About wesleyschwalje

Wes Schwalje is a business and international development strategist with experience in Africa, Asia, Europe, and the Americas, including the Arab World, Former Soviet Union, and all of the BRIC countries. He is frequently retained by C-level executives, heads of state, global business leaders, and government officials to provide counsel on organizational strategy and then focus entities on making strategies a reality. His work spans some of the most challenging global development and business issues, involving key areas of policy, strategy, and the implementation of change. He was a key member of the startup team of the Mohammed bin Rashid Al Maktoum Foundation where he developed strategies for the foundation’s interventions in education and research and development. His research focuses on the impact of workforce skills gaps on knowledge-based economic development and company performance in the Arab World. He is a noted authority on sustainable national systems of skill formation that facilitate economic development and competitiveness and is a frequent speaker at global policy summits, academic conferences, and professional meetings. He is also the author of several articles on education and workforce development policy in the Arab World.

Posts by wesleyschwalje

In this Insights at the Edge of Government Analysis Flash, we look at the impact of the sharing economy on the short-term rental market in the MENA. Based on the number of Airbnb hosts across the region, Turkey, Morocco, and the UAE are the biggest regional markets for online platforms that link property owners with short-term lessees. However, the total number of Airbnb hosts in the entire MENA region is similar in size to the number of Airbnb hosts in London alone. The MENA is a key potential expansion market where sensible sharing economy regulation and partnerships between cities and technology companies can mean significant benefits for local communities and businesses that promote large scale national economic opportunity generation.

Airbnb has ≈ 40,000 hosts in the broader MENA

In this Insights at the Edge of Government Analysis Flash, we look at the increasingly diverse industry sectors being targeted by Saudization efforts in Saudi Arabia. In the GCC countries, a key challenge to promoting employment in more diverse sectors of the economy and the private sector remains the relatively high reservation wage set by public sector employers. Recent high profile Saudization efforts are increasingly targeting economic sectors offering average monthly wages from 3,000-5,000 Saudi Riyal per month which have traditionally not been financially and socially attractive. Without a wage subsidy program, potentially similar to Kuwait that incentivizes private sector employment, public sector employment will likely to continue to attract the vast majority of Saudis and put pressure on Saudis to wait for public sector positions.

Renewed Saudization efforts targeting sectors which have traditionally not been financially and socially unattractive

In this Insights at the Edge of Government Analysis Flash, we look at the unprecedented level of economic opportunities for MENA youth created by ridesharing companies. In Egypt, Pakistan, and Saudi Arabia alone, ridesharing firms have catalyzed 200,000+ economic opportunities. These opportunities, which have been created over the last 4 years, now exceed the workforce of the largest regional public sector employers as well as the expected job creation impact of many of the region’s in progress mega projects.

In previous blog posts, we have written about how sensible regulation of the sharing economy has the potential to contribute significantly to the MENA’s socio-economic development. Some countries, like Saudi Arabia, are getting sharing economy regulation right, while other MENA countries remain focused on more traditional policies to attract inward foreign direct investment flows for mega projects to create high skill, high wage jobs in knowledge-based industries and protect industry incumbents. Based on this analysis, technology-driven business models in the sharing economy have the potential to be a key tool for MENA governments to complement active labor market policies and large scale national economic opportunity generation strategies.

MENA ridesharing firms provide 300,000+ youth economic opportunities

In this Insights at the Edge of Government Analysis Flash, we look at the number of Facebook data and content restriction requests from MENA Governments. We found that a select few countries are making a significant number of the requests. To preempt such requests and establish deeper relationships with regional government focused on their positive net contributor role in the community, Facebook employs an escalated government engagement approach.

The broader MENA region made over 7,600 government data and content restriction requests to Facebook in 2016

In a brief interview with Abu Dhabi Chamber of Commerce and Industry, Tahseen Consulting’s Wes Schwalje talks about Abu Dhabi’s race to become a global FinTech hub. This race is not just about superlative bragging rights, though Abu Dhabi Global Market’s Reglab is the first FinTech regulatory sandbox and framework in the MENA region. The economic stakes are real and significant with FinTech having the potential to become a key pillar of the Arab World’s socio-economic development.

Abu Dhabi Chamber of Commerce and Industry: Why is Abu Dhabi so attractive to FinTech companies?

Schwalje: In 2016, the Financial Services Regulatory Authority published a consultation paper seeking industry views on a FinTech legislative framework. This consultation led to Abu Dhabi Global Market establishing the Arab World’s first FinTech regulatory regime and regulatory laboratory. The initiative follows in the footsteps of similar competing FinTech regulatory sandboxes in countries such as UK, Singapore, Hong Kong, and Australia which are all vying to become FinTech hubs. These cities are all providing a safe space for FinTech businesses to test innovative products, services, and business models without having to initially comply with more traditional legal and regulatory requirements for the financial services sector.

The more recent commitment Abu Dhabi has shown to embracing FinTech as well as its traditional role as a strong player in the regional financial services sector make it a very attractive base for more established financial institutions exploring Fintech as well as startups experimenting with innovative financial products or services. The embrace of FinTech in the UAE is an evolution of the initial vision to position the country and its constituent Emirates as a unified international financial services hub offering a full spectrum of financial services comparable to other leading global financial centers. Abu Dhabi provides the regulatory framework, safe space to innovate, strong government support, and commitment to a long-term vision that financial services companies look for when it comes to pushing the innovation frontier. Additionally, there are several regional factors which make Abu Dhabi attractive. Though estimates vary significantly, the unbanked population in the Arab World is estimated at upwards of 80%. Traditional commercial banks continue to dominate lending with weak service provision for small and medium sized businesses which make up more than 90% of most Arab economies. Estimated at $7 billion, e-commerce across the Arab World is booming with a youthful, technology embracing demographic which are first movers when it comes to embracing technological innovation.

Abu Dhabi Chamber of Commerce and Industry: How could FinTech help improve the Middle East and Abu Dhabi?

Schwalje: It is not clear at this time what the full range of possible use cases for FinTech will be in the region, but a few macro trends are emerging based on the startups in region and competitive pivots of more established financial services firms. The payments industry is becoming more competitive with FinTech players challenging traditional payment firms’ intermediary role by offering more direct, faster, and cheaper services. We are seeing significant innovation in mobile wallets, crypto-currencies, and block chain technology as well as mobile banking surging. Digital and mobile-based payments will likely replace traditional card-based payments and make some traditional payment channels like ATMs and point of sale technologies obsolete. Block chain-driven payment infrastructure, which Dubai is pioneering, have the potential to significantly reduce payment processing costs. Web-based insurance aggregators are challenging the dominance of more traditional market players. We will see the increased use of big data by financial institutions to more effectively serve SMEs and previously unbanked populations with tailored deposit and lending facilities. Online platforms have already caught on as an alternate funding platform for entrepreneurs seeking early-stage finance to counter the lack of risk capital and commercial loan options for startups and SMEs in the region. Right now we are at very interesting stage in the evolution of FinTech regionally in which there remains significant big addressable markets that are currently untapped.

In a brief interview for Computer Weekly, Tahseen Consulting’s Wes Schwalje talks about the future of IoT and the need for regional stakeholders to get a lot more serious about personal data privacy and connected device security.

Computer Weekly: Which GCC sectors could benefit most from IoT – and why?

Schwalje: Due to the concentration of economic activity in the GCC in a handful of sectors such as the extractive industries, manufacturing, government services, construction, and utilities we will likely see a concerted effort to disrupt and digitally transform these traditional industries with IoT. Specific sub sectors of focus will likely be oil and gas, petrochemicals, aviation, and, pharmaceuticals as well as government services such as healthcare, education, and utilities. In these traditional sectors, industry incumbents will either take on new roles or be displaced by new industry structures due to digital disruption. A good example of this adaptation in the private sector to avoid digital disruption is Mashreq Bank’s recent announcement about its new digital only spin-off unit. In terms of government services, several GCC governments are deploying IoT as part of smart city initiatives to enhance government service provision, we are seeing interesting connected healthcare pilots emerging like telehealth systems in Saudi Arabia, and there is a significant push to leverage IoT to address transport challenges regionally. At the same time, increasing economic diversification in the GCC, driven primarily by growth in the services sector, is likely to lead to innovative IoT applications in emerging services sectors such as transport and logistics, telecommunications, financial services, and tourism. In the very near future, IoT will become a key aspect of GCC economic diversification strategies and ultimately global and regional competitiveness.

Computer Weekly: How might life in the GCC look different in ten years, due to IoT technology?

Schwalje: The data gained from IoT is the foundation for a range of emerging technologies such as machine learning, robotics, automation, 3D printing, artificial intelligence, and augmented. For this reason, we will see a significant uptake of IoT over the next decade. Data is quickly becoming vital to the profitability and success of GCC businesses as well as enhanced efficiency and effectiveness of government service delivery. In terms of specific applications of IoT, we are likely to see smart asset monitoring, employee tracking, energy consumption monitoring, product usage and monitoring, business process automation, smart security, and wide area control systems. While the potential of IoT in the GCC is promising, more effective, consumer-oriented laws and regulations on data in the GCC and throughout the Arab World are needed to address how data can be obtained and used, how long data can be kept, and limits on access by third or other government related-parties. A modern, harmonized GCC data protection framework is a critical requirement to maximize the benefits of the IoT.

Tahseen Consulting recently explored how the telecom industry in the Arab World is supporting technology-driven startups and small and medium sized businesses. We interviewed executives and innovation leaders at 55 telecom companies to get their perspectives on how companies are supporting technology entrepreneurship and what can be improved. Here are our results.

Telecom Industry Support for Technology Entrepreneurship in the Arab World

Abu Dhabi Chamber of Commerce and Industry (ADCCI) recently sat down with Wes Schwalje, COO of Tahseen Consulting, to discuss the United Arab Emirates’ plan to become a regional and global themed entertainment destination with its sizable investments in theme parks.

ADCCI: What value do theme parks bring to the UAE’s tourist proposition?

Schwalje: In 2016 the World Travel and Tourism Council estimated travel and tourism contributed approximately $227 billion to Arab economies and employed approximately 6 million people. This means that the contribution of the travel and tourism sector to regional gross domestic product is on par with the banking, chemicals, agriculture, and automotive sectors. It is clear that travel and tourism will play a strong role in generating economic growth and employment in the Arab World over the next decade.

In the UAE, travel and tourism has been identified as a key sector for economic growth and diversification. According to the World Travel and Tourism Council, in 2016, travel and tourism contributed $43 billion to the UAE economy. For this reason, the UAE has invested significantly in the travel and tourism sector to position itself as a destination of choice for international leisure and business travelers. The UAE’s more recent investments in theme parks complement the country’s already significant legacy investments in world class resorts, hotels, golf courses, and other attractions. Theme parks fill an existing gap in the types of visitor attractions the UAE offers. The UAE is world-renowned for its beaches and adventure tourism given its unique ecosystem. Over the last decade, it has launched a number or sporting, culture, shopping, and festivals which have been effective tourist draws. Heritage tourism has received a lot of investment in the run up to Expo 2020. Theme parks serve as an additional strategic lever in the UAE’s competitive strategy to attract tourists. However, it should not be ignored that some studies have shown that typically, residents from within 1.5 to 2 hours of a theme park, can account for as much as 80% of theme park visitors.

ADCCI: What kind of traveler will theme parks attract?

Schwalje: The business proposition of UAE theme park investments is rooted in the oft cited statistics that 6 billion people live within eight hours flying time to the UAE and Dubai and Abu Dhabi airport passenger traffic collectively amounts to approximately 100 million people. The idea is to convert these travelers into theme park guests. Based on the top source markets for UAE visitors, theme parks are likely to attract travelers from India, Saudi Arabia, United Kingdom, Oman, Pakistan, US, China, Iran, Germany, and Kuwait. However, it remains unclear how the UAE theme park might ultimately evolve. For example, key theme park clusters in Florida and California in the United States have carved out a niche which attracts visitors that are ready to travel long distances and stay in parks for long periods. In Florida, for example, overseas visitors have an average length of stay just above 10 days. In the UAE, the average length of visitor stay is approximately 4 days. So it is unclear if the UAE theme park market will evolve similar to the model of California and Florida or if it will evolve more closely to European or Asian theme park markets which often have considerably shorter lengths of stay and cater largely to more proximal geographic markets.

ADCCI: What kind of peripheral spends will these travelers bring?

Schwalje: Based on visitor spending trends globally, in addition to direct tourist spending on accommodation, transport, and entertainment, theme park tourists will also bring significant spending on shopping, sightseeing, dining, and other recreational activities. The indirect and induced spending impacts from tourism can be as significant as or higher than the direct contribution of travel and tourism to GDP. This implies that extending visitors’ length of stay should be a key priority for UAE tourism promotion authorities and key stakeholders.

ADCCI: How should the UAE optimize theme park segmentation? What types of parks work best?

Schwalje: To maximize revenues, UAE theme parks will need to quickly transition from selling 7-hour experiences to a 7-10 day experience. This will require doubling the average length of visitor stay in the UAE. While a large scale critical mass of theme parks and attraction is critical, a key challenge will be encouraging overnight stays by increasing suitable accommodation across all market segments.

ADCCI: Do ‘internationally branded’ parks, such as Legoland, offer more value and footfall?

Schwalje: Theme parks generally have two broad strategies for attracting customers: leveraging original local content or global alliances. In the UAE, theme parks have generally chosen the strategy of forming global alliances for intellectual property assets to make their parks appeal to a broader international audience. Empirical studies of the impact of park theming surprisingly show that theming is not particularly significant in driving entry prices and attendance – attractions seem far more important. So there is not conclusive evidence that international branding is a golden ticket to success. However, consumers are becoming more globally aware, and other rapidly developing competing theme park markets, such as China which opened more than 20 theme parks in the past few years, have followed a similar international branding approach to UAE theme parks.

ADCCI: What might theme parks of the future look like?

Schwalje: The theme park industry, like other industries, evolves based on economic conditions, global competition, socio-political developments, and technological developments. An interesting study conducted recently asked over 100 theme park leaders about their views on the future of the theme park industry. A few of the themes that emerged from this study were: top future themes for parks will be interactive adventure, fantasy and mystery, movies and TV shows, science fiction, and space; the family market will always be the target market for parks; operational excellence, such as reduced wait times and dynamic pricing, will become key points of future differentiation; visitors will demand more interactive, personalized experiences; and theme parks will have to offer integrated vacation experiences that include on-property accommodations, food services, recreation, shopping, recreational and entertainment activities, and other tourist services. We see many of these themes playing out now.

Abu Dhabi Chamber of Commerce and Industry (ADCCI) recently sat down with Wes Schwalje, COO of Tahseen Consulting, to discuss how Abu Dhabi can attract more foreign investment.

ADCCI: What makes a country attractive for foreign investment?

Schwalje: There is widespread agreement that foreign direct investment flows are influenced by the size and growth of the investment destination, stability, openness, and institutional quality. This consensus is built upon a foundation of a number of stylized facts: larger economies tend to attract more foreign investment; trade openness and export orientation have a strong complementarity with FDI flows; sectoral and cluster effects often signal opportunity for foreign investors that increase investment, political and macroeconomic stability attracts investors; and good governance and institutional quality are key FDI determinants. However, emerging research on FDI shows that bilateral trade agreements, investment treaties, and customs unions potentially have a much higher influence on FDI attraction than macro-economic policy factors like business costs, infrastructure, and quality of political institutions. So, in addition to a continuing focus on strengthening the business enabling environment in the GCC, we will likely also start seeing a much stronger focus on bilateral and multilateral trade and investment frameworks.

ADCCI: What credentials can Abu Dhabi leverage to boost and optimize its FDI?

Schwalje: Abu Dhabi currently offers foreign investors a high level of political and economic stability, strategic location, world-class infrastructure, tax incentives, and strong social infrastructure. It is currently the second most preferred destination of foreign investor in the Arab World. However, there are several competing, emerging FDI destinations in the Arab World which raise questions about how investment destinations can further differentiate themselves from competitors.

ADCCI: What sort of FDI related policies and incentives could attract investors to Abu Dhabi?

Schwalje: In general across the GCC, there is a need for deeper reforms to enhance the business enabling environment and simplify investment approval and licensing. One of the most significant concerns of potential investors in the GCC, which the UAE is currently addressing at the federal level, is limitations on foreign ownership and sponsorship requirements often contained in GCC investment laws. Investment laws which give investors greater control over their investments will be critical. Over the longer term, several GCC countries will need to consider if the investor incentives and protections offered by economic and investment zones that primarily target foreign investors should be rolled out more broadly to benefit onshore businesses. Stepped up policies to support small and medium enterprises are needed. A stronger focus on bilateral investment treaties and free trade agreements can build on the achievements GCC countries have made in improving the business enabling environment. Clarifying the role of countries and the Secretariat General of the Gulf Cooperation Council in promoting FDI could also provide a stronger regional framework for FDI attraction.