Anyone who occupies a leadership role in the Middle East will be familiar with the term ‘localisation’. It is a consistently recurring theme in board meeting agendas across the region. The issue, however, is much larger than simply satisfying government targets and mandates in order to sustain existing operations and gain access to employment visas or merely a matter of positive public relations. The challenges of localisation, and how we address them, are central to the continued prosperity of the region.
Media speculation regarding the sustainability of the boom period in the Middle East has been at record levels over the past 12 months. The focus, for the most part, has been on the real value of the stock markets, whether or not the property and construction phenomenon will continue, fluctuations in oil prices, efforts to control inflation, and the strength or current weakness of the US dollar.
One of the most vital components of sustained regional growth, however, has received very little in the way of media analysis, namely the development of productive human capital.
If we survey our global playground, we can see that the boom period in the US over the last decade has had a strong correlation with baby boomers reaching their peak. Meanwhile, we can also see flat or minor market growth in Western Europe as a result of its aging population. If you buy into the logic that a vibrant youth population drives productivity, it starts to explain the emergence of India as a global economic power, the sustainability of South Korea, the great potential of China, and the doubts surrounding Russia’s economy over the next 20 years. Russia in particular, with its declining birth rate and life expectancy, is suffering from a desperate lack of young workers. India is on the opposite end of the scale, with a large domestic market and access to a well educated, highly motivated youth population.
Similarly, a key growth factor in the Middle East will be its emerging power base of youth. Figures from across the region, inclusive of Iran and Egypt, show that more than 50% of the population is under the age of 20 — a human capital pool of more than 200 million people. That’s the good news; the bad is that, until now, this vast and precious natural resource has remained relatively unproductive. Thankfully, steps are being taken to overcome this shortfall. More and more young people are undertaking educational training in their quest to enter the workforce and start playing a significant role in the economic development of their nations. We must encourage and facilitate their efforts.
A major factor in our future prosperity, then, will be the ability of educators, and public and private enterprise leaders, to tap into the potential of our youth population. This can be achieved, in the early stages, by increasing the depth and quality of secondary and tertiary education. Next we need to establish effective career development and training programmes for new entrants in the workforce. Finally, we need to find ways to better identify ability among these new arrivals.
The quality of an individual’s skills and capabilities should not be measured by the breadth of his or her attainment but, rather, by the depth. And this is where our current process is in need of being revamped.
By depth I mean, for the most part, the thing that cannot be taught in a classroom: Practical experience. Such experience, of course, requires time, the willingness to learn from one’s mistakes, and the ability to initiate and deliver results.
Progress in training and education in the Middle East has already been positive. With a large short-to-medium-term influx of expatriate labour and management, the region has had the luxury of time — rather than rushing young people into the workforce, we are able to give them the nurturing and theoretical preparation they need to be ‘fit for growth’ in the future.
The Middle East has set the stage for sustainable growth through its massive investment in infrastructure. This, coupled with the strategic development of local young people, will ensure that the economic boom of recent years will continue. It won’t be easy, however, with the region needing to create over 500,000 jobs each year, and train and develop its human capital, in order to capture the fruits of the initiatives taken today.
But success, in the same way as failure, has a way of perpetuating itself. Once we build up a large, skilled, youthful workforce, we will have established the foundations for the next generation — the people who have acquired leadership experience will train the next wave of entrants, and so on.
This, in turn, will lead to the emergence of a ‘mass affluent’ consumer base, which will drive economic growth for many years to come.
Alex Andarakis is CEO of drinks manufacturer Aujan Industries
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