Companies are pivoting for growth post-Covid, with the region remaining resilient throughout the crisis.
With GCs and legal decision-makers increasingly asked to advise on business strategy, many are enjoying a front row seat as their companies look to invest for growth post-Covid. As the region emerges from a difficult two years caused by the impact of the pandemic, more than three-quarters (76%) report that their businesses are either stable or growing financially. (see Fig 6)
Businesses also appear optimistic about future investment, with 43% of the legal decision-makers we surveyed planning to increase investment in the growth of their business over the next two years. (see Fig 7)
A Legal Counsel expert at a regional investment firm says: “We have been very active, investing in $100 billion-worth of assets in the past two years, so we’ve not been slouching during Covid. Expenditure has gone down, the oil price has held up and actually increased a little, so there are more dollars to spend.”
In sports and event management, where 67% say their businesses have been negatively impacted, sometimes severely, by the pandemic, the focus is now shifting to growth. Fraser MacKinven, General Counsel at sports and events business Flash Entertainment, says: “We are very much in growth mode; when the pandemic hit, we used it as a positive and focused on our longer-term plans, developing some of our strategic initiatives so that we were ready when normality resumed.”
We are very much in growth mode; when the pandemic hit, we used it as a positive and focused on our longer-term plans, developing some of our strategic initiatives so that we were ready when normality resumed.”
He agrees that the region has responded well to Covid, despite obvious challenges: “I certainly feel that, throughout the pandemic, the UAE has maintained a positive open-for-business, ‘can-do’ approach whilst prioritising health and safety. The FIFA Club World Cup is a great example, where Abu Dhabi stepped up and was able to deliver that in record time whilst ensuring that all health and safety protocols were followed. There is a desire to do things, but not at the expense of people’s wellbeing.”
Abu Dhabi has also recently signed a 10-year contract extension to continue to host the Formula 1 Etihad Airways Abu Dhabi Grand Prix until 2030, further cementing the UAE’s position as a regional sporting hub. Saudi also hosted its inaugural grand prix in December 2021, with a brand-new street circuit constructed in record time.2
When looking across countries, legal decision-makers in Oman have the most ambitious investment plans over the next two years: 49% say they will increase investment in their business, compared to the regional average of 43%. Strong economic growth underpins this optimism, with the economy expected to grow by 5.8% in 2022.3 With its focus on achieving a sustainable and diversified economy, Oman’s 2040 Vision Plan promises further growth.4
As investment by companies in the MENA region continues, there is a focus on establishing new business models, hiring new talent and investing in technology and innovation.
Mona Madi, Legal Director – Head of Legal & Compliance IMEA at retail and consumer business Henkel Jebel Ali FZCO, says: “When we look across the India, Middle East and Africa region, there is always room to explore further opportunities. We are continuously looking at areas that perhaps don’t have such a huge commercial footprint, to see how to better optimise legal support in those markets.”
Many companies are looking at business optimisation measures that include working capital optimisation and cost reduction programmes, building new alliances and divestments. Indeed, optimising business structures is identified as the primary legal-related challenge facing our respondents, ahead of developing and enforcing risk mitigation plans and improving corporate governance.
In financial services, Nasreen Bulos, Regional General Counsel for MENAT at HSBC, says her business sees many opportunities for growth across the region, with a focus on investing in areas that include digital banking, wealth management and sustainable finance. “We see huge opportunity in the Middle East, North Africa and Turkey. The growth potential of the region, which is home to many of the world’s most ambitious economic transformation programmes, is huge and the investments that we’re making in people, in digital, in products and propositions – and ultimately in customer service – should translate into significant new business over the medium term,” she says.
When looking across the region, Bahrain is most committed to investing in new technological capabilities: 41% of legal decision-makers say they are looking to invest in the next two years, compared to a regional average of 34%. Bahrain has taken significant strides in expanding its fintech industry in recent years, as seen in the establishment of regional fintech hubs such as Bahrain FinTech Bay (BFTB). Established in 2018, BFTB has become the largest financial technology centre in the Middle East, focusing on investing in advanced laboratories, business accelerators and educational opportunities.5
The growth potential of the MENA region, which is home to many of the world’s most ambitious economic transformation programmes, is huge and the investments that we’re making in people, in digital, in products and propositions – and ultimately in customer service – should translate into significant new business over the medium term.”
Of the legal decision-makers we surveyed looking to expand into new geographies (22% of those surveyed), 81% are looking to grow their operations in Africa. That includes 46% who are looking to grow in Southern Africa, 19% in East Africa, 18% in Central Africa, 16% in West Africa and 3% in North Africa.
With a fast-growing population (estimated at 2.7% a year), a growing middle class, improving business conditions and an economy recovering from the Covid pandemic, sub-Saharan Africa is gathering increasing attention from companies looking to expand into new geographies. According to the World Economic Forum, the region’s economy is expected to grow by 3.8% in 2022 – more than twice as fast as South Asia (1.2%) and Latin America (0.9%).6 (see Fig 8)
Amelito Mutuc, General Counsel (Business Development) at ACWA Power, says: “ACWA Power is one of the Saudi national champions, so we have a development mandate to expand our market into new jurisdictions. We wave the flag by establishing businesses or projects in new jurisdictions and we have targets to open in a certain number of new places on an annual basis. Our latest target is West Africa and the focus of our geographic expansion will be on the renewable energy front.”
ACWA Power is one of the Saudi national champions, so we have a development mandate to expand our market into new jurisdictions. We wave the flag by establishing businesses or projects in new jurisdictions and we have targets to open in a certain number of new places on an annual basis.”
The hotel and leisure sector is another industry that has been hit hard by Covid, with 66% of respondents working in the sector saying their business was negatively impacted, sometimes severely. But Goktug Seckiner, Managing Director and Board Member at hospitality business Dogus Group, says the speed of the bounceback in the UAE means his company is now back in growth mode.
“The UAE is one of the markets that has come out of the pandemic situation very quickly and the pace of recovery was much faster than we had anticipated,” says Seckiner. “We see particularly high-spending restaurants dominating the market in respect of the recovery. Since our focus is on the high-end food and beverage segment, we had one of our best years last year. Now we are expanding in the region – predominantly in Saudi Arabia, followed by the UAE and then Qatar. We are also looking for opportunities in Bahrain and Kuwait.”
Captain Abdulla Al Hayyas, Acting Director of Marine Transportation Affairs at the Ministry of Energy and Infrastructure, United Arab Emirates, says that his industry is recovering from the impact of the pandemic. “We are seeing a lot of activities going back to normal after the pandemic, with the vaccine rollout helping countries to reopen their borders. We are also seeing less seafarer or abandonment cases – an indication that ship owners are able to meet their costs. Tourism is improving, oil prices are increasing and governments are investing in postponed projects. As a result, exports and imports are picking up, and life is returning to normal.”
Urvaksh Doctor, Senior Legal Counsel for MEA at financial technology business FIS in Dubai says his company sees particular opportunities in Saudi Arabia. “Saudi has long been an important market, but it is even more important now, purely because we are seeing a new level of sophistication and a desire to move to an open-market economy. The country is allowing more foreign investment and embracing companies like ours,” he says.
Saudi has long been an important market, but it is even more important now, purely because we are seeing a new level of sophistication and a desire to move to an open-market economy. The country is allowing more foreign investment and embracing companies like ours.”
Expanding into Saudi requires navigating a fast-evolving regulatory regime. “There are new requirements coming in,” says Doctor, “with the most recent one being that by 2024 international companies must have a headquarters in Saudi in order to continue getting government contracts. We are looking at that pretty seriously and looking at the ever-evolving regulatory and legal landscape and advising the company, which is looking to us to be the first point of contact.”
He says Qatar is another market that will likely see escalating growth as it welcomes more investment from MNCs based in the UAE, and points to the Qatar Financial Centre as a leading onshore business and financial centre – located in Doha – looking to establish as a major trade and investment hub.
Our survey finds that Qatar is doing better than the regional average in terms of business performance – 48% of the legal decision-makers we surveyed experienced either single or double digit growth in the previous financial year, compared to the year before. This compares to the regional average of 42%. And businesses are suitably optimistic about the future, with 13% of legal decision-makers in Qatar expecting to invest significantly in their business over the next two years, compared to the regional average of 9%. Qatar’s long-term development plan set out under the National Vision 2030 is one reason for this confidence. The plan aims to diversify its economy, with a focus on infrastructure spending related to transport, education, sports, healthcare, telecommunication and hospitality playing a central role in the plan.7
