(1.15) The final discussion of the morning was on 'payment gateways, blockchain and security' and featured Bhairav Trivedi - group CEO, Network International; Ola Doudin - co-founder & CEO, BitOasis; Mohanish Agni - head of merchant sales and solutions, MENA
region, Visa; and Devid Jegerson - Chief Executive Officer of Payments, Noon
With 90% of payments still in cash, the growth potential for payments in the region massive, the panel agrees.
Concerns over security surrounding card payments are unfounded, says Jegerson.
"Visa and Mastercard has specific protections in place for customers," he says.
He adds that banks should push information to customers, and say that customers are protected.
(12.40) Crucially, Khazen Baz says the region is missing out on having a bigger and more productive workforce because of many people who may choose not to be working, perhaps because there is less choice, or cultural issues such as fewer women in the workforce.
Nabbesh, by to a degree formalising the freelance contracting market, has really resolved some of these issues and started to provide more opportunities for people who otherwise would find it harder to work.
In a region with mass youth unemployment this might not be the only solution, notes Andrew Neil, but it could certainly help.
Khazen Baz agrees that the younger generation are certainly adopting this sharing and freelance economy much faster than their older counterparts.
Another point to note is that the sharing economy has provided employment opportunities for migrant workers that may not have been on offer to them before, says Neil.
Take Uber in London, he says, most of the drivers are immigrants. Still, Al Nahlawi says legal reform is required to overhaul labour laws and make it easier for migrant 'freelancers/contractors' in the region to find work and contribute to the economy.
At the end of the session Neil poses a question: "Where does it go from here?" Is it simply a case of there being gradually more people becoming self-employed? (or the Middle East, no-tax equivalent of this labour status).
For example, in the UK, the rise of self-employment is actually hitting national tax revenues, therefore in turn hitting social services and the public purse. But Khazen Baz points out that the Middle East does not necessarily function the same way as the Western world.
"What you're starting off with is already very low. There is a lot of corruption [she is talking largely about Lebanon, Jordan, countries other than in the GCC] and the economy is not structured in a way in which the public benefits from government funds. You can't necessarily stay there and make money.
"Here in the GCC, it is different. It's about constantly improving your education and knowledge, they are really keen to build the knowledge economy and the sharing services-type economy fuels this."
Neil agrees that there is a lot more to this type of economy than meets the eye.
"In a region where governments have let the people down, the standard of welfare and number of jobs are poor. The sharing economy is a way for people to do better in a region where government has not always been their ally," he says.
Yes, says Al Nahlawi, we are creating more and more opportunities with this sort of framework and we are very much part of the post-oil economy in the wider Middle East.
Khazen Baz calls for a change in mindset - and some regulation or formal freelance legal framework - to give more credibility to the sector and enable it to grow and provide even better services.
(12.30) The next session on today's AB Forum agenda is a panel discussion on Building a Shared Economy for the Arab World, featuring Basil Al Nahlawi, vice-president of business development and government relations at ride-hailing app Careem, and Loulou Khazen Baz, founder of Nabbesh, a start-up that aims to connect quality freelancers with work.
First up, Khazen Baz talks about the digital shift that has enabled people to go to different parts of the world and hire services there on a short or long term basis - it's not necessarily a sharing economy, she says, because you're charging for it, so it's more of a rental economy.
Moderator Andrew Neil asks whether 'sharing economy' is just a fancy term for certain forms of commerce. Al Nahlawi says that, with Careem there was a clear gap, as with no public infrastructure, you have the demand; and with a huge workforce you have the supply.
Khazen Baz talks of the independent contracting model that has been present for long before the Careems and so on and people are really finding ways to monetise their products and services in a more democratised way, without being in a formal system.
Marketplaces are supposed to create autocracies, eg if you are a graphic designer in Jordan, your services would typically be provided on home soil, but digitalisation has enabled you to provide those services in the US, for example, and earn more than you possibly would in Amman.
But Neil asks, well, isn't that just globalisation? Of course it is, she says, but digitalisation has enabled this faster. It's different though in a battered economy, as this has prompted a faster take-up of shared economy-type services.
One potential issue is that, in this region, many SMEs need sponsorship for this type of venture. Khazen Baz says one of the biggest risks if you are a contractor is that upfront costs are difficult due to cashflow issues but she says that many people find ways of circumnavigating this.
Even if this goes against the terms of their visas? asks Neil.
This is a thorny issue that the panellists are unable to properly address, but Al Nahlawi says that many governments are starting to recognise the benefits of the sharing economy and loosen regulations to facilitate such ventures.
"Governments are not against these new ideas," he says, "but it takes time for them to understand the benefits."
He also says he thinks that the region is fortunate in that much of this new business infrastructure is lacking, therefore there is huge latent demand.
Take Careem - people don't have to worry about parking, congestion - such a big issue in the region due to lack of roads and so on - so it has really filled a niche here.
(12.00) Ghandour also agreed with earlier comments made by Mohamed Alabbar that there is a low level of ownership in the region, and scepticism about local companies' value and worth unless they are listed.
My last point, says Ghandour, is that Dubai is the ultimate entrepreneurial city - it was built on this old notion of 'build it and they will come'. We need to think the same way about the way we build the start-up ecosystem here.
(11.50) Crucially, this is about societal disruption, he says. "If you want an entrepreneurial ecosystem you need to invest in entrepreneurs at every stage of their life and that includes the very early stage - the riskier stage. Just as we build airports, infrastructure, schools, etc - think of entrepreneurialism as the same sort of infrastructure."
And, at the end of the day, the risk takers will benefit. They may lose initially, but many will reap the rewards.
"The battle will be won in the early stage war", Ghandour states.
VCs aside, the most patient capital in the world is government, and development agencies, he says. This is because they are the most understanding of infrastructure, these sorts of long term projects.
If you are spending billions on national infrastructure projects, then why wouldn't you also spend billions on start-ups? This will show that people are serious about SMEs. That's how Silicon Valley was created - with patient capital and people taking risks.
That said, there will be "no miracles", he warned. It will take time to build the ecosystem and stakeholders must remain patient.
He used the example of Lebanon, that provides guarantees to people who are trying to start their own business. These sorts of incentives are essential, because banks are completely absent. Only 4% of banks in the region go to SMEs; 0% go to start-ups!
There is a 280bn funding gap (although he does not say whether this is in US dollars or dirhams). Somebody needs to give them government guarantees and the funding gap will not be filled if the decision makers, the governments etc do not open borders.
Try to send a package around the Arab world and it's so difficult - believe me I know - it is not nearly so difficult in other places across the world. These same borders need to be lifted for start-ups and entrepreneurs so they can go across the world.
(11.45) Next up at the AB Forum is a keynote address on The Funding Debate, delivered by Fadi Ghandour, Aramex founder and executive chairman of Wamda Capital.
He starts by taking the audience around the region, to identify the various ecosystem challenges in the different countries facing early stage start-ups and entrepreneurs.
In all the research the Wamda Group does, he says, there are four gaps that everyone mentions:
1 - access to capital. They need money; 2 - access to talent, this issue is not being addressed at present; 3 - access to clients, is it B2C or B2B. Fourth and most important, he says, is access to markets.
He says all the successful businesses in this region are those that have gone global, or least regional. This is a massive challenge in the region that very few in the regulatory environment actually address. You need to open up these markets to ensure that funding makes sense.
So at the "core of any start-ups' story", he says, is that you cannot think of funding alone; it's simply not the full story.
"Entrepreneurship is the ultimate fad," Ghandour says, everyone is always talking about it, but he concedes it really is not just a fad.
Ninety-three percent of registered companies in Saudi Arabia are SMEs, he claims, and these are the entrepreneurs that are going to fuel the post-oil economy.
"These are the people that are thinking from their basements, from their bedrooms; they are the digital disrupters and are building businesses sort of without permission. They are not waiting for approval from regulators or anything."
Having said that, Ghandour adds, early stage funding of start ups is tough. Very few companies will be able to "do an Alabbar" and start with millions of dollars!
Crucially, he advises, "I am not a believer of the winner takes all" - there should not be one stakeholder who has it all, it should be a mix of angel investors, all those little pieces, the $4000, the $10,000 - you wouldn't go to university before going through school, you have to go through the entire education."
And there needs to be a better culture of funding risk here in the region, he adds.
(11.30) Neil asks about issues facing e-commerce retailers in the region.
Fodhil Benturquia, CEO, Noon, says there are a lot of innovations happening, including the development of an address system in the UAE.
Omar Soudodi says 70% of online purchases are still in cash which has improved from 80% a few years ago.
Big data is significant resource for e-commerce retailers. Rashid Alabbar says he prefers to control and analyse the data they collect in-house. “This is our only business,” he says. He agrees with Neil that the data is the company’s “crown jewels”.
Facebook – friend or foe, asks Neil.
“I’m conflicted,” says Alabbar. “It’s a big part of our marketing campaign. It’s one of our biggest channels.”
He says Facebook, which can help with their data and target customers better.
(11.00) Panel discussion: Building an e-commerce ecosystem - with Rashid Alabbar - Chief Executive Officer, SIVVI.com; Khalid Talhouni - Managing Partner, Wamda Capital; Fodhil Benturquia - Chief Executive Officer, Noon; Omar Soudodi - Managing Director, PayFort, moderated by Andrew Neil.
Neil opens the discussion to ask about the shopping mall culture in the region asks if people prefer the ‘bricks and mortar’ experience.
Omar Soudodi, managing director, PayFort, says e-commerce is growing. He reveals that 60% of people seek value in online shopping, 30% are looking for convenience, and 10% are looking for unique products, like those on offer at Yoox Net A Porter.
Rashid Alabbar, CEO, SIVVI.com says people's habits are changing the marketplace.
“We’re trying to match the change in people’s habits,” he says. “Whether its convenience or offers, these are things we’re trying to match all of these.”
He says with the click of a button, people have access to 1,000s of products, and don’t have to remember where you’ve parked in the mall.
(10.10) Neil asks whether, perhaps, there will be a time for people to buy something online, and a time when they wish to walk around the mall with their families.
Alabbar responds: "The physical world will always be there, it's just that a move towards digital is crucial to ensuring your business is relevant."
The final point made in the session is that, as Neil says, there are many large companies who get obsessed by this phrase "big data" - they spend all this time and money collecting this data and then they have no clue about what to do with it.
Marchetti says this is a very pertinent point. It's a complex problem, but it's doable, he says. He says he no longer calls it "big data", but "smart data" - it doesn't matter how big it is, if it doesn't "do" anything, then it's not useful. Ensuring customer privacy is of course of the utmost importance, he says, but if companies can strike a balance, data can prove very valuable.
Facebook's Labin concludes by noting that the "region is young, the region's hungry - and that it is really moving in the right direction [in terms of the digital revolution".
Finally, Alabbar says he is enjoying the experience of stepping into the sector, and that he hopes it is a profitable one.
(10.00) Alabbar continues the panel session by calling on the industry to back this "risky industry" that is so rapidly evolving.
Facebook's Labin says: "Yes, there is still a lot of white space in the region, and I would like to see international businesses invest in local Middle East ones trying to develop the digital sector here.
"It's important that we have local players here - in particular, we have a lot of problems here that could be better solved through technology."
Neil notes that when assets are government owned, the public does not own as much, and asks what may incentivise them.
Alabbar says that his own venture with YOOX Net A Porter will encourage others to look at the region and consider the value of investing in it.
He also talks of the large number of young people in the Middle East, like his son Rashid.
"It's amazing - they are going to fly and they are going to have nothing to do with government; government thinking and government involvement."
This is very different from the business climate in which Alabbar himself grew up, notes Neil.
Marchetti is a "trailblazer" then, in this space and people will be watching him to see how this venture progresses, Neil adds.
"Are you ready for that?!" Marchetti thanks Alabbar for the opportunity, and says he thinks the venture will open up new doors for other investors and entrepreneurs in the region.
However, Neil highlights that people want faster and bigger bandwidth the whole time, and that all the talk in the UK and US is about 5G, not 3G or 4G. So can this region keep up with the technological changes?
Facebook's Labin does not directly answer the question, but says that digital expansion opens up democratisation of information, so ideas can come from anywhere and information is available to everyone, no matter where they are in the world.
So "bringing the library to the bedroom, however humble it is," says Neil.
And another thing, says Labin, is about how consumers here in the region are actually embracing digital faster than those in other regions.
So, does digital spell the end of bricks and mortar, asks Neil.
Alabbar, of course, is building a huge logistics shed in Dubai South to support Noon, and he says that if you are a digital player who is not also in the real world, "you will die"
(9.55) Alabbar is talking about how there is a limit to how much the government can drive the digital revolution - they can only facilitate and support, he says.
Almost the governments have no place to play, he says.
Neil says, this is very interesting because governments here in this region have historically played such a large role in the growth of other sectors, eg oil and gas and so on.
So is this largely a private sector driven venture, asks Andrew Neil? Facebook's Labin does not necessarily agree, he thinks there is an opportunity for governments to lower the cost of telecom infrastructure - and Facebook is working on projects like this across the world.
Another issue is Talent shortages - in Silicon Valley, London etc this is a constant complaint, says Neil.
"So every region has to do the best it can do to attract the talent, would you agree?" he asks the panel. Marchetti agrees: "As I said before there is a big shortage, and a big competition. Unemployment among young pepoel could be improved if more people are educated on the digital skills.
(9.50) Next on the agenda is a panel session with Mohamed Alabbar - Chairman, Alabbar Enterprises, Chairman of Emaar Properties, Federico Marchetti - Chief Executive Officer, Yoox Net-A-Porter Group, Jonathan Labin, MD MENA & Pakistan, Facebook, moderated by Andrew Neil.
Alabbar then speakers of the "4G, 3G-connected people - this is our opportunity, we need to work on them. They get the maximum services, let's convert them quickly."
He then says he hopes Iraq, Syria and Yemen all get this level of bandwidth soon, because can be used to educate people and really close a divide.
Marchetti speaks of the biggest obstacles to digital growth - education is one of them, he says. Meanwhile, mobile is a huge opportunity - even back in 2006 before we merged with Net A Porter we saw it was a key opportunity and we brought this to the deal.
The discussion moves to the payment of information and publishing, and how more and more of this is being done online.
John Labin, MENA MD of Facebook, says that it is very helpful that mobile is much cheaper. He talks of how Facebook had a difficult year in 2012 just after it went public and it was criticised for not moving faster on mobile.
"Today, we are a mobile-first, a mobile-best company, ebcause that's where people are consuming information," he says.
(9.45) Facebook's managing director MENA and Pakistan, Jonathan Labin says the digital revolution is an opportunity to bridge divides in the community and meet some of the challenges in the region today, such as unemployment.
He says there are three pillars.
Firstly, and simply, everyone needs mobile connectivity. The reality is there are still a lot of people in the MENA region unconnected - half of the population, he says - so there's a lot of work still to be done.
Then it is a question of how they are using their devise. Do they have a smart phone or a feature phone? There is also still a lot of 2G in the region, while others have 3G and 4G.
"We need to provide the right kind of services, high end and services that work on every type of phone. We're all used to 4G but there's a lot of folks that have mobile phones on a 2G connection," Labin says.
The third pillar is education - building an ecosystem that helps the region to leverage the IT infrastructure, Labin says.
(9.40) Next up on the agenda is a video address by YOOX Net A Porter CEO Federico Marchetti, who talks of the history of the company and gives an overview of the brands it represents.
He says the single platform and logistics capabilities "is our USP" and the website receives almost 30 million unique visitors per year and completes close to one order every second.
Marchetti then gives an explanation of how the joint venture with Mohamed Alabbar came about.
He says: "We are combining the strength of two regional player to tap the luxury market in the Middle East.
"Brings unique and unparallelled experience of the two players. We are the only ones doing this.
"We bring our know-how as a world class online retailer; likewise, Alabbar brings his immense knowledge of business and customer trends.
"I have a lot of admiaration for what he has acheived as a global entrpeeneurs, and now he is leading the digital revoution of the Middle East."
He then asks: so how did the venture come to be?
"Our relationship went back about two years ago before YOOX merged with net a porter. Of course we knew that there was really only one person who truly shared our vision and could help us turn it in to reality.
In April, Alabbar invested 400m euros, 4% of our ordinary shares.
"Then in July, we released our five-year growth plan and said we were aiming for 17-20% annual growth over the next few years.
"We are aiming for significant growth in the middle east. Today, six months later, we are announcing our digital JV. The proof that it is definitely a digital venture is that Mohamed and I closed the deal on Whatsapp.
"We will establish a Dubai-based presence, on the ground presence, with comms, and customer care, as well as same day delivery for Dubai, and a high quality of service.
"Also local currency and payment methods. By 2017 open the Dubai office. The regional e-tailers are all focussed on discounting and few are serving the upper segment. The Middle East is one of our brightest prospects - accounted for 3% of the total luxury market.
(9.28) Alabbar then announces some news: the signing of a joint venture with Net A Porter Middle East, which he says is "really incredible for the fashion e-commerce market - which I think is a $10bn market".
He talks about how the CEO of Net A Porter group will be giving more information about this when he addresses the AB Forum later today.
(9.25) Talks about Aramex, Americana involvement, then with the 1 billion tech fund, then we have launched Noon....interesting announcement coming up. So this is a process for us. I started out as a government employee but it's about whether we have the ability to learn. My CV was not good [at the start]!
In the region the real issue is that - we have 350m people, but they don't own anything. People who are going to digitise, they are going to own data. How are people here going to do this. So I'm seeing all these great companies that have been built, but what do we have??
Companies owned by a VC in South Africa or whatever, but what about us? These guys have done enough, what about us? So that's the story behind what we do. I think we need to contribute to society. Maybe I'm wrong to ask these questions but that's how I feel. Ownership is critical and it's important we get involved.
(9.20) Alabbar then moves on to talk about his own ventures and the motivation behind his expansion into e-commerce and the establishment of his new company, Noon, reported in detail by Arabian Business this week. For him, it's about increasing "relevance" in a rapidly changing digital world.
He says: "If you ask me why I’m doing this it’s because of this change, and with this change I think that every one of us wants to be relevant. Every business has to evolve to become relevant.
"Look at Dubai Creek that we are building - it's two and a half times the size of Downtown, it’s the biggest, people used to talk of Singapore etc, and building a proper urban masterplan but now we have to learn about 'digital masterplanning'.
"If we don’t get digital masterplanning right for Dubai Creek it’ll be irrelevant. We are reaching an agreement with one of the big firms – there is so much investment."
Honestly I see my kids and I don't want them to be bigger than me! It's our duty to be relevant, it's our duty to learn.
(9.15) Andrew Neil is giving the opening welcome. He reminds delegates that “everything has been digitised” and talks about how this changes everything - “the structure of companies, the relationships between employer and employee; it abolishes distance and changes the very culture of the company". Those that fail to grasp it miss out, he says.
Neil then welcomes our keynote speaker, Mohamed Alabbar of Alabbar Enterprises and chairman of Emaar.
Alabbar says that the rise of the digital age blurs the boundaries between developing and developed countries - "it's fabulous", he says. "It’s moving with so much speed that there are no borders, no laws with it. The Middle East with its 200 million young people - for them, YouTube is their TV set, they can reach their freedom, their dreams and connect with the world overnight."
(9.10) Mohamed Alabbar speaking live now - via Facebook Live
(9.00) We are in the midst of the next industrial revolution that will fundamentally alter the way we live, work and relate to one another. Social networks and digital devices are now being used to engage government, businesses and civil society at a much larger scale than ever before.
This shift will transform the way every business in every industry operates. In fact, we are already witnessing a transformation of business priorities as both the public and private sector across the Arab world look to invest in advanced technologies to better meet changing customer needs and expectations.
We find ourselves at an interesting juncture, a period that will propel innovative companies forward and accelerate the demise of others.
Few would downplay the significance of the current challenges, but the region seems optimistic about the long-term opportunities offered by this shift in direction.
With this in mind, today’s Arabian Business Digital Forum sets out to uncover how far along we are in the digital revolution, and where opportunities lie for the private and public sector. Topics today include the Arab digital divide, building an e-commerce ecosystem, financing and funding, the shared economy, payment gateways and blockchain, and the Arab world’s next generation of start-ups.
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