investments. For the average investor, real estate offers a dependable way to accrue wealth. Property investments are also fairly popular among those with a cautious mid-to long-term outlook as they offer relatively stable yields with the added advantage of capital gains. Property investments can be made via direct purchases, funds, trusts or investments platforms. “Real estate is quite heterogeneous by nature, and there could be extreme dispersion in returns. One can invest in real estate in two ways – direct investments and financial instruments like REITs and funds. The former is characterised by high unit value (concentration), high transaction costs,

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SPECIAL REPORT illiquidity, and is usually held as a separate asset, outside of an investment portfolio. However, real estate linked financial instruments, both listed and unlisted, make it easy for an investor to get a more diversified exposure at much lower costs,” says Madhur Kakkar, CEO at Century Private Wealth, a Dubai-based wealth and asset management firm. “Real estate forms part of the alternatives asset class and could be a good return enhancer in a traditional portfolio. It benefits from a lower rates environment and is also considered an inflation hedge. Direct investments could yield both income (rents/lease) and capital appreciation. Similarly, investing in REITs can yield quite high dividends in a low rate environment and is a preferred mode for taking a more liquid exposure.” Rental returns in the UAE have been promising, eclipsing those of property hotspots worldwide. Dubai properties offer over 7 per cent gross returns on average, compared to a 2.9 per cent rental yield in London, a 2.35 per cent return in Hong Kong and a yield of 2.85 per cent in Sydney. Singapore and Toronto offer 3.3 per cent and 3.9 per cent respectively, a Property Finder report reveals. “Real estate is an important asset class among the various investment products and probably seen by many as an integral part of their portfolio. Emotionally, we all know that the moment we save some money and can afford it, our first major investment comes in the form of a house. Therefore, I believe real estate always forms a part of almost every investor’s portfolio at some point in time. It helps in asset diversification as well as provides certain stability to the portfolio – although in no way should it necessarily mean that it’s a safe investment,” explains entrepreneur and investor Shailesh Dash.

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Equities: Box-ticking Investing in shares of listed entities has arguably been a mainstay of portfolios. Investors can either profit from a surge in stock prices or via dividends. Companies are often categorised by market capitalisation, which equates to the total market value of a firm’s outstanding shares. Regional equity markets have come a long way in terms of regulatory frameworks, foreign interest and local reach. After a strong end to 2019 with Saudi Aramco’s stalwart IPO, the year 2020 was understandably quiet for GCC markets due to the ongoing pandemic. Only three IPOs took place in Q1 2020 – Dr. Sulaiman Al Habib Medical Services and Sumou Real Estate Company in Saudi Arabia and Aman Real Estate Investment Fund in Oman. The IPOs collectively raised proceeds of $801.2m, EY confirms. “Regional equity markets have underperformed in both developed and emerging markets this year. Their woes have been exacerbated by declining oil prices and geopolitical tensions, in addition to the shock from the Covid-19 pandemic. MSCI UAE index is down by 11 per cent this year, compared to MSCI EM index being down by just 3 per cent. Liquidity has been another issue facing regional markets as very few names are relatively liquid,” notes Kakkar.

“Rental returns in the UAE have been promising, eclipsing those of property hotspots worldwide” However, albeit slow, regional equity markets continue to progress. In 2020, Boursa Kuwait marked its trading debut, becoming the GCC’s second publicly traded stock exchange after Dubai Financial Market. Meanwhile, Saudi Aramco once again became the world’s most valuable company after its market capitalisation rose above technology major Apple, according to a Bloomberg report published in September. “Outlook for 2021 certainly looks better than where we stand today. Regional markets, especially the UAE, is cheap compared to other emerging markets and some quality names are trading at deep discounts. The region has handled the Covid crisis well and recoveries have been robust, which should lead to gradual economic recovery. On top of that, a recovery in crude oil prices as global economies recover would benefit regional markets. Sectors like healthcare and consumer could outperform,” adds Kakkar.

Exchange-traded funds: Greater diversity

Investors that prioritise diversity within their portfolios may lean towards exchange-traded funds (ETFs). An ETF is a basket of securities that trades on an exchange similar to a stock, holds multiple underlying assets, and provides investors with diversification benefits at low costs. Regionally, exchange-traded funds appear to be gaining strength. “Clients in the GCC continue to use ETFs to gain lowcost exposure across sectors both opportunistically, and as part of their longer-term strategic asset allocation. ETFs tracking the Nasdaq 100 have unsurprisingly attracted client money from the Middle East since March, and ETFs with China technology exposure have also brought in new investments. We see clients continuing to use and consider ETFs (or exchangetraded commodities) for precious metal exposure. Exposure to gold in particular, which has had a strong rally since March, can be accessed through ETFs, many of which are sharia compliant providing broader appeal to clients in the Middle East,” says Alessio Cirillo, sales director at Invesco EMEA. Paul Cox, regional head of wealth development, MENA and Turkey, HSBC, adds: “ETFs are becoming more and more popular due to cost efficiency and variety. A significant number of customers are also using ETFs to diversify their portfolios

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which is, of course, very sensible. HSBC now offers in excess of 5,000 ETFs.” Each ETF holds a different investment focus, while its strengths are clearly placed in its diversity – investors can either capture a set of stocks (stock ETFs), focus on a sector or industry of interest (sector ETFs) or alternatively invest in fixed-income securities (bond ETFs) or currencies (currency ETFs). “ETFs are a comparatively new instrument to the region. I believe, personally, that the only way to promote the growth of capital markets is if the GCC economies are successful in their diversification strategies, and if the projected plans are successfully implemented. Hopefully more and more ETFs come up in the region because they are one of the best and low-cost solutions for investors looking for exposure into different segments of the market,” explains Dash. Kakkar adds: “Exchange traded funds have garnered a lot of investor interest in recent years and the market has grown significantly. Globally, ETFs now hold about $7 trillion worth of assets. New investments into ETFs stand at $430bn this year, up 57 per cent compared to same period last year. They provide an effective, low cost, passive way to take exposure to markets. “All the big asset managers have launched ETFs, not only in the broader index space but also in niche categories, covering

certain sectors and themes, thereby offering a lot more variety to the investors. Passive market participants could easily access these through an exchange platform and take a diversified exposure at negligible to very low costs. This market is set to grow further as it becomes an integral part of instrument selection, not only for retail investors but also for institutional money managers.”

Gold: Safe haven? Unequivocally, gold has been a long-favourite of investors. It is often treated as a hedge against economic uncertainty or political unrest or as a safe haven asset. Stowing the physical metal in the form of coins, bars or jewellery, ploughing into exchange-traded funds (ETFs) or investing in gold mining stocks are a few methods of reposing trust. This year, while the Covid-19 outbreak proved to be a stern test for other asset classes, it has proved to be a banner year for one of the world’s mainstream assets. Attesting the old adage – ‘gold loves a crisis’ – the metal gathered force in the months following the pandemic, amid looming economic uncertainty and concerns of lockdowns. It vaulted into record territory of above $2,000 an ounce in 2020, shattering its roughly decade-long record of $1,921 set in September 2011.

ILLUSTRATION: GETTY IMAGES/DIGITAL VISION

SPECIAL REPORT “As tradition dictates, gold is the ultimate safe haven when markets and economies experience unstable periods. We have seen an increasing trend of customers investing in paper gold versus physical gold across the region. This is a reflection of the change in mindset of younger investors. Having said that, physical gold is still very popular as culturally it is still very much synonymous with wealth. As ever, we advocate a welldiversified portfolio to mitigate volatility as much as possible and commodities such as gold add natural balance to a portfolio,” notes Cox at HSBC. As the Covid situation evolved, so did gold’s grip. However, the difference between spot and futures prices highlighted the impact on gold’s supply chain, triggered by the pandemic. “The spread between the spot gold price and the futures price (December contract) has come in significantly and is currently around a $5-$10 premium for the future. This compares to a spread of around $40 at the end of July, when most futures users were rolling into the December future and more than $70 at the height of the market dislocation in March,” says Christopher Mellor, head of EMEA ETF Equity and Commodity Product Management at Invesco. “Futures prices blew out in March as a result of two key factors: The impact of Covid-19 related restrictions on smelting and transportation of gold, which lead to a shortage of gold to meet futures delivery needs in New York; and the impact of the crisis on risk appetite amongst trading houses and banks which meant a reduced willingness to enter into future contracts. Both these factors have clearly eased, but there is still a risk that spreads on the next future contract as we approach the next roll.” Despite opportunity costs associated with gold investment – the money could instead be piled into dividend-paying stocks – several analysts remain bullish on the yellow metal for the current and next year. In April, Bank of America revised its 18-month gold price target to $3,000 an ounce from the erstwhile $2,000 figure. Seemingly, the bullion’s rally is far from over. “Despite the correction of the past weeks, UBP continues to believe gold remains in a long-cycle bull market that should resume as stimulus accelerates again in early 2021. This pause provides an opportunity for investors not only to continue building positions in the physical metal following the sharp rally from March 2020 lows, but also to refocus on the gold mining sector which should see multiple drivers beyond rising gold prices as a performance catalyst,” suggests Norman Villamin, chief investment officer, wealth management and head of asset allocation at Union Bancaire Privee (UBP). “Historically, low energy prices and falling local currency production costs mean that gold miners will see their costs fall by as much as 13 per cent to $900/ounce or more than 50 per cent below current spot gold prices. “Beyond this, mine reopenings in late July and August following their Covid-19 related closures in the first half of the year should see volumes return to match the cyclically high margins in the sector and drive the next stage of earnings growth,” he adds.

Fixed income investments: Promised returns Fixed-income investments have traditionally been considered to offer a steady stream of income. These securities are simple in premise – they are loans from an investing audience to an institution that needs money in return of periodic payments and original capital at a specific time. Debt instruments such as bonds are essentially issued by governments or corporations and are generally a means of raising long-term finance on prearranged, fixed cost terms. Catering to a burgeoning Muslim investor pool, Islamic bonds – better known as sukuks – have secured considerable foothold in the region. Designed to comply with sharia principles, sukuks – unlike conventional bonds – do not pay interest and can be structured in different ways to produce payments for investors. “GCC fixed income market has been quite small historically, but has been picking up steam in recent years, especially since the oil price crisis. Currently, it represents about 11-16 per cent of the broader emerging markets space. The total outstanding hard currency bonds and sukuk within GCC are in the $450bn$500bn range, with the UAE and Saudi Arabia making up 65 per cent of the pie. Typically, 65-75 per cent of the fixed income issuance in the region is by sovereigns and GREs,” notes Kakkar at Century Private Wealth. “This year, GCC debt is one of the top performers (+5.5 per cent as of end Sep), just marginally behind USD Corp IG (+5.8 per cent as of end Sep) and is way ahead of the broader EM debt returns (1.9-3.6 per cent). It has been the busiest year so far for the GCC primary bond market as sovereigns ramped up issuances to plug deficits.” Keeping pace with global bond markets, Dubai is fast emerging as a hotspot for sukuk listings, offering a suite of investment choices for local, regional and international investors.

“Futures prices blew out in March as a result of two key factors: The impact of Covid-19 related restrictions on smelting and transportation of gold” 59

PA R T N E R C O N T E N T

The Big Picture Swiss wealth manager Bank Julius Baer’s head of Equity Research Patrik Lang provides an overview of the current investment landscape and reveals why he remains bullish on equity markets

The economic macro picture has improved significantly compared with Q2. What is your view on the coming months? Indeed, the picture overall has improved but there is a twist; while leading indicators confirm a swift execution of the first part of the recovery, we believe that the second part, leading towards a full normalisation, could be more uneven and heterogeneous, as containment and policy measures diverge. The lack of governmental ability or willingness to provide continued fiscal support will result in a growth divergence between advanced economies and China on the one hand, and emerging market economies, in particular outside of Asia, on the other. Not least due to the timing of the impact of the coronavirus, China is currently leading in terms of growth, followed by Europe and the United States. Growth patterns are likely to be two steps forward, one step backward, as local flare-ups of Covid-19 occur.

In order to reach pre-crisis levels in terms of growth, fiscal support is crucial. Which countries have reacted most decisively? Many countries reacted swiftly to the impact of the exogenous shock on their economies and provided large stimulus measures. Unsurprisingly, those countries that can actually afford it, dug deeper into their pockets – and they stand to profit from that going forward. Japan, Singapore, Germany and Sweden have all provided fiscal stimuli of about 20 per cent of their yearly gross domestic product (GDP). Less convincing action has come from the United States with packages mounting up to about 14 per cent of its GDP.

There are some economists warning that such large spending programmes may create inflation over time. What are your thoughts on the matter?

However, looking at ‘fair value’, we would still expect yields to increase over the coming months. This is just one of the reasons why we continue to advise fixed income investors to consider moderate credit risk when seeking exposure to the asset class.

Well, inflation expectations have not jumped so far – and we do not expect that to change. On the contrary, inflation in the eurozone actually turned negative again just recently. Continued low inflation readings are a signal that the pandemic has dragged consumer spending down deeply and continues to affect prices even though the economic backdrop is improving. The demand shock from the pandemic will keep inflation contained for the time being.

Equity markets have performed well over the past months. Many investors are reluctant to increase exposure now, citing valuation levels and various risk factors. What do you tell them?

Inflation expectations in the US are back up at their February 2020 levels, but US government bond yields remain near their all-time lows. What is your take on this?

Well, to cut a long story short, it is TINA (‘there is no alternative’), in my view. True, there are plenty of risks around, causing investors to scratch their heads. They include further trade tensions, fears of a second Covid-19 wave, monetary and fiscal policy errors, the US elections, a hard Brexit or Quitaly, to name just a few. These risks are all real but we do not consider any of them a ‘game changer’ for investors. Mind you,

There are plenty of reasons to explain why US government bonds yield so little in the current environment including ongoing financial repression and the safe haven nature of these instruments, to name just two.

Bumpy ride Not all the countries will experience a sharp recovery 2020

GDP CHANGE IN %

2021

8.8 6.5

5.1

4.2

4.7

5 2.7 1.2 0

-3

-3.7

-5

-4.4 -6 -7.3

-10 World

Eurozone

-10.8 UK

Switzerland

Japan

China

SOURCE: BLOOMBERG FINANCE L.P., JULIUS BAER ECONOMIC RESEARCH

Patrik Lang, head of Equity Research at Julius Baer

based on the equity risk premium, stocks remain cheap, especially versus bonds. When it comes to stock valuations, we admit that based on our earnings expectations for 2021, the S&P 500 is currently trading comfortably above historical averages, but the earnings recovery is on track, and we continue to expect further earnings upside revisions. Further broad-based lockdowns remain unlikely, as targeted quarantine measures are more effective, hospital treatment has improved and mortality rates continue to come down as the virus is mutating. Against that backdrop, the economic recovery should continue, and the valuation gap between the digital lockdown winners and the rest of the market is likely to continue to narrow over the coming months. In our opinion, this is a mean reversion trade and not a change in the structural trends that continue to favour digital winners in the IT sector.

Which sectors/segments do you consider attractive now and why? We see no evidence for a change in leadership in equity markets but expect the sector rotation into beaten-down cyclical stocks to continue as the economy continues to recover. While we see comparably more upside for US stocks overall, we would also highlight

the European small-cap segment, which has a high exposure towards cyclical sectors. Its recent outperformance has been moderate at best, compared with historical post-recession periods and relative valuation metrics, which are still well below historical averages.

dynamics (ie growth scarcity and massive liquidity) over the past decade have continuously re-rated these growth stocks.

Anything slightly more novel, maybe?

Well, I have no crystal ball of course but once an effective vaccine becomes widely available, the premium, which has been priced into some of the major growth stocks in the internet and technology sector since March, is likely to evaporate. Partly, this has already happened but the process is not yet complete. As a result, cyclical stocks still have some catch-up potential. In any case, the consequences of the corona crisis will resonate for longer, affecting individuals, companies and countries for years to come.

Yes, of course. For diversified investors, the newly launched Hang Seng Tech Index, another proof of the coming of age of Chinese financial markets, provides an interesting investment opportunity. The ‘Hong Kong Nasdaq’ is an effective representation of the Chinese ‘new economy’ sector as tech companies form the bulk of it. Some investors may be concerned about the high valuation of the index, which is a common feature of most ‘new economy’ stocks. However, we argue that macro

Lastly, what do you expect will happen in the financial markets on the day fo the official approval of a vaccine for Covid-19?

For diversified investors, the newly launched Hang Seng Tech Index, another proof of the coming of age of Chinese financial markets, provides an interesting investment opportunity

SPECIAL REPORT

Wealth management of tomorrow: Human or hybrid? BY ZAINAB MANSOOR

n a world interspersed with digitalisation and upended by disruptive technologies, digital enablement translates into sustainability. This may prompt futurists to perhaps predict the end of the classic, relationship-driven wealth management model, labelling it unsustainable. While this may not prove entirely accurate – most experts believe that private banking will always be people-led. However, wealth managers who are slow to adopt digital technologies may struggle to scale their client portfolios. This has encouraged several providers to veer towards technology to enhance existing – or create new – solutions. “Digital wealth solutions are already an area of focus amongst most wealth managers as customers are preferring to interact digitally, especially the mass affluent segment. As

stated though, there is still a desire from clients to see their advisor but mainly for the initial investment; all servicing already requires a digital solution to be competitive,” says Paul Cox, regional head of wealth development, MENA and Turkey, HSBC. “Mobile is the only area that has not been fully integrated as yet, but this is just a matter of time. A fully operational wealth management ‘bank in your pocket’ is just around the corner.” The Covid-19 pandemic, while ringing in numerous other changes, also accelerated the adoption of intelligent solutions. Besides requiring a change in behaviour from both clients and advisors, the wealth management business also marked an increase in remote engagements, automated services and digital products. “If there is one lesson to be drawn from the Covid-19 pandemic, it is the growing importance that technology will have in the future, being with regards to analysis, relationship management, advisory activities or investment management,” opines Ludovic Pernot, head of Private Banking Middle East, Liechtensteinische Landesbank AG. “While we firmly believe the personal relationship between a client and her/his advisor and the trust based bound thus created is of primary importance in private banking, it is to be expected that financial institutions will introduce an increasing amount of technology in the relationship. The reach of the technology will probably differ from institution to institution but no doubt that the affluent and retail segment of the clientele will be faced with the like of robot advisors more and more regularly.” Cox at HSBC builds on it: “In July, despite the challenges of the Covid-19 lockdown, HSBC UAE launched its online trading platform that enables customers to trade international securities on major stock exchanges in real-time. The platform – incorporated into the personal internet banking site – allows clients to personally manage their equity securities portfolio 24/7, and submit orders themselves with real-time execution. “As importantly, when the UAE went into lockdown due to Covid-19, we were able to react and provide a different solution for clients, who were dealing with changing access to their advisor combined with extreme market volatility. Within seven working days, HSBC had a fully operational virtual solution for clients. Using video technology and digital signatures, our clients benefitted from being able to invest, redeem, change asset classes and de-risk.” Meanwhile, Standard Chartered Bank launched a mobile fixed income platform in select African markets at the beginning of 2020. By July, up to 50 per cent of fixed income transactions were completed using the mobile app, Dr. Owen Young, regional head of wealth management for Europe, Middle East and Africa, confirms. “The adoption rate for digital wealth management solutions has increased dramatically during the pandemic. The diversification of digital product offerings in investments has given clients the option to choose where to invest based on market volatility during the Covid-19 situation,” he adds. Digital enablement may seem challenging given that it

ILLUSTRATION: GETTY IMAGES/JORG GREUEL

SPECIAL REPORT

merits new systems to cannibalise from old practices and mandates a shift in cultural mindsets too. However, as digital comforts evolve, advisors will need to recalibrate, if not reboot, their suite of offerings for greater customer engagement and retention. Consequently, a hybrid mode of play is expected to prevail, drawing on the intelligence of an automated system and the experience of a human advisor. “Based on current trends, over the next few years, the wealth management provider model will expand and refocus, with divides between people and machines fading. As client needs shift, services and interactions will evolve in multiple ways. For years, wealth management advice meant a client paired with a dedicated human advisor. More recently, as algorithms have become today’s trending topic, many have chosen the technology-only route, citing the lower cost and around the clock access it provides. However, for clients that have material assets to invest, neither alone constitutes the future

of the wealth management industry. The Covid-19 pandemic has revealed the importance of pairing the human relationship with the support of technology,” notes Young.

Robo-advisors: Next generation services

Similar to how fintech integrated technology into traditional finance sectors to offer innovative and effective solutions, wealthtech – a subset of the former – fused innovation with wealth to automate and enhance wealth management. Wealthtech has continued to garner interest worldwide, securing $474.1m of global investment in 2019, a KPMG report suggests. Regionally, wealthtech has been vying for a spot amidst traditional firms and practices that have maintained dominance for years, serving high-net-worth individuals and families. However, with shifting demographics, a set of

ILLUSTRATION: GETTY IMAGES/MALTE MUELLER

SPECIAL REPORT

technologically-savvy, wealthy millennials at the helm, and time and cost efficiency at the core of all decision making, wealthtech offerings such as robo-advisors are beginning to find their feet. A near synonym for wealthtech, robo-advisors are digital platforms that offer automated, algorithm-driven investment advice – in short, they are automated financial advisors. Robo-advisors, on the back of technological innovation, have opened investment advisory options to a wider audience at lower costs. But do robo-advisors entirely remove the human element? “Robo-advisors mix the advantages of low management fees from passive management and the use of technology to lower cost while retaining the benefits of a personalised portfolio that fit the risk tolerance of financial goals of the client. They

“Robo-advisors mix the advantages of low management fees and the use of technology to lower cost while retaining the benefits of a personalised portfolio” 64

do not completely obviate the human element, but make it more efficient, and more cost effective,” explains Mark Chawan, co-founder and CEO, Sarwa, a UAE-based robo-advisory wealth management firm. “How much they use technology versus the human element depends on their approach. Some robo-advisors are pure technology-based, others offer a hybrid model, like Sarwa, where you use technology to onboard a client, and optimise portfolios returns, while offering access to human advice when needed.” Despite gaining considerable ground globally, has the adoption of wealthtech lagged locally and regionally? “I would say so but we are surely now catching up. Even though we have a very high mobile penetration in the region, it has been mainly on social media platforms. Consumer behaviour started to change – especially with the new narratives of the pandemic. Consumers are now more mindful and you see more and more adoption of online services and products. Convenience is becoming a key driver,” says Chawan. Earlier this year, Dubai International Financial Centre invested in Sarwa, as part of its $100m FinTech Fund. Sarwa, which is currently regulated in Dubai and Abu Dhabi, has been growing at a 20 per cent month-over-month rate and is expanding in the region, its CEO confirms. Moving forward, Chawan shares optimism regarding roboadvisors and their growth prospects. “Robo-advisors are a major component of the transformation changing the way of developing and distributing wealth management services. With regulatory precedence, and ease of business today, you will see more and more players penetrating the market. We hope to see more alignment between regulators to make growth across markets smoother and more seamless. “Eventually, we want to eliminate the wealth gap here. And that’s a vision we believe is worth fighting for,” he adds.

SPECIAL REPORT

Mapping the wealth

How are the world’s wealthiest investing their fortunes? Global UHNWI distribution Where do the world’s richest individuals reside?

Cryptocurrencies

27%

Individuals worth over US$30m

240,575

China 23,078 18,776

Japan

17,013

14,367

Italy

10,701

Canada

9,325

Russia

8,924

Switzerland

8,395

India

5,986

Proportion of the average UHNWI investment portfolio invested in each asset class

Others

17%

Bonds/Fixed income

Gold/ precious metals

5,100

Private equity

Turkey 1,913

UAE 1,681

Collectables

What next?

Where is wealth growing?

Some of the highest and lowest forecast growth in UHNWI populations over the next five years

Wealth advisors’ assessment of clients’ wealth change

6% 9% 11% 11% 13%

18% 19% 25%

51%

Five-year growth

64%

73%

58%

57%

81%

61%

Europe (excl UK)

50%

United Kingdom

50%

Middle East

48%

30%

22% 3%

71% 63%

43% 38%

24%

80%

38% 44%

Russia & CIS

Latin America

66%

67% 63%

Australasia

Africa

73%

56%

2,616

Saudi Arabia

3% 0%

Indian subcontinent Asia (excl Indian subcontinent)

89%

Turkey

6% 9%

77%

UAE

10%

North America

Indonesia

1% 3%

2020 prediction

China

27%

2019

Vietnam

% who say wealth has decreased/ will decrease

11%

Cash/ Currencies

Egypt

Saudi Arabia

Where is the money invested?

India

France

25%

Equities

61,587

Germany

33%

23%

Property as an investment

Billionaire population forecast for 2024

SOURCE: KNIGHT FRANK’S THE WEALTH REPORT 2020

SPECIAL REPORT

“IT’S NOT HOW MUCH MONEY YOU MAKE, BUT HOW MUCH MONEY YOU KEEP, HOW HARD IT WORKS FOR YOU, AND HOW MANY GENERATIONS YOU KEEP IT FOR”

R O B E R T K I YO S A K I , B U S I N E S S M A N A N D AU T H O R O F R I C H DA D, P O O R DA D

NOV

Lifestyle

Maximum charge

The future of motoring is battery electric cars. Here’s how the luxury auto industry can make the transition p.72

Thom Browne x FC Barcelona

“The most courageous act is still to think for yourself. Aloud” – Coco Chanel

gulfbusiness.com

The new collection includes short suits, Oxford shirts and knit hats, among other items – the proceeds of which will go to the Barca Foundation November 2020 67

Lifestyle / Fashion

The second wave

Seasoned entrepreneur Donna Benton recently exited The Entertainer business, and launched a swimwear company – Caha Capo – which has the potential to scale just as much. The bigger ambition remains not just an inward-focused business expansion, but one that can simultaneously lift the entire SME ecosystem across the region BY VARUN GODINHO

“T

here are three kinds Her first signups were five outlets at the of people – those who Marriott in Deira. “In your mind, you have make things happen, to back yourself. I loved the concept of The those who watch things Entertainer. I thought it was a win-win for happen, and those who say, ‘Oh, what hapeverybody. Some people said that it wasn’t pened?’,” says 46-year-old Donna Benton, going to work – hard work and believing in founder of incredibly popular buy-one-getmyself really helped me get through it.” one-free dealmaker The Entertainer. When asked if she was conflicted with It isn’t difficult to guess which among the impostor syndrome in the early days those three personality types best describes of becoming an entrepreneur, she says she Benton. wasn’t, mainly because of a well-crafted She arrived in Dubai from Australia to masterplan and a strategy to execute it. take up a marketing job in “I wasn’t visionary after 2000. Driving down Sheikh five years – I was visionary Zayed Road, she realised a year in. I knew exactly that although there were what I wanted and the The contribution several restaurants, none terms and conditions. I of The Entertainer to of them really incentivised went through September the economy customers to visit. 11, Gulf Wars, a recession That’s when this firstand now the pandemic. We generation business owner decided to strike had many competitors along the way, but out on her own and begin The Entertainer you have to focus on what your strengths in 2001. She had a great idea, but needed are. You have to be agile in making decifunds. “A friend invested Dhs120,000, and sions, but I never thought in my mind that in turn received shares in the company. I I wasn’t going to work out.” managed to pay back 28 times that amount In 2012, Abraaj Capital announced that and buy out those shares five years later.” it would acquire a 50 per cent stake in The One of the key reasons she tasted success Entertainer through its Riyada Enterprise and turned it into a profitable enterprise Development platform. That deal not only within the second year of its operations gave her the funds to go digital and transition itself, Benton notes, was because of a highly from a physical print edition into an app, but curated approach to the outlets that she also allowed her to scale the business. onboarded. While you’d expect a budding Six years later, she decided to sell an 85 entrepreneur to begin modestly by signing per cent stake in The Entertainer for “a up a local coffee shop, she wasn’t aiming for nine-figure mark in USD”, which meant at second best. least $100m, to Bahrain’s GFH Financial

$1.3bn

68 November 2020

Group – but not before she had grown it into a company that covered 40 destinations in 15 countries, contributing $1.3bn to the economy each year with an average profit growth of 25-30 per cent. The UAE’s Al-Futtaim and Al Zarooni Emirates Investment subsequently picked up minority stakes from GFH, while she held onto her 15 per cent stake in the company. In September, however, Benton announced that she was making a full exit from the business and now reveals the reason she did so. “As the founder of a company, you either need to have equal shares and have control over it or you need to be running the company. It really doesn’t work with minority shares. My vision was different from the shareholder’s vision. You can agree to disagree and be on board, but at the end of the day, as a founder, you are just so passionate about everything. “Some decisions were being made that I didn’t agree with – and I’m not saying they were wrong. I concluded that if GFH wanted to take it forward, that’s great, but for me personally, it was probably best to exit and do other things that I love as well.”

hose other interests are now clubbed under The Benton Group (TBG), a holding company that she set up which has diversified into businesses ranging from hospitality and sports to fitness and fashion. Via the company, Benton invested into Sunset Hospitality Group, an F&B company behind Black Tap which recently opened at The Mall of the Emirates as well as Azure Beach Club, Luigia Ristorante and Drift. Sunset is also gearing up to open Sushi Samba on the 51st floor of the Palm Tower in Dubai next year, as well as a 360-degree infinity swimming pool and AURA Skypool in the same building, which at 210 metres above the ground, would rank among the world’s highest swimming pools. Another investment that Benton has made is Dubai-based sports equipment supplier – Dawson Sports – which she invested into in the embryonic stages and which recently opened a store at Mercato Mall in Jumeirah. Apart from investing in businesses, she has also started up her own venture, Chloe’s Hair Beauty and Nails salon. But it’s her latest business, which went live only a few weeks ago – swimwear company Caha Capo – which is poised to be the gulfbusiness.com

Lifestyle / Fashion

“As the founder of a company, you either need to have equal shares and have control over it or you need to be running the company. It really doesn’t work with minority shares”

Donna Benton has set up a holding company, The Benton Group, which will use a percentage of its profits to help other SMEs

gulfbusiness.com

November 2020 69

Lifestyle / Fashion

next big business for Benton. She says that apart from always wanting to set up her own swimwear company, she noticed a glaring gap in the market. “Our fabric is Italian, so it’s high end, but we’re definitely affordable. We have a niche market and we go from size 6-18. For women in our bikini line, we have an essential line and we call them separates – so if you are a size 12 top and 10 bottom, you can swap tops and bottoms to match and you can also pick and choose different colours, style and sizes. “I also find the colours [of other swimwear currently in the market] not very appetising. We have 11 different colours in our essential range. We have 172 types of women’s swimwear alone, young girl’s swimwear, men’s and boys’ board shorts, resort wear and accessories – there’s something for everybody,” she says of the brand which is an acronym of the words, ‘caring, happy, casual, positive’. While Benton is readying Caha Capo’s first flagship store to open at Dubai’s Mall of the Emirates, she adds that e-commerce will be a big growth driver for the brand. Three weeks into launching the website, people from 12 countries already purchased online (Caha Capo partnered with DHL to offer free international shipping and free exchanges or returns). Enquiries for partnerships on the retail side have already started pouring in from places like the Cayman Islands, Australia and South Africa.

ut beyond building Caha Capo into the next 100-million-dollar brand (which, given Benton’s track record, isn’t a longshot), she explains that the bigger goal behind The Benton Group is to help other startups secure funding. “So many people have great ideas, but they don’t know how to get funding. It’s a shark world out there sometimes. Someone might need Dhs100,000 and others may need Dhs500,000. I’m very passionate about helping other startups grow and that’s something that we will definitely be working on when TBG makes profits.” 70 November 2020

Benton recently launched her own swimwear brand, Caha Capo

“I’m still a believer in no risk, no reward. You can’t be scared. You can’t stand still. You have to take an educated risk”

But Benton knows exactly the kind of companies – and the people – she will back. “I’m not a private equity firm. For me, it’s about the person. It’s about the idea, the energy, the longevity. It’s obviously about the finances as well, but also about the vision – what they have, where it can go and what they can do.” It’s an outlook that has served her well as she was also one of seven panellists on the Motivate Media Group’s SME Revival initiative, which will provide $1m in advertising and marketing support to 20 homegrown UAE SMEs – the results of which were recently declared. While Benton adds that she was impressed with the pool of nominations as well as the scale of the initiative itself, she has already been supporting homegrown businesses through the pandemic by buying products from different local companies to support them during a difficult period. And has this pandemic dampened her personal appetite for risk? “I’m still a believer in no risk, no reward – if anything, especially at this time. You can’t be scared. You can’t stand still. You have to take an educated risk as well.” For business owners, Benton says that this is also an opportune moment for them to lead from the front. While she says that employees must understand that pay cuts may be necessary during this time for several companies to survive, owners must equally try and mitigate the impact. “I cut my salary. I didn’t take anything for four months to keep other people employed. I really stretched, I didn’t give any pay cuts,” she says of The Benton Group and Caha Capo which employ 17 people, as well as Chloe’s salon which has approximately 25 employees. While she took a pay cut to save jobs, Benton is confident that companies that do survive the economic fallout of the pandemic stand to gain handsomely at the other end of this global health, financial and social crisis. But in the meanwhile, Benton is making things happen. gulfbusiness.com

Lifestyle / Technology

Hands-on review: The vivo X50 Pro The vivo X50 Pro gets it right on camera and design BY DAVID NDICHU

he vivo smartphone brand is not a household name in this part of the world. It should be, if the quality of the X50 Pro we reviewed is anything to go by.

The X50 Pro utilises 3D sound tracking with three microphones to accurately detect sound direction. Audio tracking technology and the image recognition algorithm work together to keep sound and image in sync.

DESIGN

CAMERA

The first thing you notice when you unbox the X50 Pro are the curves. The screen and the back are both curved at the edges, lending a lean and elongated silhouette to the phone. Because the display can take advantage of the entire front real estate, the phone is slimmer than similar-sized devices and fits better in the palm despite its 6.5-inch girth. The device comes in a single colour – (alpha) grey. The phone’s slim profile however means the camera structure protrudes quite a bit at the back and the phone balances awkwardly on a flat surface. Vivo has cleverly hidden the optical fingerprint sensor under the display, further maximising the screen utility. The fingerprint sensor combines with face recognition for extra security.

Ever since the first person turned the camera onto themselves, pouted and took what later became known as the selfie, smartphone brands today live and die on the strength of their camera. Vivo has invested considerable resources in sharpening its camera technology in the X50 Pro. One of these areas is the use of a gimbal camera system. A gimbal is a handheld 3-axis stabilisation device designed to give a camera operator the independence of handheld shooting without vibration or shake. This effect can now be replicated in a smartphone. Vivo’s gimbal camera system uses a double-ball structure to achieve

PERFORMANCE

The main camera set-up is a 4-sensor architecture

triple-axis rotation, ensuring clear photos and videos while in motion. The main camera set-up is a four-sensor architecture that includes a 48MP gimbal main camera, a 13MP portrait camera, an 8MP wide-angle and macro camera, and an 8MP 60x hyper zoom camera. Vivo calls its camera system ‘AI quadcamera’, and for good reason. The system can recognise the subject in front of it and adjust automatically. For example, point it at a word document and it immediately asks to enable document correction. You can also select from several modes and the sensors will adjust for lighting. The super night mode and astro mode combine to enable users to capture great photographs at night. The photos are bright and crisp and compare favourably with much pricier brands. The front camera is offset to the left and cuts into the footage when watching a video. Under-the-screen camera technology is maturing so this is something vivo may want to look at. The X50 Pro sells for Dhs2,999 in the UAE, a good value in our opinion for a 6.5inch device with FHD+ and an intelligent camera setup.

The vivo X50 Pro runs on a Qualcomm Snapdragon 765G chipset, with 8GB RAM and 256GB of storage. It delivers a 90Hz high refresh rate with a 180Hz response rate. These numbers may not mean much until you compare devices with lower stats. Then the differences in terms of crispness of the images, movies, and games do pop out. The company says the device will support 5G connectivity ‘depending on local market conditions’, although this is not expressly a 5G device. The Qualcomm Snapdragon 765G is a powerful processor and you are guaranteed fast computing speed and smooth multitasking. Powering the X50 Pro is a 4315mAh battery, at the high end of the industry standard. Should you unexpectedly run out of juice, the 33W vivo FlashCharge 2.0 fast charge technology should get you back up and running in no time. Sound (when recording) rarely receives any attention from device manufactures. gulfbusiness.com

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Lifestyle / Auto

Plugging into the future One of the biggest revelations for the luxury auto industry this year is that going electric is no longer an option – and it must be done now BY VARUN GODINHO

here the sovereign wealth fund of one of the richest countries in the world chooses to pump in over $1bn, rest assured there is a bountiful harvest to reap. In 2018, Saudi Arabia’s Public Investment Fund backed California-headquartered Lucid Motors – a relatively new American company which is now baiting one of the world’s most valuable carmakers, Tesla. Lucid isn’t just shooting its lip. At its helm is Peter Rawlinson. Remember the Tesla Model S? It’s impossible not to, considering it has become the most successful electric sedan manufactured to date. Rawlinson was the chief engineer on that car, and reportedly a confidant of Elon Musk.

72 November 2020

“It’s a testament to the vision of the kingdom of Saudi Arabia and to the vision of the Public Investment Fund that they have the foresight to invest in the future of not just mobility, but the future of energy and energy use,” Rawlinson tells Gulf Business, while adding, “and to recognise that oil will not be there forever. This is a very shrewd move on the chessboard for them.” A study by Allied Market Research suggests that the electric segment is expected to record a compound annual growth rate of 9.7 per cent from 2019 through to 2026. Carmakers have scrambled to electrify their fleet. The Porsche Taycan is a full-electric car, Mercedes EQS is in the advanced stages of being realised, and Audi recently showcased its Q4 Sportback E-Tron concept.

But while the future of the luxury auto sector will undoubtedly belong to electric cars, the present is dominated by ozonelayer denting internal combustion-powered machines. Take, for example, Rolls-Royce – a 116-year-old marque that still has a minimum of 12 cylinders in a car. It’s a carmaker that shifts the goalpost from electric to craftsmanship around its wood, paint and leather – all of which the Goodwood manufacturer has excelled in. “At RollsRoyce, there is no full-option car – it doesn’t exist. There is always something more you can do with a Rolls-Royce,” says Mamdouh Khairallah, general manager, AGMC at Rolls-Royce Motor Cars in Dubai. “When it comes to us in the Middle East, our most expensive Phantom was in the gulfbusiness.com

Lifestyle / Auto

range of $4m. We had one car we built in the factory where we crushed diamonds into the paint. The price of the paint alone was almost Dhs1.5m.” But even Khairallah agrees that it is impossible for the luxury car industry – Rolls-Royce very much included – to ignore the writing on the wall. “The future is electric cars. Internal combustion engines will not sustain the future. Rolls-Royce engineers are busy at work on future electric cars.” Stunningly, even Rolls-Royce CEO Torsten Müller-Ötvös said during a television interview in January that Rolls-Royce will transition to electric this decade and will become a “pure-electric propelled” brand in the long-term. The long-term couldn’t arrive sooner for countries like China, the world’s largest auto market since 2009. The government wants ‘new-energy vehicles’ to make up at least 15 per cent of the market within the next five years by 2025, and double that a decade later. Legislation is already coercing the transition. In Shanghai, for example, car buyers have to pay an additional $13,000 for the licence plate of a combustion engine car, whereas that amount is waived completely for electric vehicles. “For us, it is the grand prize,” says Rawlinson, referring to the China market, where he intends to take the all-new Lucid Air sedan in late 2022, months after it enters production at the Arizona factory in spring 2021. For now, Lucid is focused on getting the price right. “The biggest area where the price point of electric cars is going to be influenced is in two areas: battery technology, and global efficiency of the complete system.” Addressing the former, Lucid has claimed a 517-mile range on the Air (far more than a Model S’ 348-mile range), and with regards to the latter, it has tied up with Electrify America charging network for its cars that will be sold in the US. The International Energy Agency said earlier this year that the number of public charging spots were 862,118 worldwide, with China accounting for 60 per cent of that figure. But not all luxury carmakers see China as the grand prize. “China will stay as an important market, but the US, Europe and Middle East are still doing well. I would not see the Chinese market as singlehandedly taking the [luxury car] business forward,” cautions Khairallah. At the start of the year, Rolls-Royce said that it had gulfbusiness.com

China wants ‘new-energy vehicles’ to make up at least 15 per cent of the market within the next five years by 2025 its most successful year ever in 2019, with 5,152 deliveries spread out across over 50 countries. Apart from China and the US, the Middle East is one of the strongest markets for luxury carmakers. And there’s innovation rising from the region too. Dubai-based W Motors, which manufactured the $3.4m Lykan HyperSport car, said in January that it had begun work on a Dhs370m manufacturing facility in Dubai’s Silicon Oasis. Its founder Ralph Debbas confirmed to Bloomberg in February that investment bank Guggenheim Partners were hired to assist in raising up to $100m to help it begin manufacturing electric cars within the next 4-5 years. Making a more rapid entry will be Lucid, which plans to enter the region via Saudi Arabia next year, followed by other regional markets by 2022, alongside a near-simultaneous rollout in Europe. Left: Peter Rawlinson, CEO and CTO at Lucid Motors Below: Lucid has claimed a 517-mile range on the Air

But with EV sales in Europe, surprisingly, exceeding China in the first six months of 2020, according to global automotive research firm Jato Dynamics, it may even be Europe that will leap ahead of the Middle East, China and the US for electric cars. BloombergNEF revealed recently that although the sales of EVs fell 15 per cent globally in Q2 2020, it is forecast to expand around 7 per cent for the full year of 2020, led by Europe. “Who knows which markets can be penetrated with the sudden availability and advent internationally of a true luxury car which is pure battery-electric – the sky is the limit,” says Rawlinson. To drive into those markets, carmakers are also carefully considering the kind of vehicles they’re pushing – especially SUVs. “Many people were surprised that we didn’t start with an SUV. The Lucid Air is a car that is smaller on the outside than a Porsche Taycan, and yet it’s got more space than a long-wheelbase S-Class Mercedes. We’re going to take that to a whole new level with Project Gravity,” says Rawlinson of Gravity, Lucid’s first SUV, set to enter into production in Arizona in spring 2023. Mamdouh agrees that within the RollsRoyce electric future, SUVs will be a mainstay, mainly because of the success of its current gasoline-powered Cullinan. “The

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Lifestyle / Auto

[Cullinan] SUV is now the most successful car in the entire family of Rolls-Royce. It is our bestseller. Rolls-Royce has enhanced that by adding the Black Badge Cullinan beginning this year.” Apart from the products themselves, luxury carmakers are also rethinking their retail strategies. Rolls-Royce, for example, ties up with other luxury product manufacturers – watchmakers, jewellery artisans, carpet weavers, etc – and displays their creations alongside the cars in the boutiques, creating an all-encompassing sense of curated luxury. For Lucid motors, there is a comprehensive digital push when it comes to its retail strategy augmented with an online configurator. “No other car company – BMW, Mercedes, Porsche, Jaguar, Lexus, even Rolls-Royce – has got that level of a digital configurator which we’ve got that places the car in a threedimensional moving environment.” He quickly adds, “I still believe, paradoxically, that even in this digital internet superconnected environment, there’s still place for bricks and mortar. Personal interaction is crucial in the luxury space and you want to aim to control it. We own all our stores and we aren’t going to have dealerships.” Lucid’s newest store opened in Beverly Hills, just along Rodeo Drive, at a site which was formerly occupied by a Rolls-Royce showroom. Not all carmakers are equally sold on the idea of an imminent and immediate need to go electric. Aston Martin, for example, which

74 November 2020

“A lot of car companies are going to be dead in 10 years, because they aren’t adopting electric fast enough. There is an existential threat to their very existence” received a $663m infusion of capital earlier this year and a new executive chairman in Canadian billionaire Lawrence Stroll, has not only indefinitely suspended plans for its Rapide E electric car, but has postponed the launch of its all-electric sub-brand, Lagonda, from 2022 to 2025, at the earliest. In November last year, Bugatti president Stephan Winkelmann termed his efforts to secure funding for an all-electric fourseater car with parent company Volkswagen Group as a “hard fight”. Unconfirmed media reports from September this year indicated that VW is mulling selling Bugatti to Croatian electric supercar manufacturer, Rimac Automobili, showing Winklemann might eventually have got more than he initially settled for.

Below: Mamdouh Khairallah, general manager, AGMC at Rolls-Royce Motor Cars in Dubai

While carmakers course correct, the Covid-19 pandemic has launched an altogether stark assault on their businesses. “When it comes to the luxury segment, we are in a U-shaped curve,” says Khairallah adding that factory closures or the pandemic worsening could very quickly change that situation. “But the recovery is definitely going to be more Ws all the way.” Rawlinson makes a different point altogether, while saying that focusing on the academics of the recovery pattern is really a futile exercise. “This is a myopia about shorttermism. It doesn’t matter if it is U-shaped or V-shaped. A lot of those car companies are going to be dead in 10 years, because they aren’t adopting electric fast enough. There is an existential threat to their very existence and they can’t even see it.” A carmaker which has seen, and acted, on that threat before most others is Tesla. In October, it revealed revenues of $8.7bn and profits of $311m for Q3 2020. At the time, its share price had already climbed over 400 per cent since the start of this year alone. Rawlinson is watching.

gulfbusiness.com

Lifestyle / Horology

Taking flight Bremont unveils the all-new ionBird timepiece to mark a record-breaking attempt for an electric plane currently being developed by Rolls-Royce BY VARUN GODINHO

tep into any major airport in the world, and you’re guaranteed to see a Rolls-Royce engine strapped onto a commercial passenger jet. Its engines power up aircraft from several manufacturers including Airbus (A330 and A380, among others) and Boeing (777 and 787 Dreamliner). Now though, Rolls-Royce is using its aviation knowhow to build an all-electric plane that will attempt to break the world record by powering through the 300mph mark next year. Called the Spirit of Innovation, if successful, the zero-emission aircraft will comfortably surpass the 213mph current world record for a fully-electric aircraft. British watchmaker Bremont has been appointed as the official timing partner for the initiative. The Henley-on-Thames headquartered company isn’t though just merely standing by on the fringes during the build process – it is actively involved in designing components for the aircraft as well. Bremont is aiding in designing the plane’s cockpit and will fit it with one of its

The Spirit of Innovation zeroemission aircraft will attempt to surpass the 213mph current world record next year stopwatches. It has also machined parts of the canopy release mechanism at its own manufacturing facility. The watchmaker is a brand with aviation at its core. Its MB Collection, for example, is a part of its association with Martin-Baker, an aviation company that reportedly supplies over 70 per cent of the world’s fighter jets with its ejection seat technology. In

The 43mm Bremont ionBird uses a case made from aircraft-grade lightweight titanium

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2009, the first MB timepiece was constructed, and built to withstand the same level of shocks (pressure, velocity, temperature) as any other component of an ejection seat. Its MB1 timepiece is exclusively meant for those who have at some point ejected using a Martin-Baker seat (there are reportedly over 7,000 people who have done so), while its MBII and MBIII collections are for the rest of us who haven’t had to make that terrifying split-second decision. Back to the Rolls-Royce project, and Bremont has designed another new timepiece to mark its association with the project, this new chronometer GMT called the ionBird – a name borrowed from the aviation term which refers to the ground-based prototyping device used when developing and testing aircraft designs. The 43mm ionBird uses a case made from aircraft-grade lightweight titanium and holds inside of it an automatic BE-93-2AV chronometer GMT movement with a Nivaflex 1 mainspring. The 28,800vph movement also returns 42 hours of power reserve. The dial features two time zones, read off vintage style numerals with the help of bronze hands. Although it is offered with a nubuck strap for now, Bremont confirms that it will subsequently offer it with a Bluetooth-enabled ‘Alerting Strap’ that will connect to a new mobile app being developed as part of the project, which will allow pilots access to data on the app including checklists and timing information. The test pilots of the Spirit of Innovation will be wearing the ionBird during their attempt to break the world record too. One of them has a personal connection to Bremont. “As pilots ourselves, we (my brother Giles and I) have known Phill, the Rolls-Royce test pilot, for many years and Rolls-Royce owns the Spitfire that our father operated when he was alive,” said Nick English, co-founder of Bremont. Earlier this year, Bremont unveiled the ALT1-C Griffon chronograph which paid tribute to that Spitfire with Griffon engines. For now, it’s a warp-speed operation to get the plane off the ground and into the record books. As Rolls-Royce project lead, Matheu Parr says, “Creating the fastest all-electric aircraft is enormously tough. We have overcome many challenges including developing a 400kW electric powertrain powerful enough to set world records and a battery with enough energy to supply 250 homes, whilst remaining light enough to fly.” November 2020 75

Lifestyle / Sports

Tee time Dubai will host the floodlit OMEGA Dubai Moonlight Classic from November 4-6, with star players in attendance BY VARUN GODINHO

t’s been a crushing year for global mega sporting events, the majority of which have had to be postponed, while others have had to be called off altogether. A handful of these though have since resumed over the last few months under the long shadow of the coronavirus pandemic, with ‘bubbles’ created to protect participants under strict safety protocols. One such sporting spectacle is the upcoming OMEGA Dubai Moonlight Classic scheduled to take place from November 4-6 at the Faldo Course within the Emirates Golf Club in Dubai. “2020 has been a very difficult year globally, not just for sports, and as such we are very grateful to Dubai Sports Council and all our partners. Without their support, this tournament simply wouldn’t have been possible. With some of the game’s best players set to attend this year’s tournament, we’ve gone above and beyond to ensure the necessary safety precautions are in place,” says Simon Corkill, executive tournament director for the 2020 edition. It is the only day-night event on any tour, with the tournament organisers deciding to play 36 of the 54 holes in this year’s edition under floodlights. A total of 56 players will compete for $285,000 prize money. “The tournament was previously known as the OMEGA Dubai Ladies Masters, which we were the title sponsor of since 2009. For all of our time supporting golf in the Middle East, the ladies’ tournaments have been a

76 November 2020

very special highlight, because the talent is always exceptionally high,” says Raynald Aeschlimann, CEO of OMEGA. That exceptionally high talent includes Minjee Lee, as well as New Zealand golfer Lydia Ko, a former world number one pro golfer who has won two majors and notched up 26 victories around the world. Also competing will be 24-year-old Georgia Hall who plays the Ladies European Tour and the LPGA Tour. She won the 2018 Women’s British Open and has shown to be in good form this year with three other wins. She will also come up against fellow British golfer, 24-year-old Charley Hull, a familiar face in the region who won the 2019 edition of the Fatima Bint Mubarak Ladies Open in Abu Dhabi’s Saadiyat Beach Golf Club. Held under the theme ‘Time to Shine’ the pro-am event will also give amateurs a chance to measure themselves against established names. Among the emerging talents is 19-year-old Indian golfer Diksha Dagar, who was born deaf, and won the 2019 South African Women’s Open on the Ladies European Tour. As part of the Covid-19 protocols, the tournament will be closed to the public, but will be broadcast to over 60 countries and a reported 348 million households. It’s an opportunity that provides significant

visibility to title partner OMEGA, which has also been actively engaged in partnering with several other sports. “Sport is an essential part of our identity. And it has been since 1909, when we timed our first-ever sports event. We’ve been timing the Olympic Games since 1932. OMEGA has not only timed sports, but we have helped to evolve them through the development of new timing systems and equipment,” says Aeschlimann. That timing equipment includes the likes of Scan’O’Vision Myria camera which was introduced at the 2016 Olympics and can capture a breathtaking 10,000 images per second for a photo finish, as well as an archery targeting system that can determine the position of an arrow from the centre down to 0.2mm, more than can be distinguished by human sight, and even starting blocks for track events that can detect false starts, among several other innovations. “It’s important to point out that OMEGA is not considered a ‘sponsor’, but rather an official timekeeper. Our role is quite critical to the success of each sport, and we bring over 100 years of experience to every event. At the moment, OMEGA is involved in the most important competitions in sailing, golf, athletics, swimming, bobsleigh and monobob. Of course, there’s also the

“It’s important to point out that OMEGA is not considered a ‘sponsor’, but rather an official timekeeper” gulfbusiness.com

Lifestyle / Sports

OMEGA Dubai Moonlight Classic

players

$285,000 prize money

of the 54 holes in this year’s edition wil be played under floodlights

Above: Raynald Aeschlimann, CEO of OMEGA Left: The Emirates Golf Club in Dubai Opposite page: Charley Hull and Lydia Ko are vying for the prize

Olympic Games, where we time every single second of the action. In Tokyo alone, that covers 339 events in 33 different sports,” notes OMEGA’s CEO. The pandemic has meant that the 2020 Olympics was pushed to next year, but like the upcoming golf tournament in Dubai, there are a few other high-profile tournaments that have still gone ahead. “It’s been a very disruptive year for sport, and it looks like the challenges might continue for a little longer. But that doesn’t mean our loyalty will change. We’re looking forward to all the events coming up – including the America’s Cup sailing competition in just a few months.” While OMEGA has a fixed roster of sporting events it partners with, Aeschlimann points out that the Swiss watchmaker is not gulfbusiness.com

rigid in its position to forging new alliances with sports that have become popular over the last few years – take UFC, for example – but says that it needs to find a good reason, beyond mere popularity, to do so. “We wouldn’t increase the range unless it felt authentic to our brand. Just because a sport is popular, it doesn’t mean it’s the right fit for us. I think because we cover so many different sports at the Olympic Games, there’s always a chance we could go in a new direction,” says Aeschlimann, while adding, “but for now, we are already very busy and happy with the sports we have”. Here in the Middle East, OMEGA’s involvement with sports is focused on golf. Apart from the OMEGA Dubai Moonlight Classic, OMEGA is also the title sponsor of the high-stakes OMEGA Dubai Desert

Classic. This year’s tournament included the likes of Tommy Fleetwood and Sergio Garcia with a total prize purse of $3.25m, and the winner (Lucas Herbert) taking home $541,660. Aeschlimann confirmed though that the watchmaker’s sporting relationship with the UAE (a country where it recently opened its 14th boutique in Dubai’s Nakheel Mall) will extend beyond golf too as it heads to Abu Dhabi to partner with the FINA World Championships next year. For the moment, sporting enthusiasts can train their attention onto the upcoming golf event in Dubai. Strong comebacks, big upsets and career-defining moments – judging by the history of the event, it won’t be hard to find several examples of these at the Moonlight Classic. November 2020 77

NOV

The SME story

A dedicated hub for the regional startup and SME ecosystem

INTERVIEW

This is one of our USPs, we call it the Interactive Experience and it is a power-based ride, where we track progress using state-of-the-art technology.

The big business idea A male grooming products company, a social networking technology platform, and a fitness boutique in Dubai – read how the owners of these three businesses went from the Eureka moment to execution mode Mohab Samak Co-founder of NRG Fitness Why did you decide to start your own business?

I have been and still do commercial and corporate real estate as my profession. However, eight years ago I completely lost track of my fitness after a major injury brought my exercises to a halt. At this stage my daughter asked me “Daddy, why do you have a big belly?” and that was all I needed to realise where I was. I was then introduced to group exercising. I took courses and even became an instructor for three programmes. I wanted to share my life-changing story and my passion with everyone. That was when the NRG Fitness idea was conceived, and about one year later I opened NRG Fitness in 2017. What is the concept behind NRG Fitness and what services does it offer?

We’re really proud to be a boutique fitness hub. We have a full range of classes at NRG. From our training studios with HIIT, KO8, Zumba, Yoga and most recently TOA, to our cycle studio where we have a very unique way of teaching spin classes. 78 November 2020

Below: Mohab Samak, co-founder of NRG Fitness

Which are some of the major highlights for NRG until now?

We won Favourite Fitness Centre of the Year in 2018 at the What’s On Awards, which we’re really proud of. We’ve run big events such as large-scale group sessions, contracted to work with the whole RTA group for two years in a row for Dubai Fitness Challenge (DFC). We have been on the main stage with DFC three years in a row for their opening and closing ceremonies, coaching thousands of people. We’ve worked on community events such as Emirates Down Syndrome Association, UAE Government Community Development Authority (elderly homes) and Dubai English College School. We’ve also worked with Emaar for large fitness activations in Marina Mall and Marina Walk. How has your business been impacted by Covid-19?

It hit us hard. However, we were lucky enough to have incredible staff who were keen to keep our members moving at home and that was a big part of our focus during the lockdown. We even rented out the equipment and bikes so people could still keep fit. It really felt like we were still a family and our members were really impressed with the schedule and ease of working out at home. Do you have expansion plans in place?

Watch this space – NRG has grown so much over the last few years that it would be crazy to not open more venues. In terms of what we have currently, we’re always looking to expand our classes and come up with new concepts that really engage our members. What is your measure of success for NRG?

We always say that seeing the same faces day in day out means we are doing a good enough job. There’s so much competition, especially in the Marina area, so it’s important we keep members happy. gulfbusiness.com

The SME Story

persistence, teamwork and a drive to improve can be just as valuable – if not more so – when starting up. Where are the products manufactured?

For the first two years, my wife Samya and our friend Layal made all the products in our home. As a chemical engineer, Layal focused on systems and processes to help us scale. We realised that we couldn’t continue making the products at the scale we were growing, so we reached out to manufacturers in Saudi Arabia and the region. We currently manufacture our products in the UAE. Did Covid-19 significantly impact your business?

No business is immune to the impact of the global pandemic. Interestingly, it served us in very interesting ways. We already have a significant online presence with an e-commerce operation so we weren’t struggling to set that up or build social proof there, but the closure of retail forced us to figure out alternate revenues and where we could adjust with our contractors based on the closures and lockdowns.

Waseem Sendi Co-founder of Diggn’It How did the idea for Diggn’It come about?

I was living in Saudi Arabia back in 2015 and started growing my beard. There were almost no products available locally that could help me nourish and take care of my beard and skin. My wife and I noticed that beard care companies were popping up all over the world, but none of them were Arab ones. We decided there’s a great opportunity here, and with our friend and partner Layal Ismail, a chemical engineer, we started the company right out of our home kitchen and focused on providing traditionally inspired, natural, Arabian male grooming products. How did being featured on Shark Tank change the way people perceived your startup?

I think our experience on Shark Tank really made our community proud. It is very challenging mentally and emotionally bootstrapping a business from the idea to growth. People are inspired by companies that can start from home since so many people today work on small projects inside their own homes and dream of it being a successful business. You don’t always need a SAR1m to start, but passion, gulfbusiness.com

Above: All Diggn’It products are made in the UAE Below: Waseem Sendi, co-founder of Diggn’It

NO BUSINESS IS IMMUNE TO THE IMPACT OF THE GLOBAL PANDEMIC. WE ALREADY HAVE A SIGNIFICANT ONLINE PRESENCE SO WE WEREN’T STRUGGLING TO SET THAT UP OR BUILD SOCIAL PROOF THERE In terms of demand, with so many men staying home and letting their beards grow out, they encountered a lot of the problems and reached out to us to get products that could help them grow their beards well. What are the expansion plans you have in place for the brand?

We plan to be the leading player in male grooming and skincare across the region, with a significant presence in the Western and other Asian markets. In the short term, we are focused on increasing the number of retail outlets in the GCC. Do you have plans to open your own branded boutiques as well?

Currently, we are focused on growing with retail partners and our e-commerce while building our brand and community. We don’t have plans to open our own branded boutiques. One day we hope to have a flagship location that can serve as the physical brand hub. November 2020 79

The SME Story

We are currently exploring the option of integrating with third-party apps, and will only do so once we are certain user privacy will not be compromised. What were you doing before you founded Ozz?

I’ve always been entrepreneurial. I taught myself to code when I was 12. As a teenager, I created different small businesses on the side that actually turned a profit. At university, I pursued mechanical engineering and even there worked on several patented inventions. It was only once I started working in my first job at a European multinational company, that I realised I missed thriving in uncertainty, pushing to solve real business and consumer problems. Six months later, I resigned and dived right back into what I loved – creating technology. I launched my first startup, BackPack, in 2009 which was one of the very first Middle East apps on the BlackBerry store. As a serial entrepreneur, what are some of your biggest learnings?

Ahmed Wasfie Founder and CEO of Ozz Technologies What is the concept behind Ozz?

We still use business cards today even though they do not serve the speed, specificity and scale with which we seek to connect with one another. Business cards are often lost. Also, given the Covid-19 era we live in, exchanging a business card poses health and hygiene issues because of the risk of virus transmission. This is why we built Ozz: it’s not just your “new” business card but an aggregator and one-stop destination for all your contact information, social media and professional profiles.

Above: Ozz is an aggregator for all your contact information Below: Ahmed Wasfie, founder and CEO of Ozz Technologies

Someone’s ability to excel in a role often has very little to do with education – in fact, I have someone working on UI who is actually a trained doctor. What I look for is a curious and industrious spirit, someone who isn’t afraid to question, experiment and learn something new. The best software engineers and designers I have worked with have all been selftaught. If you hire someone who is passionate about the role, they will reward your faith and go the extra mile to learn all they need to know and deliver. Also, I believe everyone should have a voice and as an entrepreneur, you need to be open-minded and listen. Innovation is not just the domain of senior management. Great ideas don’t belong only to individuals at a certain hierarchy, they can come from anyone, anywhere and at any level in the organisation. Has Covid-19 impacted your business?

We were working on the initial prototype for Ozz a few months before the coronavirus hit the headlines. Once it was clear Covid-19 was reaching pandemic proportions, we doubled down on refining that initial prototype and bringing Ozz to market because we knew people would now be compelled to connect ‘contactlessly’. In a sense, Covid-19 catalysed our business.

How will you ensure data privacy?

What are your expansion plans?

All user information is securely stored on Amazon Web Services. Additionally, users can establish their own access controls to the information they have stored under Ozz with our state-of-the-art OZZSure Security Factor, which enables users to apply multiple layers of password-protection and visibility to any contact information or document under their profile, with the added option to hide selected files before sharing.

Currently, we operate in the UAE, Saudi Arabia and Egypt. However, initial orders for Ozz are also coming in from users in countries we hadn’t even anticipated, like Italy and Spain. Going global is definitely part of our medium- to long-term plan. We will tailor our expansion plan based on user demand in different countries and will likely have franchise deals in place in different geographies.

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The SME Story COMMENT

Peter Maerevoet Senior executive officer Tradewind Middle East Limited

The ultimate financing question Here’s why SMEs should consider export factoring when seeking funding in the current crisis

ILLUSTRATION: GETTY IMAGES/CSA IMAGES

e are living through exceptional times and things are changing at a dramatic pace for businesses across the country. SMEs require urgent financing – particularly through today’s testing times when cash flow can make or break a business. While banks are known for lending during good times, they have a tendency of pulling the plug when things get ugly and funding is needed the most. Therefore, many businesses often shy away from finance arrangements that carry a high possibility of burning them if times get tough. Moreover, since legacy banks have various revenue streams and cross-sell opportunities, at times this means they are not particularly concerned about attrition rates when it comes to their clients.

Peter Maerevoet, Senior executive officer Tradewind Middle East Limited

Hence, the ongoing liquidity crunch will most likely be exacerbated further, as banks become more conservative and scale back lending due to tougher, more stringent credit policies. Factoring can provide the much-needed liquidity boost SMEs require, more so than ever before. By using export factoring, a company can finally entertain the idea of taking risk to sell on credit. Export factoring provides a full suite of trade finance benefits, including cash advances, credit protection, and collections and reconciliation services. If SMEs look at a factoring arrangement, they stand to get cash-in-bank, while a select amount of receivables are removed from their balance sheet. This results in improved leverage for the company, giving them room to grow. Naturally, this results in accelerated cash flows without the burden of associated debt. Not only is funding immediate, but export factoring is also an easy process – from the application to the account setup. It eliminates the rigid requirements that most SMEs face when seeking a bank loan. With less hoops to jump through, smaller companies can get the liquidity they need in order to focus on their core business and growth goals. There are also other challenges that come into play with traditional financing that can be difficult to pivot around. Bank services can provide funds that are limited or exhaustible, but funding from export factoring can grow as a company’s orders and invoices increase. Such scalable financing enables SMEs to commit to higher volumes of orders, knowing that they will have enough cash on hand while paying for other expenses involved in running a business. Due to its meaningful contribution towards improving visibility and control, factoring will be in high demand during the current crisis and after, as SMEs seek alternative sources of working capital financing. FACTORS TO CONSIDER

It is not entirely feasible to treat factoring as a quick-fix or short-term bail-out. Smaller companies should first ensure their books are completely gulfbusiness.com

November 2020 81

The SME Story Concerning times in order. They must also have a goal and a game plan in mind as they begin to apply for funding. At Tradewind Middle East, which is regulated by the DFSA, we look for accurate information and conduct background checks on all the buyers we intend to take exposure on. We study a company’s balance sheet, its receivables, and its order book for future order volumes. From the receivables, a select portfolio is shortlisted according to volumes and repayment morality, and a credit insurance check is conducted. If limits are available, we inform the client of our ability to take exposure domestically, and even on a cross-border basis. Further, we monitor – on the company’s behalf – risk concentrations and credit insurance ratings in order to mitigate and steer through any adverse developments – something which may not be entirely possible by the company alone. Such a service allows for the company to focus on its core business and for it to identify new avenues for growth.

Startup founders are more worried than investors about the impact of the Covid-19 crisis

3.5

3.0

Founders Sentiment Index

Investor Sentiment Index

(1= NOT WORRIED AT ALL TO 5= VERY WORRIED)

Sentiment Index by Country 0

Finally, one might wonder what happens in case of buyer insolvency. This is where the benefits of trade finance companies come into play – they can file an insurance claim against the buyer. For this purpose, through its insurance partners, the trade finance company may provide the insurance, or the company can choose to assign their insurance to their trade financier. All in all, bespoke trade finance institutions are altering the finance landscape for SMEs and many other companies in the region, providing them with the opportunity to grow their businesses, and without the constraints they would generally face if they were to seek traditional financing from a bank. It’s no secret that the backbone of economies are SMEs, and when equipped with powerful, alternative trade financing tools – they can at last flourish and grow unfettered. 82 November 2020

3.1 Egypt

3.3 UAE

3.5 Lebanon

3.8 Saudi Arabia

A ripple effect Startups expect Covid-19 to have a severe economic impact in MENA No impact

BESPOKE TRADE FINANCE INSTITUTIONS ARE ALTERING THE FINANCE LANDSCAPE FOR SMES AND OTHER COMPANIES IN THE REGION, PROVIDING THEM WITH THE OPPORTUNITY TO GROW THEIR BUSINESSES

Founders

1% 0%

Investors

21% 19%

Mild impact

55%

Recession

75% 24%

Depression

WHEN DO THEY EXPECT THE COVID-19 CRISIS TO END

Between Q4 2020 and Q1 2021

In Q4 21 or beyond

48% 61% 14% of founders

of investors

of founders

of investors

Winners and losers Fintech and ICT ventures accelerated fundraising, while retail, transportation, and entertainment ventures saw reduced valuations % SPLIT

11%

Education

11% ICT

49%

Fintech

Other

Transport

FACING REDUCED VALUATIONS

ACCELERATING FUNDRAISING

20%

Retail Trade

Healthcare

17%

Professional Services

54%

Other

Entertainment

SOURCE: INSEAD & MAGNITT H1 2020 SENTIMENT REPORT

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