The United Arab Emirates is the most competitive economy in the MENA region, the International Finance Corporation said in a released study about competitiveness in the Middle East and North Africa, followed by Qatar and Saudi Arabia.
The IFC held a roundtable including Cairo, Washington, Beirut, and Geneva, to discuss the Arab World Competitiveness Report 2018, which was released Tuesday.
The report ranked the UAE as the 17th most competitive country in the world with other Arab countries like Qatar and Saudi Arabia cracking the top 30 globally, ranking 25th and 30th, respectively.
The ranking made by the World Bank Group’s IFC and the World Economic Forum is based on 12 factors including education and infrastructure that are critical to productivity and economic growth.
Egypt ranks 100th globally in the Global Competitiveness Index 2017-2018 of 137 countries, and 11th among Arab countries, to be followed by Lebanon, which was last.
The report cites improvements which took places over the last decade in the fields of infrastructure development and technological advancement across the region, yet stating that countries in the region are struggling to diversify their economy, to create more jobs and creating a more competitive private sector.
"The world is adapting to unprecedented technological changes, shifts in income distribution and the need for more sustainable pathways to economic growth," Mired Dusek, Deputy Head of Geopolitical and Regional Affairs at the World Economic Forum.
"Diversification and entrepreneurship are important in generating opportunities for the Arab youth and preparing their countries for the fourth Industrial Revolution," he added.
The report added that the region needs to create 58 million job opportunities by the year 2040 to maintain and even lower unemployment rate.
It was clarified in the roundtable that Iran and Israel are not included in its report, only Arab countries in the Arab League.
Speaking from Lebanon’s Beirut, IFC Director for the Middle East and North Africa, Mouayed Makhlouf, pointed to the fact that small and medium-sized enterprises have a major role in Arab economies, adding that there were about 23 million small and medium-sized enterprises in the MENA region.
According to Makhlouf, two out of three of the small and medium-sized enterprises do not have access to credit.
“You don’t expect a bank support to startups; it’s a different mindset; but you expect them to support small and medium-sized enterprises,” Makhlouf said.
He also referred to tech small and medium-sized enterprises as the most booming, referring to the quick spread of Careem as a good model.
“The beauty of technology is that it has no boundaries,” he said.
According to the report, the Gulf Cooperative Council (GCC) have made extensive efforts to support innovation and seed funding to start-ups.
Saudi Arabia created $1 billion fund to invest in small and medium-sized enterprises, with Bahrain providing $100 million and Oman $200 million in funds to support startups.
Moving to Lebanon and Egypt, the IFC said both countries’ central banks have pledged to invest more and gradually raise financing for the small and medium-sized enterprises by 2019.
“Arab countries currently investing in a foundation for sustainable and diverse markets, while creating jobs and embracing new digital trends, are on the path to competitiveness,” Naji Hassan, Director of the Finance, Competitiveness and Innovation Practice at the World Bank Group said.
The report also mentioned that governments have to draft more policies to encourage risk-taking and innovation, improving the entrepreneurial ecosystem.
The report also recommended to decrease exporting raw natural resources for those economies seeking to diversify their economies.
The released report is part of a series of studies that examine competitiveness across different regions; also a recent partnership between the IFC and the World Economic Forum to support entrepreneurs in the Arab world and promote private sector development.