The Abu Dhabi Fund for Development (ADFD) financed 10 key development projects worth Dh743.9 million ($202.55m) in 2021 as part of its efforts to support new programmes in developing countries, despite the challenges posed by the coronavirus pandemic.
The fund, owned by the Abu Dhabi government, provided six soft loans worth Dh642.5m in total to five projects in Rwanda, Turkmenistan, the Maldives, Lesotho and Guinea-Conakry last year, it said in its annual report on Thursday.
The fund also allocated Dh101.4m in government grants to develop four projects in the Comoros, Ethiopia, Uzbekistan and Mauritania during the period.
The ADFD was set up in 1971 with the aim of helping developing countries through the provision of concessionary loans for development projects to strengthen their economies, as well as making long-term investments and direct contributions.
Overall, the fund’s total loans, grants, investments and deposits at central banks to shore up foreign reserves in developing economies stood at Dh156.9 billion by the end of last year.
“The various strategic projects ADFD financed and programmes it launched in partnership with governments, national institutions and regional funds contributed to the realisation of sustainable development goals for 103 countries, improvement of the quality of life, and achievement of the objectives of the 2030 development plan,” said Sheikh Mansour bin Zayed, Deputy Prime Minister, Minister of the Presidential Court and chairman of the ADFD.
“The fund actively pursued the UAE’s policy of economic diversification through a strategic partnership with the private sector and enhanced the global competitiveness of national exports.”
The fund's projects — which are expected to help countries to “advance their economies and raise the quality of life” — are in various sectors such as infrastructure, transport, housing, agriculture and water, industry, renewable energy, education, health and tourism, the report said.
The fund is also supporting the development of the private sector in the UAE and has allocated Dh3bn for the 2021-2025 period to provide financing for projects that have a “tangible impact on the economy”, the report said.
The UAE, the Arab world's second-largest economy, is seeking to diversify its economy away from oil and has unveiled a number of new initiatives to support other sectors.
Last year, the UAE launched the Operation 300bn strategy to increase the industrial sector's contribution to the country's gross domestic product to Dh300bn by 2031, from Dh133bn in 2021.
Abu Dhabi also recently unveiled a new industrial strategy that aims to more than double the size of the emirate’s manufacturing sector to Dh172bn by 2031.
The Abu Dhabi Exports Office, the export-financing arm of the ADFD, is also working to support Emirati companies and help them to expand their businesses in international markets.
“Over five decades, the fund has made great strides in fulfilling its developmental mandate,” said Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation and vice chairman of the ADFD.
“The fund’s flexible strategies and proactive initiatives have also contributed significantly to the diversification and competitiveness of the national economy.”
ADFD’s total investments in 22 countries since its inception stood at Dh11bn while bank deposits at central banks hit Dh41bn in 2021, it said.
The total value of loans and government grants disbursed by the fund stood at Dh52bn and Dh52.9bn, respectively, by the end of 2021.
“The fund created opportunities for national companies by enabling them to develop and implement projects in beneficiary countries,” ADFD director general Mohamed Al Suwaidi said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
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Courtesy: Crystal Intelligence
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
