Why 'made in the UAE' makes more than just good business sense

A skilled, educated workforce is just one of the UAE's advantages when it comes to further developing its manufacturing sector. Courtesy: Higher College of Technology.

Self-sufficiency is the cornerstone of prosperity for any country. Although the transformative potential of the UAE’s oil wealth was apparent even before the union of 1971, the challenges presented by its arid desert landscape and lack of modern infrastructure spurred its leaders, particularly its Founding Father, the late Sheikh Zayed, to find ways to steer the new country away from dependency.

As well as investing in health, education and transport, the UAE recognised the importance of developing its capacity to produce food. Sheikh Zayed himself is known to have said: "Give me agriculture and I'll guarantee you civilisation." Hydroponic farms, crop breeding and even sending young Emiratis overseas to study agricultural science were all part of making a modern economy.

Importantly, these processes were done in partnership with outside investors and talent, from working with western energy majors to develop hydrocarbons to recruiting teachers from across the Arab world to educate the UAE’s workers of the future. Fast forward to 2024, and it was announced this week that the UAE’s industrial sector will receive an additional Dh23 billion ($6.3 billion) in funding, backed by major companies. A closer look at this significant development reveals a link to the Emirates’ past and its proven drive for self-sufficiency.

Industrial growth in the UAE is to be supported with funding from two of the country’s biggest companies: energy giant Adnoc will contribute a further Dh20 billion while Pure Health, the largest healthcare group in the Emirates, will provide another Dh3 billion. At the same time there will be a new lending programme worth Dh1 billion to support small and medium enterprises, in co-ordination with Emirates Development Bank and other commercial banks.

In addition, a scheme to provide competitive electricity prices for industrial companies in Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah was launched, in partnership with the Ministry of Energy and the Emirates Water and Electricity Company.

This combination of forces – financial, logistical and commercial – gives this drive to develop UAE manufacturing the character of a national movement. This is because building a strong industrial base is not just about being profitable. Establishing and maintaining rigorous domestic supply chains for as many products as possible leaves the country less vulnerable to global shocks such as we’ve witnessed with the Covid-19 pandemic or international financial crises.

This process is also part of the continuing maturation and diversification of the UAE economy from one primarily based on energy exports to one that not only offers a range of services but can produce goods at home too. The Emirates’ 21st-century advantages should outweigh any initial misgivings about its tough geography: the country has first-class infrastructure, well-established ports and air links, an educated local workforce, strong regulation, a commitment to intellectual property rights and so on.

The UAE’s flexible approach to business is also important - the proliferation of nearly 50 free zones allows the country’s seven emirates to tailor their approach in the way that suits them best; this is an agile approach to business that makes sense when seen as part of the flexible global economy. As with any endeavour there are issues to be mindful of: manufacturing often demands high initial investment, producers must reckon with stiff global competition, increasing automation can threaten jobs and there are environmental consequences from industrial output. However, these are all issues that the UAE has been thinking about for years and has plans in place, as was on display at this week’s Make it in the Emirates forum.

The size of this $6.3 billion investment and the range of companies and sectors involved in it, show that this is a serious next step for the UAE's economic diversification. More importantly though, it harks back to that pioneering spirit seen during the union when amid the rush to build there was also a long-term, sustainable vision for the future.