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Over the rainbow you may just find the Middle East 

By Reg Lascaris - Business Day, South Africa

Palm Islands Project in DubaiFOR South African exporters and brand builders “somewhere over the rainbow” no longer means the US or Europe.

For a new generation of forex-earning brands the location of that fabled pot of gold lies almost certainly in the Middle East.Cultural affinity, market similarities and commercial self-interest signpost the route to Middle East opportunity. Geography marginalises us in relation to America, Japan and parts of Europe. The Middle East is not nearly as remote; Riyadh and Dubai are a lot closer than New York and Tokyo.

Some South Africans already sense the Middle Eastern opportunity. Murray & Roberts is big in Dubai, the world’s fastest-growing city and home to 38% of the world’s cranes. You run into South African nurses all over the Gulf; ditto engineers, IT professionals, and hotel and catering managers.

The Middle East is fast sucking in expatriate South African skills. Expatriates form an incredible 90% of the working population in the United Arab Emirates (UAE) and 82% in Kuwait.

Periodically we see renewed focus on “Omanisation”, “Saudiisation” and so on, but when growth and strategic objectives beckon, this region goes for skills and experience every time.

Arab Gulf Co-operation Council (GCC) states averaged 5,9% gross domestic product growth last year, with Qatar at 8,8%. It pays to welcome skills and recognise ability. We should keep this in mind as we gear up for our attempt at 6% growth, especially as the lack of skills has already been identified as a potential constraint.

These nations are turning the desert into a building site. The construction programmes will add massively to infrastructure and the economic base. The value of property projects in the GCC plus Iran and Iraq tops $750bn. A third of these projects are in the UAE.

Big brands are also being built. Turkish white-goods brand Beko is now going global. Emirates is positioned to overtake British Airways, currently the biggest of the international airlines. Etihad, the UAE carrier, is eager to follow suit.

JSE investors celebrated a 28% gain last year; the Cairo stock exchange put on 162%. Dubai was up 142%, Saudi 104%, Jordan 93%, Kuwait 80% and Abu Dhabi 69%. Istanbul “lagged” with a 59% uptick. In 2005, initial public offerings (IPOs) in GCC states saw record oversubscription levels of 71 times, with the Aabar IPO setting an oversubscription world record of 808.

The Middle East’s advertising market doubles every four years. In just seven years, global advertising group TBWA has created a regional agency network covering eight countries.

Over that period I have had ample opportunity to track similarities between the Middle East and SA.

We both face the challenge of perceptions. We are dogged by images of crime, the Middle East by its reputation for chronic instability, despite peace and progress in many countries. We both see tourism as a key benchmark. It builds foreign earnings, creates jobs and highlights shifting perceptions.

In 2004, the Middle East overtook Africa for the first time, achieving 18% annual growth and logging 35-million tourist arrivals versus 33-million. The Middle East is now the world’s fourth most visited region.

Simultaneously, the first halting steps towards a more representative political dispensation are evident in states such as Lebanon, Egypt and even Saudi Arabia.

Youth profiles are similar. SA has a median age of 24. In Saudi Arabia, 39% of the population is under 15. In Lebanon the figure is 30% and in Iraq it’s up to 41%.

Historically, both SA and the Gulf suffer from commodity dependence and seek diversification through tourism, technology, telecoms and financial services.

The Middle East’s diversification stampede creates huge opportunities. Western multinationals are determined to cash in. They spend a fortune training their executives in cultural niceties and behavioural nuances.

Our companies have a head start. We have a significant Muslim population. Fast-tracking executive material from the Muslim community makes sense for South African groups trying to build a Middle East footprint. And in general terms, African hospitality and our culture of respect make a great preparation for the Middle East.

After all the cultural coaching, western executives are still confused when schedules and agendas are changed at the last minute. South African executives with their we-can-make-a-plan mind-set are more relaxed and amenable, a point instantly noted by Arab associates.

On numerous levels, South Africans are much closer to Middle Eastern opportunities than our western competitors. Huge deals are there to be done. Promising partnerships and profits await the Rainbow Nation.

Lascaris is president of the Africa, Middle East and Mediterranean region of the TBWA global advertising group and founding partner of TBWA Hunt Lascaris, SA.


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