Middle East & African Countries of the Future 2015/16 – the winners

The United Arab Emirates has topped the overall ranking of countries in fDi magazine’s Middle East & African Countries of the Future 2015/16 ranking. United Arab Emirates ranked in first place for Economic Potential, with a low unemployment rate (3.8%), while it also enjoys high levels of GDP. According to greenfield investment monitor fDi Markets, the country attracted 1514 foreign investment projects between 2010 and 2014 – the most of any country in the Middle East region. Nearly one-third of companies investing in the UAE cited the ability to grow domestically as their reason for investment. 

The UAE was also the source of 1003 outward FDI projects, nearly 30% of which were in the financial services sector, with companies such as the NMC Group conglomerate, Dubai Islamic Bank and the National Bank of Abu Dhabi investing abroad.

More than 4% of the country’s gross national income is spent on education,the fifth highest of any Middle Eastern country studied, resulting in high rates of secondary education enrolment and a literacy rate of more than 99%. The country is considered one of the most politically stable in the region. 

Low import and export costs encourage investors, who have plentiful routes into the country. The UAE has seven medium or large ports with access to shipping lanes in the Persian Gulf and through the Strait of Hormuz, while the country’s 25 airports serve 234 international destinations, helping the country to place first in the Connectivity category.

Productive Qatar

According to the International Monetary Fund, Qatar is the world’s richest country by GDP per capita. Its economy is a picture of good health, with a high rate of population growth (5.6%) and an unemployment rate of just 0.5%. Qatar is very productive, with a GDP, at purchasing power parity, of $323bn and inflation of 3.36%, lower than the Middle Eastern average of 4.8%. Between 2010 and 2014, the country attracted 275 inward FDI projects, one-third of which were in the business services sector. GDP is forecast to grow by 8.53% annually until 2019.

A high percentage of Qatar’s population are connected online (85.3%) and the country performs well in the Human Development Index, a measure of life expectancy, income and education. Businesses are attracted to the country for its low 10% corporation tax rate and its ease of doing business, where starting a business takes only 8.5 days.

Saudi Arabia third

Saudi Arabia, the third most populous country in the Middle East, ranked in the top 10 of all categories in the ranking. The country attracted 516 inward FDI projects between 2010 and 2014, the second highest level of inward investment of all Middle Eastern countries. 

Charles Foster, managing director of Middle Eastern operations for markets research company Millward Brown (a subsidiary of UK-based WPP), which opened an office in Jeddah in December 2013, cited the climate for doing business as the main reason for the company’s presence, describing the Saudi Arabian market as “dynamic” and “evolving”.

Saudi Arabia also placed second in the Cost Effectiveness category. Import and export costs are low and businesses pay a low total rate of tax, about 14.5% of profits. Businesses establishing themselves in Saudi Arabia do not have to pay to register a property, there is no minimum wage legislation and electricity is cheap.

South Africa top in region

South Africa ranked seventh overall, and first among African countries, attracting the highest number of inward FDI projects in Africa. Between 2010 and 2014, 667 investments were made, 19% of which were in the business services sector, followed by software and IT services (17.86%), and financial services (12.62%). The region’s fifth most populous country boasts its third-highest level of GDP, at purchasing power parity, at $683.15bn, behind Nigeria and Egypt.

Unique region

The Middle East and Africa are home not just to some of the world’s fastest growing economies, but also some of its richest oil reserves. 

The historic nuclear deal signed by Iran in July could dramatically shift the results of the next ranking. Lifting tough sanctions will allow companies to tap into oil reserves reported to be worth $185bn by 2020. However, the region is also home to several extremist terrorist groups, including Islamic State and Boko Haram. 

Where walls between east and west are coming down in Iran, they are being reinforced in other parts of the region, shifting investor focus and confidence in fluid motions.