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July 19, 2017
OPEC’s declining clout in a post-shale oil world
The first round of production cuts was agreed in November 2016 and was effective during January 2017 and was aimed at cutting down 750,000 barrels of oil per day from the global supply. Second round of the production cuts announced in May 2017 is aimed to take out 1.8 Mn barrels per day which is aimed at balancing the market. While most of the countries have agreed to the cut, some of critics of the plan point out that the...
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June 28, 2017
Can startups be a solution for job creation?
The GCC region too has caught-up with this global phenomenon and has some successful start-up stories to boast about. Start-ups are being projected as forerunners of economic growth through job creation and also pursued as the solution for job creation. However, to what extent this presumption about start-ups holds well is debatable. Do start-ups create jobs? Table: Increase / Decrease in Employment Sectors 2012 2013 2014 2015 2016 Construction (27,780) (24,608) 99,087 69,313 56,937 Trade and Repair Services 56,312 41,756...
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April 27, 2017
SME Startup Stories in GCC – What can we learn?
These success stories highlight the value SMEs deliver to GCC economic imperatives. Even a cursory glance at the case studies reveal that these companies have shown remarkable prowess in identifying ideas that speak to customer pain points and have turned them into practical companies through actionable business models. Another notable characteristic is that, in keeping with trends in the rest of the world, these companies have harnessed digital business platforms to drive their revenues, growth and scalability. Coinciding with the...
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April 6, 2017
Remittance agents can advance with Blockchain technology
The article originally appeared in The National | Business. Traditional business models are being challenged by new disruptive technologies whose speed of development makes the "catch-up" act very difficult. However, if something can provide solutions to problems encountered by businesses and individuals, it is most certainly welcome. One of the biggest problems is faced by the large expat population in the region, which relies on remittances to transfer cash across borders. For an industry worth nearly US$100 billion in the GCC,...
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March 9, 2017
Who should worry most about VAT in the UAE?
The article originally appeared in The National | Business. By January 1, 2018, it is expected that value added tax (VAT) will be applied at a rate of 5 per cent on most goods and services in the UAE and wider GCC region. The GCC governments will face a combined fiscal deficit of about US$350 billion over the next five years, according to the IMF, which bases its estimate on an oil price of $56 per barrel. This means that...
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February 28, 2017
[Gulf Business] Alternative financing options for the GCC
The article originally appeared in Gulf Business. Traditional financing options, such as bank funding, continue to rule the roost in the Gulf region. Rising oil exports led to large government revenues, which usually ended up as deposits in the region’s banking system and constituted a significant source of low-cost funds. However, the current lower oil price environment and the resulting budgetary deficits have forced market participants to look at alternative sources of funding, such as private equity, venture capital, peer-to-peer...
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November 30, 2016
GCC debt deluge: big-ticket issues, even by international standards
The article originally appeared in The National | Business. The GCC is raining debt issuances. From almost nothing a few years ago, all we hear and read these days is the jumbo-sized bond issuances from Saudi Arabia, Qatar, Kuwait, Bahrain, Abu Dhabi etc. The Saudis just closed a successful US$17.5 billion issue that was oversubscribed by more than four times, while Qatar raised $9bn in May followed by a $5bn sale by Abu Dhabi. Even by international standards, these are...
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September 20, 2016
Why UAE interest rates are more negative than they appear
The article originally appeared in The National | Business Banks in the UAE pay 1.25 per cent on time deposits with a maturity of one year. While this may look measly, two things matter for consideration here. First, interest rates are still positive in the UAE, unlike Europe where they turned negative. (Yes, some European banks demand interest from depositors.) Second, while the interest received by UAE depositors is positive, this is technically termed as nominal rate. When adjusted for...
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August 24, 2016
Should GCC banks be wary of Fintech entry?
The western countries, especially the US, have adopted technology at a much faster pace than the rest of the world. At present, almost 80% of Fintech investment happens in the US, followed by the UK. Developed markets in the Asia Pacific have also been investing and implementing Fintech solutions in recent times. However, adoption in the GCC is still in its infancy. But with growing awareness, Fintech is slowly breaking ground in the region. Digital-only banking Digital-only banking is...
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August 3, 2016
Bankers can finally look forward to merger activity
The article originally appeared in The National | Business The fee-based investment banking business has four key components – syndicated loans, equity capital markets, debt capital markets and mergers and acquisitions (M&A). While in other markets we can witness activity across these four components, in the GCC investment banking advisers depend on syndicated loans for their survival – 50 per cent of total investment banking fees on average. Equities is dull thanks to poor performing capital markets and the related dull...