Delving deeply into the MENA region from a financial, marketing, and linguistic perspectives, this article demonstrates the ease of doing business in MENA region. Despite the global pandemic and the economies shrink triggered by the lockdown, the MENA region will quickly pick up and resume growth, an estimate supported by the International Monetary Fund forecast projecting growth in the region at 4.7% in 2020. Add to this optimistic estimation, the great concern of most governments and actors in the region over technology and infrastructure development, and their efforts for recovery from this crisis to provide a favourable environment for doing business in MENA region.
Doing Business In MENA Region From A Financial Perspective
On the financial level, the ease of doing business in MENA region is based on solid grounds. MENA region bagged foreign direct investment (FDI) of about US$32 billion in 2018, with the UAE attracting the largest amount of FDI at US$10.4 billion, followed by Egypt at US$6.8 billion, and Oman at US$6.3 billion. The regional trends in 2019, according to the Investment Climate Report issued by the Arab Investment and Export Credit Guarantee Corporation (Dhaman), show that FDI flows into the Arab economies in the region accounted for 6% of global greenfield FDI in 2019, with project numbers accounting for 5%. The UAE dominated FDI by the number of projects and recorded one of the biggest increases in FDI in absolute dollar value in 2019, while Egypt had both the highest total and the highest average investment at $13.7 billion overall and $98 million per project.
The top 8 destination countries for FDI to the region were Jordan, Tunisia, Morocco, Egypt, Saudi Arabia, UAE, Oman, and Bahrain, but the strongest increase of the number of projects was achieved by the first four countries with 100%, 63%, 56% and 52% respectively. The major source regions investing in the Arab countries were Western Europe, the Middle East and the Asia Pacific with a capital expenditure of $17.1 billion, $17.1 billion and $12.7 billion respectively, where the UAE and Saudi Arabia featured as top investing countries with projects amounting to $15.4 billion and a market share of 25.6%, followed by Switzerland and France with projects amounting to $6.5 billion and a market share of 10.9%. China and Japan, on the other hand, accounted for 12.5% market share of all inward FDI projects in the region with projects in the amount of $7.5 billion.
Governments Responses Pre and During the Pandemic
Pre the pandemic, governments in the region have carried out a slew of reforms to improve the ease of doing business for small and medium enterprises. As a result, four Arab countries ranked among the world’s top 10 business climate improvers, namely Saudi Arabia, Jordan, Bahrain, and Kuwait for implementing almost half of the region’s reforms, with the UAE as the overall strongest performer.
For the first time, two Gulf countries instituted new visa options to encourage long term investment in their countries, where Saudi Arabia introduced the Golden Visa which offers new residence by investment and the UAE launched a long-term residency system for non-citizens. Two major global events are going to be held in two Gulf countries, namely the G20 Summit 2020 in Riyadh in November 2020 and the Expo 2020 in Dubai, which has been rescheduled to October 2021 due to the pandemic. In the backdrop, the Kingdom is engaged in its mega-investments in NEOM, a mega-project that stretches over three countries with territory from Egypt and Jordan comprising a total area of 26,500 km.
To crown it all, the Middle East Megacity Infrastructure Annual Report 2019, which was launched in 2019 by the Smart City Association Italy, provides insights and reflections on the challenges, innovations and technologies required to drive mega-city infrastructure projects in the Middle East towards excellence, with contributions from respected organizations and governments on the regional and global level. In doing so, the report sheds light on major achievements in housing & residential developments, roads, bridges and highways, clean & sustainable cities, infrastructure investment, port development, and connected cities in the MENA region.
Forecasts after the outbreak of the pandemic, according to the Organization for Economic Cooperation and Development (OECD), expects global FDI flows to decline by more than 30% in 2020 and MENA countries are susceptible to be more impacted due to the large share of FDI in primary and manufacturing sectors, besides the effects of the oil price drop on their economies. The pandemic and crisis response measures in the region have had greater impacts on some sectors than others, which in turn are reflected in FDI flows. Although there were no divestment trends or project cancellations, important investment delays are expected.
In their response to the pandemic, governments have taken containment measures that have led to a halt of large segments of production for many enterprises, including multinational enterprises (MNEs) operating in the MENA economies. Others have taken fiscal and financial measures to release pressure on some industries and support contracted economic activities, which also benefited foreign investors. With the crisis, some MENA countries decided to provide foreign investors with larger access to their local market under specific conditions and in specific sectors.
However, what breaks the ice is the fact that measures to contain the pandemic have prompted many governments and businesses to shift towards adopting greater digitalised systems and online operations and services to alleviate administrative burdens on companies and reduce bureaucratic hurdles, with a view to increase delivery of required products in the short term and to support and facilitate investment processes in the long term.
The deep impact of the pandemic on societies and economies globally represented an important juncture for the investment policy community to consider the adequacy of past approaches and offer solutions to achieving the Sustainable Development Goals, which will have its impacts on the MENA region as well.
Add to this comprehensive snapshot of business and other encouraging drives of technology and infrastructure development underway in the MENA region, the strategic hub located in the centre of the world’s trade route, loaded with a wealth of natural resources and cheap manpower, and an investment-friendly environment, the MENA region is a real opportunity that is worth considering for several reasons, to name but a few:
- One of the most trustworthy and comprehensive guides in doing business is the World Bank report “Doing Business 2020 – Region Profile of the Middle East and North Africa Region”, which compares and measures business regulations and their enforcement in 190 countries to inform policymakers and serve as a source of information for those interested in starting a business in any of these economies. In doing so, entrepreneurs and investors are provided with all the required data set to help them launch their business in the target location.
- The report reveals the ranks of the MENA countries based on the average of each economy’s ease of doing business, where some have witnessed a slight drop, others a slight rise, while a few remained stable. This can be evident by comparing the rank of each country in the World Bank Group’s Doing Business 2019 Fact Sheet with its rank in the aforesaid 2020 report.
- Most of the MENA region countries have made reforms for ease of doing business. This has been accentuated in the World Bank report Business Reforms in the Middle East and North Africa, which lists all countries that have undertaken reforms for ease of doing business, along with the dates and descriptions of each reform.
- The Ease of Doing Business Score Calculator helps to assess the absolute level of regulatory performance over time, where it captures, according to the selected indicator, the gap of each economy from the best regulatory performance observed across all economies. It also indicates that the MENA region has witnessed a minor improvement from 58.4 in 2019 to 60.2 in 2020.
- The MENA region features a market that enjoys low taxation compared to European markets. Working in 12 countries in the region for almost 40 years up till now, Pricewaterhouse Coopers Network in advisory, assurance and tax accentuates, in its the PwC 2019 Paying Taxes study, the importance of the Middle East, with its growing population and middle class, as a developing and dynamic hub for investment that has some of the least demanding taxes systems in the world.
Doing Business In MENA Region From A Marketing Perspective
From a marketing perspective, doing business in MENA region features many positive attributes. In its article Demographics of the Middle East and North Africa, Wikipedia presents the demographics of the region, which show a highly populated, culturally diverse region spanning over 3 continents, with a population that was nearly 578 million in 2018.
The article lists population by country, revealing population shifts, migration rates, youth rates, most populous areas, economy, and other important indicators. Demographically, the population is split into 3 broad age groups: children & young adolescents (under 15 years), the working-age population (15-64) and elderly population (65 and older). In its section entitled “How does median age vary across the world”, Our World in Data discusses the world age structure and demonstrates on a real-time responsive map with a variable description of median age groups over a variable time span from 1950-2100, that the MENA region is dominated by a median age group ranging from 25-30 in 2020.
The World Bank estimates, on the other hand, support the above findings and reveal that the working population (15-64) is the dominant age structure in the MENA region. Its 2019 population estimates by age & location reveal that the working population age group (15-64) represents 64.842% of the total population of the MENA region, which features a young and dynamic demographic structure.
The time that this large segment is presently spending on social media and the internet is more than the global average. According to Statista, internet penetration rate in the Middle East compared to the global internet penetration rate in the period from 2015-2019 was: 52.2%, 57.4%, ,56.5%, 64.5%, 67.2% in the Middle East, compared to 46.2%, 49.3%, 48.9%, 54.1%, 56.8% in the rest of the world. The active social media penetration in the MENA Region in January 2018 ranges from 99% to 75% in Qatar, UAE, Kuwait, Bahrain, Palestine, and Saudi Arabia and ranges from 66% to 30% in all other Arab countries with the exception of Yemen where the rate was 8%.
This translates into great opportunities for marketers to use social media and content marketing, especially for industries like consumer goods, fashion & beauty, healthcare & personal hygiene products, food & beverage, electronics and entertainment. Additionally, the region is one of the highest spendings on cosmetics per capita in the world, with a constantly increasing appetite for beauty and fashion products. It is also noteworthy to point out that Arab consumers are easy to segment, thus not much effort is needed to identify the customer persona.
Here, Istizada, a reputable online marketing company focusing on the Arab world, examines exhaustively the Middle East Arab Consumer Profile demonstrating the behaviour, traits, characteristics and demographics which set them apart from other consumers of the world. Monitoring trends and tracking social media engagement are effective tactics to define the key motivations of potential customers. If collected smartly, proper data-driven approaches can get investors the necessary insights.
The interesting part is that many of these young consumers are affluent professionals, offering a big market for luxury brands and electronics. In marketing language, this means a higher customer value and higher revenue per customer, and ultimately a higher Return on Advertising Spend (ROAS). The consumers in the region are highly influenced by the media and mass campaigns over personalized experiences. Thus, a viral campaign can be widely effective in shaping consumers habits and can work for all brands, big and small.
Doing Business In MENA Region From A Linguistic Perspective
From a linguistic perspective, to initiate your first presence in the MENA markets, it is advisable to test the appeal of your products and services to your target audience in the region. The best feasible and cost-effective option to gauge interest in your products or services would be to localize your website into Arabic by an in-country native Arabic speaker linguist, who is proficient in the language and knows what would be culturally acceptable and resonate with the target audience. Mastering the copied from and copied to languages enables the linguist to understand and convey your message smoothly in flawless Arabic to engage readers across the region.
As Modern Standard Arabic is the written form of the language used in academia, print and mass media, law and legislation, your localized website will be understood and available for access by all interested MENA region residents. Translating websites in the language of the target audience is a proven means to improve user experience, appease Google & SEO practices, the benefits of which can be checked in our article 14 Incredible Benefits of Website Localization You Shouldn’t Miss.
Besides allowing your audience to understand the showcased products and services, they believe you respect their culture, get to know more about you & your business, identify with you and trust you, which is a positive way to gain brand recognition and credibility. Moreover, research proved that more than 75% of customers prefer to purchase in their native languages. Thus, a simple decision to translate your website signifies business and sales growth with international brand awareness recognition, more customers, leads and revenues.
According to Wikipedia’s list of Arabic speaking countries, Arabic is spoken by 395,979,000 native speakers and is the official language of 22 sovereign states in Asia and Africa, along with occupied Palestine. It is also an official or a de facto language of 6,306,154 citizens in the Sahrawi Arab Democratic Republic, Somaliland and Zanzibar in Africa. Additionally, Arabic is the working language of Eritrea, the national language of Mali, Niger, and Senegal, and the language of a minority in Turkey, Cyprus, and Iran, whose combined population amounts to 230,903,000 citizens.
Besides being the official language of the Islamic State of Iraq & the Levant, and the Syrian opposition, Arabic is a co-official language in Azawad, Galmudug, Hirshabelle, Iraqi Kurdistan, Jubaland, Khatumo, Northland State, Puntland, Rojava, and the South West State of Somalia, where it is spoken by 30,115,000 citizens.
Besides the above overview of native and non-native Arabic speakers, Arabic as a language is supported by the following facts:
- Arabic is the liturgical language of Islam and Muslims around the world, who account for more than 8 billion Muslims worldwide constituting 24.1% of the world’s population, study Arabic to pray and read the Quran.
- Arabic is the fifth most spoken language in the world with more than 432 Million native Arabic speakers, whether in or beyond the MENA region.
- Arabic is one of the five official languages of the United Nations.
- Arabic speaking countries are fast-growing countries for trade, providing a huge export market for many products and services.
With this comprehensive roundup, we hope we have been able to highlight the potentials of doing business in the MENA region and to provide entrepreneurs and investors with helpful and useful information.
 Source: World Bank.
 The MENA countries ranks are listed in page 4 of the “Doing Business 2020, Region Profile of the Middle East and North Africa Region” report: https://www.doingbusiness.org/content/dam/doingBusiness/media/Profiles/Regional/DB2020/MENA.pdf
 MENA countries ranks, scores and no. of reforms in 2018 and 2019 are listed in page 2 of the factsheet: https://www.doingbusiness.org/content/dam/doingBusiness/media/Fact-Sheets/DB19/FactSheet_DoingBusiness2019_MENA_Eng.pdf