The UAE estimates the value of business deals to come as a result of the normalisation of relations with Israel to be in the range of $300 million to $550 million (Dh1.1 billion – Dh2bn).
Minister of Economy Abdulla Al Marri said that an exact figure would be announced soon. Israeli officials have estimated there will be $500 million in trade between the two nations.
Mr Al Marri has been in Washington this week as part of a UAE delegation led by Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation. Sheikh Abdullah signed the Abraham Accord at the White House on Tuesday.
Mr Al Marri said “it was a day where we look towards the future with optimism, hope and confidence”.
The peace treaty sets out the normalisation of relations between the UAE and Israel including co-operation across a number of sectors including health care, food security, aviation, finance, tourism, energy and science and technology.
Mr Al Marri said he and Israel’s economy minister during a call on Wednesday discussed how any economic deals or initiatives would benefit Palestinians.
“We have confirmation and assertion from both parties that this agreement would bring benefits for the Palestinians.”
More broadly, Mr Al Marri said, “everyone would benefit” from stronger economic growth that could be sparked by the accord.
The UAE and Israel “will allow goods, services, investments to grow across our borders, we will host an exchange of scientists, executives, the students, academic experts and religious leaders and tourists”.
The UAE's position as a regional hub offers Israeli companies an opportunity to scale up, he said, comparing the Emirates with Israel's economic strengths as mentioned in the book Start-up Nation.
“So from start-up nation in Israel to scale up nation in the UAE … how can the UAE be a gateway for North Africa, for the Middle East, for Asia, as well latching on our expertise in logistics, and transportation, and what we're really good at, and the UAE is a great place of scale up.”
“I think it's important to look at that we are, in the UAE, very strong on trade. We're very strong as hubs of logistics of airlines of construction, and as well as advancement of tourism as well in the region.
“We don't need to compete, we can complement and that's important.”
Joint development of solar power for the benefit of the entire region could be a key area of co-operation for the UAE and Israel, he said. Food security is also another important sector for the Middle East being discussed by the UAE and Israel.
The two countries are approaching the opportunity presented by the accord with “an attitude of excitement, curiosity, and a lot of ambiguity”.
The UAE has been looking at how it can be more agile and adaptive in the wake of the global Covid-19 pandemic, he said. The plan for the future of the economy after it has subsided is to diversify its mix further and ensure it is fit for what will be needed a decade from now, Mr Al Marri said.
Investment in research and development was the most critical factor in helping economies to pick back up.
“Simple as that investment in R&D technology that will take you further. I think that's the most important part. Another part is reducing tariffs on trade. That would help us as well to trade faster and get the economy back on recovery straightaway,” he said.
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.”
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
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A list of the animal rescue organisations in the UAE
