MBAs in the GCC: Attracting international talent

11 December 2008

As higher education evolves into a global business, internationally renowned colleges and universities from around the world are heading to the Gulf in a bid to enrol MBA students.

With a population of 36 million, the GCC is a relatively small market for education providers. But despite its size, the region is drawing in increasing numbers of international business schools and universities. There are now 68 accredited business schools in the GCC, with the UAE this year entering for the first time the top 10 list of destinations for Gulf nationals to study.

Many foreign educational institutions, such as the UK’s Oxford and Cambridge universities, target the Gulf for overseas student recruitment. But some, including business school Insead, based in Fontainebleau, France, as well as the UK’s London, Manchester and Cass business schools, have launched bases in the UAE so that Gulf students do not have to travel overseas to study at the best institutions. The Netherlands’ Maastricht Business School also has a campus in Kuwait, while US international university Carnegie Mellon has a campus in Doha offering undergraduate business courses.

Development strategy

Local universities are also developing partnerships with foreign institutions. Bahrain Institute of Banking & Finance (BIFB) offers an MBA with Chicago’s DePaul University. Saudi Arabia’s Al-Yamamah College has co-operative agreements with several North American universities.

Effat College, a Saudi business school for women, offers a business administration programme with Georgetown University’s McDonough School of Business.

In 2007, Insead opened a business centre in Abu Dhabi, its second overseas campus after Singapore, to provide executive training for companies and government ministries in the Gulf and wider Middle East. But it has stopped short of offering its full MBA at anywhere but its Paris campus.

The oil-rich Gulf states urgently need to diversify away from oil and create jobs for young nationals to build a sustainable economy and meet targets for Arabisation (employing Arab nationals). GCC governments view the liberalisation of the education system as a chance to meet these needs. Attracting inward investment into education is a way to support both job creation and economic diversification.

Qatar, the UAE and Bahrain are developing rival education cities - tax havens that offer incentives to international business schools.

Saudi Arabia is pursuing a similar strategy at Knowledge Economic City in Medina. With all these competing initiatives, the race is on to attract the most prestigious international names.

Bahrain’s Higher Education City plans to attract a top US university to enter into partnership to develop an international centre for specialist research. Education City in Qatar has also focused on attracting US universities.

In Dubai, Knowledge Village has attracted colleges from the US, Europe, the Indian subcontinent and Australia. Dubai International Academic City (DIAC) opened at Knowledge Village in 2007. DIAC plans to attract 40 business schools and universities by 2015 as part of a national strategy to bring at least 60 overseas colleges to the emirate of Dubai by the same year. This summer, DIAC had enrolled 10,000 students, 35 per cent from outside the UAE.

Global benefits

“There is a lot of regional competition,” says Peter Jedersten, director of Insead Abu Dhabi Centre. “We spent two years looking at the opportunities in the Middle East. We considered Qatar, Lebanon and Saudi Arabia before deciding that Abu Dhabi Education Council was the best partner for us.

“We felt the UAE was well placed to become a regional education hub, and that the Education Council had an open attitude to what we wanted to deliver. We plan to integrate Abu Dhabi with our operations in France and Singapore, and to invest time and resources in regional research.”

The UK’s Cass Business School (CBS), part of City University London, launched an executive MBA programme at Dubai International Financial Centre (DIFC) in 2007. Thirty students joined the first intake, rising to 47 on the current programme, 20 per cent of whom are Emirati, with a quarter flying into Dubai for classes.

DIFC recruited the former dean of CBS to its regulatory board, and the school saw an opportunity.

“Business schools have been expanding in Asia since the 1990s, and Dubai is now an emerging financial hub,” says Stefan Szymanksi, MBA dean at CBS. “Dubai needs international talent and, ironically, as the financial crisis
means fewer jobs in New York and London, more jobs are becoming available in the Gulf, which favours demand for MBAs in Dubai, certainly in the short term.”

CBS is organising a Dubai Symposium for May 2009, to which it will bring MBA students from London to the Gulf to network with local students and employers, and discuss key issues in the region.

Globalisation brings benefits to both regional governments and business schools. Attracting prestigious foreign names boosts the Gulf states’ credibility. And for international business schools and universities, there is a lot of money to be made in the Gulf.

With fees ranging up to $80,000, an MBA does not come cheap. London Business School admits that it offers the most expensive course in the region - fees for the September 2008 Dubai intake were $79,950. Cass Business School charges £29,500 ($43,515) for its Dubai Executive MBA. Oxford University’s Said Business School charges £34,000 for its MBA in the UK.

But despite the high costs, growing numbers of Gulf nationals are willing to pay. For students who can afford it, or who can secure a loan, the returns can be worth the outlay. The GMAC 2008 Corporate Recruiters Survey reports that the average start-up salary for a newly qualified MBA graduate has risen to $83,451 over the past year, from $80,452.

Rising expectations

“We might offer the most expensive MBA in the Gulf, but our graduates recoup their investment within two or three years through salary increases,” says Zeger Degraeve, Dubai faculty director at the London Business School.

Hull University Business School recruits Gulf MBA students to its campus in the UK and offers two courses a year in Bahrain and Oman. Most of its students are self-funded, according to David Bright, programme leader for the distance-taught MBA.

At £13,500 to join the UK course, or £11,150 for the part-time programmes in Oman and Bahrain, Hull offers one of the least expensive accredited MBA courses.

But it is still generally the student who shoulders the cost. “It is still unusual for Gulf companies’ human resources departments to fund MBA study,” says Bright. “We are looking to develop closer links to regional employers.

“There is a growing expectation among the biggest private sector companies in the Gulf that managers should have an MBA - or at the very least, be willing to get one. At a certain level of management, an MBA has become a necessity, and projects such as Bahrain Financial Harbour are driving new demand.

“There is a huge desire and respect for education and qualifications. While people often have two jobs - one in a ministry, another in the family business - they are keen to be seen to be qualified, and an MBA is highly valued.”

Quality standards

Jeanette Purcell, chief executive officer of UK accreditation body the Association of MBAs (Amba), anticipates continued regional growth in MBA demand as Gulf employers compete to hire management talent. But she is concerned that despite high numbers of new entrants, the level of accreditation of Gulf MBA courses is low.

Three international bodies - Amba, the Association to Advance Collegiate Schools of Business (AACSB) in the US, and the European Quality Improvement System (Equis) in France - monitor and accredit MBA courses worldwide. AACSB has accredited three business schools in the GCC, all indigenous. Five local business schools are members of the European Foundation for Management Development (EFMD), which administers Equis. But of the seven Gulf colleges accredited to Amba, all are from overseas.

“We have not seen any interest from indigenous universities applying for accreditation,” says Purcell. “It is puzzling. If you want to be a global player [and compete on an international stage], accreditation is a must.

Perhaps there is a feeling that these courses serve the local market, which means there is no need to seek accreditation.”

The GCC authorities are sensitive to criticism that in opening education to international competition, they risk sacrificing quality for quantity.

In the summer, DIAC announced it had approved just five of the 54 bodies that applied to set up base at Dubai Knowledge Village.

The successful applicants include the US’ Hult International Business School, which has launched a full-time, accredited regional MBA programme in Dubai. Unusually, Hult’s MBA is structured around elective modules so students can split their studies between Dubai and Hult’s campuses in London, Boston and Shanghai, gaining valuable international experience.

DIAC selects applicants through its University Quality Assurance International Board, an in-house committee.
In future, setting and maintaining internationally recognised standards will become more important. GCC business schools are not only competing with each other, but also with Asian rivals. Mumbai, Kuala Lumpur, Beijing and Hong Kong have emerged as strong centres for regional business education.

Meanwhile, there is no sign that the pace of new entrants into the regional MBA market will slow any time soon.

New courses keep coming. In October, Jeddah’s College of Business Administration, the only Saudi school with Equis accreditation, announced the launch of the first Saudi-based MBA course for women, complementing an existing course for men.

Such is the demand for the London Business School executive MBA that it is adding a second yearly student intake in January, bringing in 78 additional students for the 2008-09 academic year.

But some observers fear that the pace of regional growth in MBA programmes is a risk.

“There is a danger that companies will come in, aiming to make a lot of money quickly,” says Peter Jedersten, director of Insead Abu Dhabi. “And regional governments need to be careful that the market is not flooded due to oversupply. The GCC is not - and will never be - a large market.”

Szymanski of CBS says growth must be linked to quality. “MBA standards are highly variable - from junk emails offering dubious courses, to programmes demanding two years’ intensive study,” he says. “But there is still
room in the market for schools that offer an integrated experience, offering good academic courses and softer management skills, a strong brand and a commitment to developing management expertise.”

“We do not see this as a zero-sum game,” says Degraeve, who argues that the region’s demographic structure represents a good opportunity.

“This is a market that regenerates itself. So many expatriates here move on and are replaced every couple of years. We welcome competition. In promoting their courses, our competitors raise awareness of the benefits of MBAs. And ours compete at an international level.”

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