A vow by the Ruler of Dubai to sack failing officials will improve public services and help achieve a culture shift in the government sector, experts predicted.
At the weekend, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, launched a new drive in which he laid out a series of steps designed to improve efficiency in the emirate.
Sheikh Mohammed said the heads of government departments would sign a pledge to improve services and efficiency, which will be reviewed every two years.
"Those who fail to bring about real change within two years shall be relieved of their duties," he said.
Those who fail to bring about real change within two years shall be relieved of their duties
The move is aimed at bringing private sector dynamics into the public realm, analysts said, and could also boost moves towards Emiratisation by making working practices in government roles more closely aligned to those in business.
“The big difference between the public sector and private sector is that market forces force the private sector to adapt, if they don’t adapt they fail,” said Rudolph Lohmeyer, a partner at global consultancy firm A.T. Kearney’s National Transformations Institute.
“That’s not the case with government.
“The nature of public institutions is that we need them to endure through a wide range of circumstances, that’s necessary and important. But given that, how do we keep them continuously improving and evolving, since they have a mandate that ensures their existence?
“It’s got to come from leadership in the public sector. So when I read [Sheikh Mohammed’s] letter, it is an exact example of that.
“So to harness those same dynamics in government, by intensifying accountability standards, is therefore strengthening the mechanisms that will bring fresh blood continuously into key positions.
“This reflects the effort of the Dubai government to continuously refine its speed and effectiveness."
Another knock-on benefit could be to achieve a change in practices in the long-term which could level the playing field between private and private sector practices.
The Emirates has a long-standing goal of encouraging entrepreneurship among UAE citizens and of driving up Emirati participation in the private sector. The vast majority of employed Emiratis currently work in the public sector, which some see as offering more secure and comfortable employment.
“By making dynamics in government more comparable to those in the private sector, I think you increase the likelihood that people will move between public and private sector jobs,” said Mr Lohmeyer, who has worked previously as an investment banker and senior adviser at the US State Department.
“By not allowing government jobs to become static and fixed, and more comparable to private sector jobs, you make it more likely that there will be this healthy cross-fertilisation of people between those two sides of the socio-economic system.
"It’ll balance the attractiveness of public and private sector jobs; the intensity of the jobs will be more comparable.”
Among the other measures announced by Sheikh Mohammed was the establishment of the Dubai Council, a new body that will oversee six sectors; the economy, services for citizens, governmental development, infrastructure, justice and security and health and knowledge.
Setting out his vision, he said: “What worked in the past may not work in the future and what has benefitted us in the last 20 years may not benefit us in the next 20 years.
"Time forces us to change tools, renew institutions and fight stagnation.”
Mazen Houalla, associate partner at KPMG Lower Gulf, a global network of firms providing auditing and tax services, backed Sheikh Mohammed's mission to drive up standards.
"The robust governance frameworks and the opinions of the advisory boards will assist in driving the growth agenda and achieve a sustainable future for nationals and citizens," he said.
"Dubai is also harnessing the manifold benefits of public-private partnerships to yield significant growth in major sectors such as education, health and infrastructure.
"Enhancing services offered to the public – and allowing the local community to contribute to this process – is likely to assist in increasing transparency and accountability. This will aid in enabling Dubai to keep pace with economic developments and create sustainable investment opportunities."
Other moves towards creating greater accountability within Dubai include naming underperforming government centres, while Sheikh Mohammed has been known to carry out unannounced spot-checks on his departments.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
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