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Ed Webb

Saudi Arabia Suffers Shock Collapse In Inward Investment - 0 views

www.forbes.com/...abia-shock-collapse-investment

KSA Saudi investment FDI economy politics UAE Qatar Jordan MBS

shared by Ed Webb on 08 Jun 18 - No Cached
  • Inward investment into Saudi Arabia collapsed last year
  • According to the latest UNCTAD World Investment Report, published on June 7, foreign direct investment (FDI) into Saudi Arabia last year amounted to just $1.4 billion, down from $7.5bn the year before and as much as $12.2bn in 2012
  • the likes of Oman and Jordan overtaking it in 2017, with inward FDI of $1.9bn and $1.7bn respectively
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  • While the Saudi economy has been losing out, others have been gaining a bigger piece of the pie. The UAE has seen its share of regional FDI more than double over the past six years, from 19% in 2012 to 41% in 2017
  • even Qatar – which has been the subject of an economic boycott by Bahrain, Egypt, Saudi Arabia and the UAE since June last year – managed to increase its FDI take in 2017, attracting $986m compared to $774m a year earlier
  • significant divestments and negative intra-company loans by foreign multinationals
  • FDI to Saudi Arabia has been contracting since the global financial crisis in 2008/09. And although there has been a similar pattern across the region – inflows to West Asia have fallen in most years since hitting a peak of $85bn in 2008 – the performance of Saudi Arabia last year is still appreciably worse than any other economy in the immediate neighbourhood. It is also far worse than the global picture – worldwide FDI inflows were down 23% last year to $1.43 trillion
  • the authoritarian tendencies of the Saudi regime have at times undermined the confidence of potential and actual investors alike
Ed Webb

Debt is No Way For Non-Oil Arab States to Grow - Bloomberg - 0 views

www.bloomberg.com/...or-non-oil-arab-states-to-grow

Egypt Jordan Tunisia Morocco economy investment FDI debt remittances integration regionalism analysis opinion

shared by Ed Webb on 01 Aug 19 - Cached
  • many of the non-oil exporting nations in the Middle East and North Africa are undergoing a process of redefinition of how they are linked with the global economy. It is not going well.
  • Egypt, Tunisia, Morocco and Jordan are becoming more dependent on external borrowing than on foreign direct investments compared to the pre-2008 period. This is visible with declining ratios of FDIs to GDP, in contrast with increasing ratios of foreign debt to GDP and total exports
  • The relative political stabilization in all four countries as of 2014/2015 did not allow them much room for full-fledged recovery due to the global economic slowdown. This made it harder for all of them to achieve export-led growth and attract FDI, leaving them with foreign borrowing as the only viable option. Foreign debt accounts for much of the apparent recovery, as expressed in growth rates.
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  • The ratio of external debt to total exports of goods, services and primary incomes was even more dramatic for all four countries. This is a proxy of the capacity of these economies to service their growing external obligations. Between 2010 and 2017, the ratio increased from 75%, 99.6%, 97.6% and 125% for Egypt, Tunisia, Morocco and Jordan re2spectively, to 190%, 178%, 125% and 198% in 2017. All the figures exceed the 77% limit that, in the World Bank’s reckoning, foreign debt has a negative impact on growth.
  • In Egypt, the ratio of external debt to GNI more than doubled from 17% in 2010 to 36% in 2017. The change was as pronounced in Tunisia, were the ratio jumped from 54% to 83%. In Morocco and Jordan, the ratios changed as well from 65% and 29.6%, to 47% and 75%.
  • International capital markets are unstable and global trade is contracting. Governments should instead target local investment in brick-and-mortar sectors that can deliver real growth, create jobs and possibly reduce the dependency on some imports
  • better use of the net inflows of capital they have received for years in the form of remittances. Instead of channeling them into non-tradable sectors like real-estate, as has been often the case, they should be used to finance investment in more productive sectors
  • trade-oriented regional integration, opening markets in oil-rich countries. There might be room also for adding a regional dimension to plans for industrial diversification by Saudi Arabia and the United Arab Emirates, by coordinating flows of investment and technology and skill transfers in sectors like petrochemicals and hi-tech services.  Such measures would generate growth and employment for poorer allies and cement regional geopolitical arrangements
Ed Webb

UAE to open second military base in east Africa | Middle East Eye - 0 views

www.middleeasteye.net/...sion-eastern-africa-2028510672

UAE military economy FDI Somalia Somaliland Ethiopia Eritrea diplomacy Yemen

shared by Ed Webb on 17 Feb 17 - No Cached
  • The United Arab Emirates is going to set up a second military base in the Horn of Africa, sparking concern among some governments in the region.The Somaliland parliament approved the deal for the northern port of Berbera on Sunday
  • Under the 30-year deal, the Emirati government will have exclusive rights to Somaliland’s largest port and manage and oversee operational activities.
  • DP World, the UAE’s ports operator company, will supervise the port, which will gain a naval base as well as an air base. The lease of the port is contingent on the $442 million deal with DP World.
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  • Somaliland will get investment as well as international recognition: no other country has yet recognised the breakaway territory – which separated itself from the rest of Somalia in 1993 - as an "independent state"
  • The Eritrean base has been used by the UAE in the Yemen war against the Houthis. It is not known whether the facility at Berbera will have a similar purpose
  • Abu Dhabi is reaching out to countries in and around the Horn of Africa, as it looks to increase its non-oil revenue through other avenues including real estate, trade and financial services.
  • the UAE will be engaging in trade across the port, and for this, it would require a sustainable road network across Berbera. Hence, as the minister said, it will create opportunities for the local people on infrastructure development.
  • the Somaliland deal has angered Ethiopia, one of the regional powers in the Horn of Africa, which itself has economic ties with the UAE.As recently as last year, the UAE and Ethiopia signed several investment deals, under the terms of which the UAE is legally bound to protect the economic interests of Ethiopia
Ed Webb

Saudi Arabia, China Sign Deals Worth Up to $65 Billion | Foreign Policy - 0 views

foreignpolicy.com/...elt-one-road-saudi-vision-2030

KSA Saudi China economy energy oil trade investment FDI diversification

shared by Ed Webb on 16 Mar 17 - No Cached
  • Saudi Arabian King Salman traveled to China Thursday to deepen economic ties between the world’s biggest oil exporter and the world’s second-largest oil consumer. It’s a key stop in the king’s six-week trip to Asia that comes as Riyadh struggles with a slumping oil market and a desperate need to diversify its economy.
  • up to $65 billion worth of economic and trade deals, spanning sectors from energy to space
  • more than 20 agreements on oil investments and in renewable energy
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  • China even discussed taking a stake in Saudi Aramco, the state-owned oil firm, which is preparing for a public listing
  • King Salman, and especially crown prince Mohammed bin Salman, have launched an ambitious campaign to shock the country out of oil-dependency and diversify the economy under the auspices of its Saudi Vision 2030 plan. It’s culminated in the unusual six-week trip to Asia that includes stops in Japan, Malaysia, Indonesia, Brunei, and the Maldives as Salman courts foreign investors
  • Xi couched China’s future role in the Middle East in purely economic terms, citing his country’s ambitious One Belt One Road initiative, China’s state-run Xinhua News reported. He stressed China would continue its longstanding policy of non-interference in the Middle East, in contrast to the United States and European counterparts
  • But China has steadily ramped up involvement in the region as its dependence on Middle Eastern oil grows. Beijing began building its first overseas military outpost, a naval base in Djibouti on the Horn of Africa, in 2016. And it funneled thousands of peacekeepers to U.N. missions, including in oil-rich countries like South Sudan.
Ed Webb

Neither Public nor Private: Egypt Without a Viable Engine for Growth - The Tahrir Insti... - 0 views

timep.org/...out-a-viable-engine-for-growth

Egypt politics military economy opinion analysis IMF finance

shared by Ed Webb on 13 Mar 23 - Cached
  • The program has the ambitious objective of reducing the role of state-owned enterprises—in which the IMF includes military-owned companies—and encouraging their replacement with “inclusive private sector led growth.” Indeed, Egypt’s Prime Minister Mostafa Madbouly called for just that last year, saying he is aiming for the share of private investment in Egypt’s economy to rise from 30 percent to 65 percent in the coming three years. However, when one examines the market conditions in Egypt and globally, it becomes clear that such an expansion of private investment is clearly unrealistic.
  • a massive parallel market for hard currency emerged, with its own exchange rate. The parallel market even operated internationally, with Egyptian expatriate workers paying their Saudi rials or Kuwaiti dinars to dealers in the countries where they worked, who then had partners in Egypt who would disburse Egyptian pounds to awaiting relatives at the black-market rate. In 2015, before new reforms were introduced, the central bank governor at the time Hisham Ramez estimated that as much as 90 percent of Egypt’s remittances were being lost to the parallel market, circumventing the country’s official banking system and starving banks of much needed hard currency liquidity. For perspective on the seriousness of this issue, remittances in recent years have brought more dollars to Egypt than Suez Canal revenue, Foreign Direct Investment (FDI), and tourism combined.
  • Inflation already pushed past 20 percent last month and this is only the beginning of a year or more of price corrections as markets absorb the latest dramatic devaluation of the country’s currency. While in 2016 and 2017 consumers cut back on beef and chicken, replacing them with eggs as a source of protein and fats, eggs today are too expensive for many, leading the government to encourage the consumption of chicken legs.
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  • The new IMF program requires 20 million vulnerable Egyptians to receive cash transfers by the end of January, but three years ago when things were far less precarious, there were already 30 million Egyptians in poverty and the World Bank estimated 60 million Egyptians were near or below the poverty line. Today, poverty levels are almost certainly higher and despite a modest increase in social protection coverage, domestic demand in the coming year will likely weaken even further
  • the IMF appears unrealistic about the coming pain, estimating just 14 percent inflation in the coming year. They are also likely to be unrealistic about how quickly growth can be achieved. It is not just the private sector that will not grow in the near term due to the many deterrents facing Egypt’s business community. 
  • Egypt’s GDP growth for the past several years was buoyed by enormous levels of public spending on roads, bridges, new cities (including a new capital city), massive rail projects including the world’s longest monorail line, and even a number of presidential palaces.  Now that the state is being required by the IMF to cut unnecessary large project stimulus and its ability to borrow is heavily constricted, the country’s growth model is at risk of decelerating.
  • The IMF has finally started to seriously engage with Egypt’s sizable governance issues and calls for reducing the size of the military’s economic empire which has done enormous damage to the country’s economy and private sector
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