The Middle East today is the world’s fastest-growing region. Dubai in particular, which is aiming to quadruple its economy and triple its population by 2020, is seen as able to offer invaluable lessons. The emirate is running out of oil and yet is transforming itself into a global centre for transport, aviation, finance and tourism.
A decade ago, the world was lecturing the region about its economic failures. At a World Bank conference in Cairo in 1995, a World Bank expert lambasted Atef Obeid, then Egypt’s privatisation minister, about the slow pace of selling of state assets. ‘Why don’t you follow what has been done in Argentina. They have privatised everything, even the zoo,’ the World Bank man declared. Obeid, sharp as a knife, interjected. ‘Yes, they have sold the zoo,’ he said. ‘But now there are no animals in it.’
The Argentine economy subsequently collapsed. The Middle East is now on top of the economic heap. But is that due to the advice of clever economists? No. There is no evidence that their suggestions made any difference to Middle East economic performance. What has done the trick is the tripling of the oil price in the last five years.
So what are the Middle East lessons for Africa? First, don’t let yourself be lumped together. Saudi Arabia, the region’s largest economy, has a gross domestic product (GDP) of more than $300 billion. Bahrain’s is just over $10 billion. Bahrain is smaller than central London; Sudan is the size of a continent. Per capita GDP in Qatar will rise above $50,000 this year; Yemen’s is less than $700. Africa, like the Middle East, is made up of many different economies, each facing different opportunities and challenges. They require tailored policies.
The Middle East has since 1970 been a strongly-performing economic region. Only if you start from 1980, a period that encompasses two oil price crashes, are the figures bad. Therefore, the second lesson is don’t let the statisticians do you down they way they have in the Middle East.
The Middle East boom is due to oil. It has played to this strength, refusing to unduly liberalise the energy sector. The region is now reaping a rich financial harvest. So the third lesson for Africa is recognise your strengths and play to them.
The services sector is one of the biggest components of Middle East economies. Dubai’s growth has been driven by Emirates, which is aiming to be the world’s largest international airline, and DP World, which is now exporting its competencies to the Far East and Europe. Africa should aim to develop its own world-class service businesses.
The final lesson is: don’t take the rules of the globalisation game too seriously. The GCC has breached practically every part of the Washington Consensus, a body of thinking which dominated World Bank and IMF policies in the 1990s. Dubai has sold about $10,000 million of real estate to foreigners without even having an enforceable freehold law. Tens of thousands of homes have been built and will stay.
The big lesson is believe in yourself rather than the fickle advice of international economists who have a lamentable record of changing their minds. The GCC, one of the world’s poorest areas 40 years ago, is now one of the richest. If they can do it, so can you.
The sports season starts
Winter in the Gulf means a host of world-class sporting occasions. The Rugby 7s in December will be followed in the spring by tennis, the Desert Classic golf and the World Cup horse race in March plus many other smaller but interesting events. The big story of 2006