NEW YORK // The influential head of the Qatar Foundation has criticised Arab governments for failing to provide sufficient education and work for the region's burgeoning youth population, and warned of a "devastating cycle of unemployment".
Sheikha Mozah bint Nasser Al Missned's criticism was published in a UN report today amid uprisings across the region in which young people have led calls for better job prospects and political rights.
"The education system in Arab countries is partly responsible for the soaring unemployment rate, because it focuses more on granting diplomas than on effectively training students in practical skills," wrote Sheikha Mozah, who is the wife of Qatar's emir, Sheikh Hamad bin Khalifa Al Thani.
"In today's rapidly changing technological world, young people need to learn critical thinking, writing skills and flexibility - areas virtually absent from our curricula at present. If we do not reform our current practice … our economies will not be able to compete globally."
Sheikha Mozah, a UN education envoy, added that huge hydrocarbon revenues had not "been entirely beneficial for our young people" in the six-nation Gulf bloc. "Many adolescents have grown accustomed to a materialistic lifestyle that distracts them from reaching their full potential," she wrote.
"Likewise, the seduction of consumerism traps adolescents in an endless quest for possessions and encourages them to disregard their role as citizens responsible for community involvement and positive self-development."
The 138-page annual report from the UN's agency for children, Unicef, quotes unemployment rates for those aged between 15-24 reaching 27 per cent in North Africa and 23 per in the Middle East at the end of 2009, among the highest levels globally.
In 10 years, 65 per cent of the region's population is projected to be under the age of 25. This would require the creation of 6.5 million jobs each year to cater to the growing youth population, or risk more of the political unrest that has swept the region.
A lack of opportunity for young people was a feature of protests even before the 26-year-old Tunisian university graduate Mohamed Bouazizi set himself ablaze to protest against officials barring him from even menial work as a street vendor.
Unicef's 2011 State of the World's Children report contends that the Middle East and North African countries most affected by political turmoil have related, though subtly different, problems when it comes to education and youth joblessness.
Bahrain and Tunisia, which have both experienced protests, have relatively high rates of secondary school enrolment (89 per cent and 71 per cent respectively for 2005-2009), far higher than in other troubled countries, such as Yemen (37 per cent) and Egypt (22 per cent).
Vivian Lopez, Unicef's regional expert on adolescents, said that young Tunisians and Jordanians were frustrated because despite of their high levels of educational attainment, there were still "extraordinarily high rates of unemployment".
Meanwhile, countries such as Egypt, Sudan and Yemen had large numbers of adolescents who were "both out-of-school and out-of-work", where even the lucky ones could only earn the equivalent of a few dollars a day doing menial work, she said.
"We have been talking about the need to address young people in the region for decades but the financial, technical and human resources provided have been far too little," Ms Lopez said.
"Now there is an opportunity to develop integrated national policies for young people," she said, "addressing the multi-faceted issues that are making young people go out on the streets, such as education, unemployment, lack of opportunity, participation, freedom of expression and censorship."
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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.”
