Deloitte “Middle East Point of View”: Social progress challenges in MENA countries
The use of technology in the public sector, the increasing appetite for alternative investments, achieving capital efficiencies and cost savings in the workplace and measuring national performance via non-traditional indicators are all issues that are being widely talked about in the Middle East, as businesses struggle to strive amid unstable climates.
These topics are discussed in the Summer 2014 of Deloitte’s quarterly publication, the Middle East Point of View (ME PoV) which includes a special insert on the Social Progress Index, one of the most recent and noteworthy measurements of a country’s development. Rashid Bashir, head of Strategy Consulting at Deloitte Middle East and Steve Almond, global chairman of Deloitte Touche Tohmatsu Limited, provide in-depth analyses of the SPI and its implications for the Middle East North Africa region.
The most commonly used measures of development and national performance in an economy have traditionally been Gross Domestic Product (GDP) and associated indicators. The Social Progress Index (SPI) consists of a comprehensive measurement framework for the social and environmental performance of a nation. Published by the non-profit Social Progress Imperative in collaboration with Deloitte, and released at the Skoll World Forum on Social Entrepreneurship, this year’s SPI studies 132 countries, of which 8 from the MENA region, ranked as follows: UAE 37th, followed by Kuwait in the 40th position, Saudi Arabia 65th, Jordan 75th, Lebanon 83rd, Egypt 84th, Iraq 118th and Yemen 125th.
In MENA, GCC countries have made significant strides for the region in providing basic needs such as housing, education, housing and utilities. However, for the Middle Eastern countries included in the SPI, the greatest challenges observed are in providing social opportunity for citizens and residents. A number of factors weigh in on this dimension, such as the unique political, religious and cultural characteristics which influence some of the outcomes measured such as Personal Freedom. Ecosystem sustainability is also an area of concern in the GCC where fresh water and biodiversity are more scarce, and high emissions are a by-product of extensive industrial development.
“The first observation made from the SPI findings in the Middle East is that many resource-rich countries do not perform as well on social and environmental indicators when compared to countries of similar per capital wealth which are not dependent on natural resources as a primary source of income. Saudi Arabia, the UAE, Kuwait, Iraq, Iran, Russia, Kazakhstan and Angola all have a notable disparity between their SPI and GDP per capita rankings,” explains Bashir.
“The second observation is that there is a weak correlation between government spending and SPI scores, which implies that governments inclined to improve their scores will need to go beyond stimulus, spending and investment programs to improve social welfare”, he adds. “The GCC has started to take heed in the area of sustainability, where new policies and programs aimed at conservation and sustainable development are increasingly popular.”
The summer issue of the ME PoV publication also explores other hot topics in the region, such as alternative investments, technology in the Public Sector, and capital efficiencies in the workplace, among others.
Over the past five years, investors have developed an increased appetite for alternative investments, due largely to their need to achieve high returns with less vulnerability as to macro-economic risks associated with quoted stocks. Badr El Hassan, principal, Deloitte Middle East explains in his article, “Challenges to auditing alternative investments” how a growing appetite for alternative investments by Middle East businesses can prove challenging to audit.
In “Technology gone mad?,” Raid Shahin, director, and Youmna Saloumi, consultant at Deloitte Middle East Technology Consulting explain how the public sector, in wanting to provide consumer-centric and efficient services throughout the Middle East, is adopting new technology services and implementing new IT solutions to achieve its strategic objectives.
The alternative way of achieving efficiency in the workplace is studied by Ben Hughes, director, Deloitte corporate Finance Limited (regulated by the Dubai International Financial Center) who finds that approximately 80 percent of corporate expenditure are due to staff costs; the author posits that to save money, one has to operate more efficiently and his article provides a formula for achieving that result. Similarly, Chris Digby, senior director, Muhammad Razeen, senior manager and Syed Ammar Zaheer, senior consultant at Deloitte Middle East provide some solutions to the challenges of keeping spending and schedule under control as companies invest heavily again in “bigger and better” projects.
Nadine El Hassan
Public Relations Regional Leader
Deloitte Middle East
Tel: +961 (01) 748 444