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Learning to build a sustainable growth economy – the case of Abu Dhabi

29 July, 2020Ouida Taaffe

The discovery of enormous oil reserves in the Middle East made local economies rich. But the United Arab Emirates knew that it could not rely on its oil wealth forever. Its mighty sovereign wealth fund now makes investments globally. Just as importantly, it is also making careful investments in human capital at home.

Green shoot growing out of moneyMost of us find it hard to improve our habits. Experiments in behavioural science show that people tend to struggle to plan longer-term – particularly when that means short-term self-denial.

Being fit for the future is, however, essential for both individuals and societies. The United Arab Emirates (UAE), for example, knew that it needed to diversify away from oil to secure its future. That is why it aims to transform its economy by 2030.

The UAE wants to have “a secure, dynamic open economy with priority areas in economic development, as well as social and human development.” Achieving all of that at once is not a small ambition, but the UAE is not the first country to set the bar high. It points to Norway, Ireland and Singapore as states that show how a complex economic transition can be managed.

What do those models indicate for the transition of the UAE?

By 2030, Abu Dhabi aims to have 64% of its GDP come from non-oil sectors and to have fostered entrepreneurship that brings innovation and boosts productivity.  

That means building a sustainable, knowledge-based economy. One of its cornerstones will be financial services, because financial markets ultimately decide which investments are made.

With that in mind, the UAE founded Abu Dhabi Global Market (ADGM) 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”.

Learning to grow

ADGM is central to the UAE’s future because creative economic growth that brings positive disruption is, by definition, unplannable.

Change and diversification in an economy can’t be imposed by government edict – however well intentioned and well informed. What a government can do is prepare the right environment and set the right standards.

That means having a vibrant entrepreneurial sector, strong research and development, regulation that does not stifle new ideas and – in particular – it means having a highly-educated workforce.

Education in its widest sense is, of course, what underpins economic growth and change. But, even in a wealthy economy, there is a case to be made for the particular importance of financial expertise.

Banks decide which firms get finance. That means they make fundamental decisions about where an economy is focusing its resources. Bankers need to be prudent, honest and risk-aware, even as they invest in what are, sometimes, untested technologies.

That makes heavy demands on both individual bankers and on their institutions. It means taking an open, diverse approach and constantly learning.

To help ensure that its financial centre can meet all the demands made on it, Abu Dhabi has brought in partners.

For example, The London Institute of Banking & Finance (LIBF) helps the ADGM Academy develop, implement and deliver programmes and qualifications to the finance sector in Abu Dhabi, the UAE, GCC and MENA region. The technical training LIBF offers is designed to help Abu Dhabi achieve its goal of a transition to a knowledge-based economy.

Hamad Al Mazrouei, Managing Director of ADGM Academy said: “Investing in human capital is a direction we’ve been following since our father Zayed founded the UAE. We believe that education is the most important investment in tackling all our global challenges.

“ADGM Academy crossed a milestone by providing the best quality of education in the banking and finance field. Our aim is to follow the race of technology by providing a wide range of financial programmes.”

Real wealth development

Plant shoot growing on a pile of gold coinsOil reserves clearly bring great financial benefit if they are managed well. The Emirate of Abu Dhabi has, for example, an AA credit rating and takes active steps to regularly optimise its capital structure.

In April 2020 it raised US$7bn in international bond markets, at just over 2% over US Treasuries, and the deal was over six times oversubscribed. However, that sort of financial firepower can make it easy to overlook where the real wealth of any country lies – in its people.

That is why the Abu Dhabi Economic Vision 2030 focuses on developing its greatest national resource – young Emiratis.

Providing a thorough-going education is relatively easy to envisage, but often hard to implement. In particular, the softer skills that round out technical knowledge can be difficult to get across.

The ADGM’s School of National Development focuses on fostering detailed know-how, but it also wants to ensure that staff bring the right behaviour and ethos to equipping the region’s banking and finance sector for the future.

In the past, young bankers often learned how to tackle social and ethical challenges on the job. However, the UAE financial sector had found it difficult to take on education and alongside day-to-day business. That is why the partnership with The London Institute of Banking & Finance was needed.

Practical partnering

The London Institute of Banking & Finance brings deep expertise – both in financial services and in education. Its staff are former practitioners and LIBF has been training financial services professionals for 140 years. For ADGM, led by its MENA office, LIBF helps provide technical training in ADGM Academy’s School of Banking & Finance, in its School of Digital & FinTech and also in its School of Sustainable Finance – as well as the School of National Development.

In all of these, the Institute helps the students to develop their technical knowledge and benchmark it against international standards, but it also helps them to become rounded professionals who can thrive in a global financial environment.

Kareem Refaay, Regional Director of GCC and MENA, The London Institute of Banking & Finance said: “Our Abu Dhabi office is driven by the leadership and governance of the UAE in order to pursue greater learning and education by aligning initiatives and offerings towards the National Development Agenda and contributing to a positive impact. In collaboration with our partner, ADGM Academy, we strive to make a difference beyond education for the financial sector.”

To make sure that students really do gain an overall insight into what is required of a financial services professional, course credits come from demonstrating how learning and skills are applied in the workplace – not just from passing an exam.

The subjects range from an introduction to capital markets to the skills needed in advanced wealth-management.

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