A NEW MIDDLE EAST: AN OVERVIEW
THE MIDDLE EAST AND NORTH AFRICA (“MENA”) region is synonymous for the Arab World comprising 375 million people in 22 diverse countries. It stretches from Mauritania on western Africa’s Atlantic coast to the Gulf of Oman at the eastern tip of the Arabian Peninsula. Strong if uneven market growth in the region is fueled chiefly by favorable demography and related factors.
The region as a whole has one of the youngest populations in the world, with median ages of 22 (Middle East) and 28 (North Africa) years respectively. Other growth drivers include rapid urbanization, rising disposable incomes and burgeoning consumer markets fueled, in part, by technology. With rising purchasing power, the size of the region’s middle class is expected to exceed 230 million comprising consumer markets valued at over $2B by 2030.
Millions of middle class people are likely to see incomes rise, and tens of millions more will enter the middle class for the first time. The net effect is an aggregate economy among 11 nations worth $3.3 trillion — one of the world’s fastest growing emerging economic blocs, larger than the “ASEAN-5.” Despite the region’s natural advantages, there are clearly headwinds at play. In addition to political instability and sectarian strife, the region’s persistent economic barriers include poor access to finance, lagging education and a patchwork of outdated regulatory restrictions.
The region is undergoing a period of profound uncertainty, as governance challenges, economic pressures and sectarian divisions undermine many states. Declining oil prices mean shrinking government spending by resource rich countries on social programs including education and healthcare.
The new generation of Arab youth is more cosmopolitan, tolerant and enterprising than their parents. Their rapid adoption of mobile technology has transformed the region and accelerated economic vitality. On the flip side of the demographic dividend is the daunting challenge of creating 80 million jobs over the next decade to keep pace with population growth.
The greatest threat to the promise of MENA’s economies is upheaval and conflict in the region’s flash points and the risk of spillover effects as well as the reduced reliance on energy reserves as many of the region’s economies become more diversified.
Entrepreneurs are a potent and growing force for addressing the pressing economic and social challenges facing the MENA region. Emerging tech companies are reaching new milestones in bringing innovative products to consumers with disposable incomes. Across much of the region, the long-term outlook is promising due to growing confidence in the stability of countries outside conflict zones, rising living standards and a new generation of talented entrepreneurs in unheralded but flourishing ecosystems.