Reprieve for small shops in Abu Dhabi is welcome



As readers of our letters-to-the-editor column will know, Abu Dhabi residents are not all convinced that the city needs modern grocery stores with automatic doors, steel roofing, a minimum floor size and CCTV. But there is more agreement that the closure of hundreds of small groceries early this year inconvenienced many people.

So the newly-announced decision to allow those small stores that have not yet closed down another six months to accomplish the required renovations is highly welcome. And the whole process should provide a learning experience for all concerned.

The authorities mandated the upgrade - or closure - of small stores on the basis of health and safety concerns that all of us can understand.

On the other hand, there is the question of convenience. Consumers spent about Dh1 billion a year in Abu Dhabi's small grocery stores, according to a 2011 study by the Abu Dhabi Government. Most people had such a shop in their neighbourhood, and enjoyed the ultimate convenience of speedy free home delivery.

The 1,300 neighbourhood stores, however, were required to change to meet international standards by following food safety and hygiene rules, using modern technologies. The Abu Dhabi Food Control Authority gave the shopkeepers an 18-month warning of last month's deadline, and some retailers managed to meet the schedule and follow the rules. But hundreds failed to do so, many because they could not afford the costs, now estimated by the authorities at between Dh93,500 and Dh137,500. And so they were forced to go out of business.

Now, The National reported yesterday, some small shops not yet closed have been given an extra six months to meet the standards, which will be made clear to them by the Food Control Authority.

This relaxation of the deadline is good news for the retailers, and very welcome for their customers. But giving a deadline extension now suggests that 18 months was not enough time to get the message across.

Officials and retailers alike can learn from this. In future, changes affecting a whole class of shops, however necessary, can be rolled out with clearer advance communication, fuller information and more consultation. Official determination can go hand in hand with clarity and flexibility, so that change can come with minimum disruption.

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Name: HyperSpace
 
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Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
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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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Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5