Alain Bejjani, chief executive of Majid Al Futtaim, said the company's retail revenue held up in 2020 due to "the resilience of our people and business model" as online sales rose 188 per cent. Courtesy Majid Al Futtaim
Alain Bejjani, chief executive of Majid Al Futtaim, said the company's retail revenue held up in 2020 due to "the resilience of our people and business model" as online sales rose 188 per cent. Courtesy Majid Al Futtaim
Alain Bejjani, chief executive of Majid Al Futtaim, said the company's retail revenue held up in 2020 due to "the resilience of our people and business model" as online sales rose 188 per cent. Courtesy Majid Al Futtaim
Alain Bejjani, chief executive of Majid Al Futtaim, said the company's retail revenue held up in 2020 due to "the resilience of our people and business model" as online sales rose 188 per cent. Courte

Economy

Majid Al Futtaim's Alain Bejjani: Private sector can boost Mena region's GDP

Better integration between public and private areas will drive sustainable growth, the expert says

Alice Haine
Alice Haine

January 29, 2021

  • English
  • Arabic

Alain Bejjani, chief executive of Majid Al Futtaim, said private sector companies in the Middle East and North Africa can contribute “much more” to gross domestic product, a move that will “unlock the real potential of the region”.

Mr Bejjani, who heads up the Middle East's biggest mall operator, which is privately owned, told an online session at the World Economic Forum that the downside of the pandemic was the tendency of regional governments to want to “deal with their own issues”.

“We have a bigger role to play as the private sector to actually push towards better and more integration and finding global solutions to global problems,” Mr Bejjani told delegates on Thursday.

“Through better economic integration, through enlarging the size of our market and through working seamlessly on and driving the principles of stakeholder capitalism, we will also be able to drive much more FDI [foreign direct investment] into our markets.”

Mr Bejjani, who oversees a network of malls, retail outlets and the company’s Carrefour supermarkets, said regional governments are now much more aware of the importance of public-private partnerships.

“There is more narrative about how to actually engage with the private sector, which I think is important," he said. "We have a much better framework across the region when it gets to engaging with the private sector."

The reality, however, “especially in the economies that matter the most”, is that the "inherent desire" of the government or public sector to actually engage with the private sector “somehow comes across as competing with the private sector,” Mr Bejjani said.

"I would say a more engaging posture with the private sector will go a long way in driving sustainable growth,” he said. “I don't think we're there yet, although I believe that we are much more aware of the importance of it.”

Majid Al Futtaim is pushing ahead with the regional expansion of its Carrefour franchise, particularly in East Africa. The company already operates in Kenya and Uganda and is considering new markets as well, Mr Bejjani told The National last month.

The lawyer turned retail executive is bullish on Saudi Arabia and Egypt – two markets where Majid Al Futtaim is planning to expand. In the kingdom, the company is continuing to invest in its cinema business despite the pandemic.

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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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