Arab states work with the world but not with each other, Davos hears

Alain Bejjani said, ‘This region (MENAP) doesn’t work together. It works with the world but not with each other.’ (Courtesy WEF)
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Updated 21 January 2020

Arab states work with the world but not with each other, Davos hears

  • Majid Al Futtaim CEO Alain Bejjani: I think you’ll be surprised when I tell you that only 16 percent of the trade in the MENAP region is within the region
  • Alain Bejjani: We forget sometimes employment is a result of economic growth — you can’t create jobs without economic growth

LONDON: Arab economies need to break down barriers and start to work together if they are to stand any chance of creating the millions of jobs they need to grow, the World Economic Forum in Davos heard.
Regional economies are estimated to have grown by just 1 percent for 2019 as a weaker oil price, geopolitical threats and the impact of global trade wars have hurt output.
But a panel of Middle East business leaders and ministers called for more efforts to break down barriers and slash red tape in order to create the sort of economic growth needed for meaningful job creation.
“We forget sometimes employment is a result of economic growth — you can’t create jobs without economic growth,” said Alain Bejjani, the CEO of Majid Al Futtaim Holding, the Dubai-based retail conglomerate that operates malls across the Middle East.
He said that most global growth was creates through regional trading blocs but that this model had not yet worked successfully in the Middle East.
“If you look at the ASEAN region as an example — it has 56 percent of its trade happening within the region. I think you’ll be surprised when I tell you that only 16 percent of the trade in the MENAP region is within the region. If you take oil out it is less than 5 percent. So in reality this region doesn’t work together. It works with the world but not with each other.”
Bureaucratic processes have also stymied growth according to Majid Jafar, the CEO of UAE-based Crescent Petroleum.
“Registering a company can take more than a year in some countries,” he said. “So how can we make that quicker? Look at what is standing in the way and how can we improve it.”
The Middle East and Central Asia is expected to record 2.8 percent growth in 2020, the IMF said on Monday. That was slightly lower than its October outlook and reflecting the latest move by the OPEC+ group of oil producers to extend supply cuts. It expects the region to pick up speed in 2021 with growth of 3.2 percent.


Saudi central bank injects $13.333bn to support liquidity of banking system

Updated 02 June 2020

Saudi central bank injects $13.333bn to support liquidity of banking system

  • Latest cash boosts from Saudi Arabian Monetary Authority follow March fund to support SMEs, employment

RIYADH: The Saudi Arabian Monetary Authority (SAMA) is set to inject $13.333 billion in the banking system to enhance the liquidity in the sector, the Saudi central bank said.

The stimulus package aims to enhance its liquidity and enable banks to continue providing credit facilities to their clients, SAMA added.

The new support follows SAMA’s decision in March to provide SR50 billion for banks to provide debts and delay overdue loan installments for small and medium-sized businesses (SMEs) to help them maintain jobs.

SAMA added that the cash will help to continue “supporting and financing the private sector through modifying or restructuring their finances without additional fees, and supporting plans to maintain employment levels of the private sector.”

Dr. Ahmed Alkholifey, governor of SAMA, told Al-Arabiya that the funds will come in the form of one-year no-interest deposits in all Saudi banks.

Alkholifey added that the SAMA move aims to enhance liquidity in the banking sector as well as reducing the burden on some banks that delayed payments of companies and weren’t covered by the March support package, and those banks with high exposure to enterprises in Makkah or Madinah.

He added that SAMA is going to activate the open market operation for all banks during this month to enable them to get the required liquidity levels from SAMA.

“We are monitoring the liquidity levels on a weekly basis since the (coronavirus) crisis started, we care about both the liquidity index and the quality of debts, regarding the liquidity index we monitor the debt-to-deposits where there is a slight increase, we set it to not exceed 90 percent,” he said, adding: “Three banks have exceeded that percentage slightly, this might be one of the indicators of pressure on liquidity but in reality there is no big pressure.”

He added that injecting liquidity aims to give more confidence to the banking sector and to enable them to give more loans after reopening the business activities.

Alkholifey added that since SAMA announced providing supporting packages for SMEs in March, more than 65,000 contracts have been signed between SMEs and banks to benefit from the supporting package.

Talat Hafiz, secretary-general of the Media and Banking Awareness Committee for Saudi banks, said that SAMA’s new stimulus package is an extension to initiatives taken by the central bank to ensure the stability of the system amid the coronavirus crisis and its economic impacts.

“It’s one of SAMA’s monetary tools that it uses to ensure there is enough liquidity in the banking sector to enable banks to carry out their duty of financing the private sector in general and the SMEs in particular,” he told Arab News.

“The banking sector shows very healthy financial indicators, as the first quarter of this year has shown the Capital Adequacy Ratio of the banking sector recording 18.6 percent, which is much higher than Basel requirement. 

“The total assets of the banks has grown to 14 percent in the same period compared with last year. Loans and credit facilities extended to the private sector have grown by 12 percent.”

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