When countries in the Middle East discovered vast oil reserves, their societies changed swiftly and became very wealthy. A prime example is the UAE, whose GDP per capita in 2017 was around US$68,000, 14th in the world rankings.
Oil riches were not, however, an unalloyed blessing. Abu Dhabi could allow its nationals to rely on the state for a secure income and avoid some difficult choices, more than half of all workers are in construction or government services (together around 13 percent of GDP), which not only reinforces the country’s reliance on oil but also does little to foster innovation, exports or productivity growth, a key reason why entrepreneurship in Abu Dhabi is relatively low.
The fall in oil and real-estate prices seen after the 2008 financial crisis was a wake-up call. Although the UAE had already begun to diversify away from oil, the 2008 crisis made it all the more urgent to wean the economy off its reliance on hydrocarbons.
Alongside its neighbours in the wider Gulf Region, Abu Dhabi developed a plan to transform its economy by 2030, with the goal of having “a secure society and an open and dynamic economy.” It cites Norway, Ireland and Singapore as examples of countries that have made a successful transition. However, although nationals are around 25 percent of the population, they are only 11 percent of the workforce—a disconnect that the government puts down to a “mismatch between education and labour market demand”—or the fact that, until recently, Abu Dhabi could afford to hire outside experts for many roles.
The relatively long history of importing skilled workers means that some sectors in Abu Dhabi are reluctant to hire nationals. To help close that gap, the government has set so-called “Emiratisation” quotas for some sectors. In banking, it is 4 percent and in insurance 5 percent. However, the government knows that what it views as “low and very achievable targets” may not be enough, which is why it wants to ensure that nationals can gain the qualifications and skills they need to play a full leadership role in the management of the economy.
What should the economy look like? By 2030, Abu Dhabi aims to have 64 percent of its GDP coming from non-oil sectors; and to have fostered entrepreneurship that brings innovation and boosts productivity. To capitalise on the potential the region has, Abu Dhabi Global Market (ADGM) was founded in 2013 as the international financial centre for the Gulf Region and MENA area to develop and support a “business-friendly environment in line with international best practice”.
To drive forward both the growth of the region as a financial hub and the financial education that it requires, ADGM has launched an academy in partnership with the London Institute of Banking & Finance. The academy is to be a centre of excellence for financial education in the MENA region. The London Institute of Banking & Finance brings deep expertise—both in financial services and education—and will run the technical training in the Academy’s School of Banking & Finance. The Institute will also contribute to the five other professional schools, including the School of Personal Development and the School of National Development, which will focus on ensuring that nationals are properly equipped to play a full role in the economy. In each school, students will be helped to develop the technical skills, behavioural approaches and knowledge base that will allow them to thrive in a global financial environment.
A new approach
This is not, of course, the first time that Abu Dhabi has tried to prepare its population for the challenges of a post-oil economy. One of the problems of previous attempts was that in the financial sector local banks found their resources were stretched when they were required to take on education and training as well as running their day-to-day business.
The 2030 drive breaks with that sort of piecemeal approach to ensure that the workforce is offered professional qualifications and accredited training programmes. Student attainment will be directly tied to economic outcomes, both at a personal and wider level. They will gather credits, for example, when they demonstrate how their learning and skills are applied in the workplace—not just for passing an exam. The subjects on offer will range from an introduction to capital markets to advanced wealth-management technical skills. The London Institute of Banking & Finance and the ADGM Academy will also work together to develop specialised programmes and certificates that demonstrate knowledge and competency in particular roles, such as that of certified financial adviser.
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