OUR GEOGRAPHIC COVERAGE

Middle East and Africa (Israel, GCC, North Africa, South Africa, Rest of Middle East and Africa)

The Middle East and Africa (MEA) is a diverse region that boasts a flourishing economy. This region has a history and culture hosting various countries at different stages of economic development. Over the few years the MEA region has gained increasing significance for global businesses due to its strategic location, abundant natural resources and growing middle class. The Middle East and Africa’s economic growth has been propelled by investments in infrastructure development encompassing areas such as transportation, energy and telecommunications. Countries like Saudi Arabia, the United Arab Emirates and South Africa have made contributions, to their infrastructure to support their ongoing economic expansion.

Israel

Israel boasts a highly developed market economy that places great value on innovation and technology. Over the few decades the country has enjoyed consistent economic expansion with estimations projecting a GDP growth rate of 2.9% in 2023 and 3.3% in 2024. A multitude of factors have played a role in Israel’s progress and GDP such as its unwavering commitment to innovation and technology investments and trade quality human resources and education as well, as robust infrastructure and efficient transportation systems.

Innovation and Technology

• Israel has gained recognition as the "Startup Nation" for its thriving startup ecosystem. It boasts the number of startups per person globally and has given rise to successful companies like Waze, Mobileye and Fiverr. Over the ten years alone Israel has seen the birth of 2,000 startups alongside an additional 3,000 small and medium sized startup and high tech companies, 30 growing enterprises and 50 large technology companies. This culture of innovation and entrepreneurship has made a contribution, to the country’s economic growth.
• The Israeli government has implemented policies and initiatives aimed at promoting the growth of the technology sector. These measures include providing tax incentives to attract investors allocating funds for research and development and actively encouraging companies to establish their research centers in Israel. Such efforts have effectively fostered an environment to innovation and technological advancements.
• Israel boasts an academic research community that has played a significant role in driving the countrys technological progress. Renowned educational institutions like the Technion. Israel Institute of Technology and the Hebrew University of Jerusalem have been instrumental in conducting groundbreaking research across fields such, as computer science, biotechnology and engineering. The outcomes of this research have led to the creation of novel technologies and products thereby contributing significantly to growth.

Investment and Trade

• Israel is a country that attracts a significant amount of foreign direct investment (FDI) because of its highly skilled workforce and thriving technology sector. In 2021 the United States had an investment of $41.3 billion in Israel.
• Israel's top exports include diamonds valued at $9.06 billion integrated circuits worth $5.09 billion refined petroleum at $2.73 billion and medical instruments totaling $2.36 billion in 2020.
• To facilitate trade and boost growth, Israel has established free trade agreements with key partners such, as the United States, the European Union and China.

Human Capital and Education

• Israel’s economy greatly depends on its educated workforce and robust education system. The nation boasts a number of individuals, with advanced degrees, which has played a vital role in fueling its economic progress and overall development.
• Israel places high importance on education and has made substantial investments in its education system. The nation boasts a network of top tier universities and research institutions which have played a pivotal role in cultivating innovation and fostering entrepreneurship. These factors have been instrumental, in driving the country’s achievements.
• Israel’s education system has played a significant role in fostering economic growth by producing a highly talented workforce. The nation places importance on STEM education focusing on science, technology, engineering and mathematics. This emphasis has contributed to the development of a workforce capable of excelling in today’s economy.

Infrastructure and Transportation

• Israel boasts a well-developed transportation infrastructure system that encompasses modern highways, railways and airports. The nation’s major urban centers are seamlessly connected via a network of highways and intercity buses. Israel Railways oversees the railway system, which links cities like Tel Aviv, Jerusalem and Haifa. Ben Gurion International Airport, situated near Tel Aviv stands as the country’s busiest air transport hub, catering to both domestic and international flights.
• In recent years, Israel has made substantial investments in infrastructure development with a particular emphasis on enhancing transportation and communication networks. The government has spearheaded large scale projects including the construction of new highways expanding public transportation systems and establishing high speed rail connections, between major cities. These investments are poised to invigorate growth and bolster competitiveness by facilitating easier market access while diminishing transportation costs.

North Africa

North Africa region consists of six countries; Algeria, Egypt, Libya, Morocco, Sudan and Tunisia. This region is known for its natural resources such as oil and gas. It also holds a geopolitical position between Europe, Africa and the Middle East. The area boasts a population, with a vibrant cultural heritage that continues to thrive.

Investment in Infrastructure

• Investing in infrastructure has played a key role in driving economic growth in the North Africa region. The region has witnessed investments in transportation, energy and telecommunications infrastructure resulting in improved connectivity cost reduction and increased productivity.
• Transportation infrastructure has received attention with substantial investments made in airports seaports, highways and rail projects leading the way. Currently there are than $62 billion worth of active projects focused on enhancing transportation infrastructure throughout North Africa. These improvements have not facilitated trade and commerce but have also attracted foreign investment.
• As an oil and gas producer the North Africa region has heavily invested in energy infrastructure to support this industry’s needs. With 195, 400 barrels of fuel oil produced per day followed by Algeria at around 106,000 barrels per day and Morocco at 31,000 barrels per day respectively. Additionally to diversify its energy mix and reduce reliance on fuels the region has started investing in renewable energy infrastructure such, as wind and solar power.
• Significant investments have been made to enhance telecommunications infrastructure including the development of fiber optic networks and mobile broadband services. As part of the Digital Economy for Africa (DE4A) initiative by The World Bank Group, broadband internet access, in Africa has been boosted from 26 percent in 2019 to 36 percent in 2022.

Growth in Non-Oil Sectors

• North Africa is known for its tourist spots like Morocco, Tunisia and Egypt which have experienced a significant rise in tourism in recent years. The number of visitors has been increasing, leading to higher revenues. In 2022 North Africa’s renowned destinations welcomed 15 million overnight visitors representing a 98% surge compared to 2021 and reaching 87% of the volume recorded in 2019. This growth has been facilitated by government efforts to enhance infrastructure and promote the region as a tourist location.
• The manufacturing sector in North Africa has also witnessed progress, particularly in industries such as textiles, food processing and automotive manufacturing. This expansion can be attributed to factors including government support for industrial development access to affordable labor and advantageous trade agreements, with other nations.

Government Policies and FDI Attraction

• Foreign Direct Investment (FDI) plays a crucial role in stimulating economic growth in the North Africa region. To attract FDI the region has implemented a range of strategies, including offering tax incentives establishing investment promotion agencies and streamlining regulations.
• One significant policy is the creation of free trade zones that provide investors with tax exemptions and other attractive incentives. These zones also offer a business environment by simplifying procedures and reducing bureaucratic hurdles.
• Investment promotion agencies like the Saudi Arabian General Investment Authority (SAGIA) and the Moroccan Investment Development Agency (MIDA) also play a significant role, in attracting FDI. They assist investors by providing information, support and facilitating the investment process.
• Simplifying regulations and minimizing hurdles are crucial in attracting foreign direct investment (FDI). The region has taken steps to streamline the investment procedure, including the establishment of online platforms, for business registration and licensing.

South Africa

South Africa, the second largest economy in Africa boasts a diverse economic landscape encompassing agriculture, mining, manufacturing and services. While Nigeria and Egypt lead as the continents economies with a GDP of $478 billion each. South Africa stands out with its abundant natural resources hosting some of the world’s largest gold, diamond and platinum mines. Despite its potential, South Africa faces challenges such, as high unemployment rates, income inequality issues and limited infrastructure investments. However, noteworthy progress has been made in years through various policies and reforms aimed at fostering economic growth and enhancing the wellbeing of its citizens.

Investment in Infrastructure

• Investment in the development of new highways and road infrastructure has had a positive impact on transportation and logistics. Notable projects include the enhancement of the N1 highway that connects Johannesburg and Cape Town well as the construction of the Maputo Corridor toll road. Moreover, investments have been made in railway lines and high speed trains further improving transportation and logistics. A significant project in this regard is the Gautrain high speed train network connecting Johannesburg, Pretoria, Kempton Park and O.R. Tambo International Airport.
• Investments have been made to upgrade airport terminals and enhance port infrastructure resulting in a boost to tourism and trade. Prominent projects include the expansion of OR Tambo International Airport and the transformation of Durban Port, into a regional shipping hub.

Mining and Agriculture Industry

(Mining)

• South Africa is renowned for its mineral resources, which have played a vital role in the country’s economic growth. The mining sector makes a contribution of approximately 8% to the country’s GDP and provides employment opportunities to over 450,000 individuals. South Africa is known for mining minerals such as gold, platinum, diamonds and coal.
• Gold mining has been a driving force behind the South African economy for more than a century. The country holds the distinction of being the global producer of gold with the Witwatersrand Basin in Gauteng Province recognized as the world’s largest gold field.
• Platinum mining is also a significant industry in South Africa as it leads globally in platinum production. This versatile metal finds applications across sectors, like automobile manufacturing and jewelry production.

Agriculture

• Agriculture plays an important role in the economy of South Africa. The country has around 32,000 commercial farmers, out of which approximately 5,000 to 7,000 contribute to about 80 percent of the agricultural output. South Africa’s agricultural industry is diverse. Includes crops like maize, wheat, citrus fruits and wine grapes.
• Maize crop holds importance in South Africa as it constitutes over 30% of the total grain production in the country. While yellow maize accounts for 91% of production white maize dominates in Africa with more than 92% of the total maize crop. This crop serves both as food and animal feed.
• Citrus fruits are also an agricultural product for South Africa. The country stands as the world’s largest exporter of oranges. Besides oranges other citrus fruits like lemons, limes and grapefruits are grown here too. In total there are over 100,000 hectares dedicated to citrus orchards in South Africa; out of which 48% are orange orchards.

Tourism Industry

• Tourism is a major contributor in South Africa’s economy. In 2019, the travel and tourism industry contributed around 8% to the country’s GDP and provided employment opportunities for approximately 1.6 million people. This industry encompasses sectors including accommodation, transportation, food and beverage as well as recreational activities.
• Over the few years South Africa has experienced a consistent growth in the number of international tourists visiting its shores. In fact than 10 million visitors arrived in 2019 alone. The majority of these visitors hail from neighboring countries, with Europe and North America following closely behind.

FDI Attraction

• South Africa has become a popular destination for foreign direct investment due to its well-developed infrastructure and its strategic position as a gateway to the African continent. According to data from the OECD FDI inflows in the half of 2022 reached a total of USD 4.28 billion showing an increase from USD 2.67 billion compared to the previous year. The sectors that have attracted FDI include manufacturing, financial services and mining.
• To entice investment the South African government provides various incentives such as tax benefits, grants and subsidies. These incentives are specifically tailored to sectors like energy, tourism and agriculture.
• However, despite the government’s efforts in attracting investment South Africa still faces several challenges including political instability, high crime rates and a scarcity of skilled labor. Moreover the country’s labor laws are inflexible. Regulations can be complex which can pose difficulties for foreign investors looking to establish businesses, in South Africa.

Government Policies and Reforms

• The National Development Plan (NDP) is a roadmap that outlines the long term economic and social development goals of the country. Its primary objective is to address issues like poverty, unemployment and inequality by focusing on sectors such as education, healthcare and infrastructure.
• Black Economic Empowerment (BEE) policies have been introduced to rectify the imbalances created by apartheid through encouraging the participation of black South Africans in the economy. These policies include initiatives like procurement, equity ownership and skills development programs.
• South Africa has entered into trade agreements with different countries and regions such, as the African Continental Free Trade Area, Southern African Development Community and European Union. The purpose of these agreements is to boost trade and investment by reducing barriers and increasing market access opportunities.

GCC Countries

The Gulf Cooperation Council (GCC) represents a coalition of six nations in the Middle East: Saudi Arabia, Kuwait the United Arab Emirates, Qatar, Bahrain and Oman. Collectively these countries are home to than 50 million people and possess some of the world’s largest oil reserves. Saudi Arabia stands as the global oil producer and contributes approximately 15% towards worldwide output. The GCC nations hold influence in the global economy due to their extensive reserves of oil and gas. The petroleum industry plays a role in their GDP and government revenues. Nevertheless, these countries are actively investing in infrastructure development, tourism and real estate to diversify their economies and lessen dependency, on oil and gas exports.

Oil and Gas Industry

• The oil and gas sector plays a major role in the economies of GCC countries making up a substantial part of their GDP. Saudi Arabia is the leading oil producer, followed by Kuwait, the UAE and Qatar.
• GCC countries have been investing significantly in the oil and gas industry aiming to expand production capacity and explore reserves. For instance, Saudi Arabia's Vision 2030 initiative seeks to enhance refining capacity and reduce dependency on oil for stability.
• The oil and gas industry profoundly influences the GDP of GCC nations as a substantial portion of their exports comes from oil. However economic growth can be influenced by fluctuations, in oil prices that affect this industry.

Infrastructure Development

• GCC countries have made investments, in transportation infrastructure with the aim of facilitating economic growth and fostering development. Notable endeavors encompass;
  • Dubai Metro - a modern, driverless rail system in the UAE.
  • King Fahd Causeway - a bridge connecting Saudi Arabia and Bahrain.
  • New Doha International Airport - a state-of-the-art airport in Qatar.
• The GCC nations have made investments, in utility infrastructure to bolster their economic growth and advancement. Notable projects includes;
  • Shuqaiq 3 - a desalination plant in Saudi Arabia with a capacity of 450,000 cubic meters per day.
  • Barakah Nuclear Power Plant - a nuclear power plant in the UAE that will provide up to 25% of the country's electricity needs.
  • Dukhan Gas Plant - a gas processing plant in Qatar with a capacity of 1.8 billion cubic feet per day.

Tourism and Real Estate

The Gulf Cooperation Council (GCC) countries are making investments in tourism infrastructure to attract visitors from all over the globe. Leading the pack is the UAE with its attractions like the Burj Khalifa and Dubai Mall. Oman on the hand is famous for its breathtaking natural beauty and cultural heritage sites. Qatar has put resources into sports tourism as evidenced by its hosting of the 2022 FIFA World Cup. Meanwhile, Bahrain is focusing on developing its luxury hospitality industry.

In terms of economic growth in the GCC, real estate plays a crucial role especially in countries like the UAE and Qatar. The demand for residential and commercial properties remains high particularly in major cities such as Dubai and Abu Dhabi. Anticipated growth will be fueled by development projects, like Qatars Lusail City project in the upcoming years.

Diversification Efforts

The GCC countries have been making efforts to reduce their reliance on oil and gas revenues by expanding their economies into sectors. They are investing in areas such as manufacturing, finance and technology. For instance, Saudi Arabia’s Vision 2030 plan, which aims to decrease the country’s dependence, on oil exports by promoting the growth of industries and attracting more foreign investment.

The countries of the GCC are also placing emphasis on the promotion of medium sized businesses (SMEs) and fostering entrepreneurship. This is viewed as a means to generate employment opportunities and stimulate development. As an illustration the UAE has initiated programs aimed at assisting startups and SMEs including the Dubai SME 100 and the Ventures Fund, by Abu Dhabi Investment Office.

Rest of Middle East and Africa

The Rest of Middle East and Africa region is a diverse and dynamic area that encompasses many countries, including Egypt, Oman, Qatar, Saudi Arabia, United Arab Emirates, and others. This region has experienced significant economic growth in recent years, driven by a variety of factors, including;

• Strategic geographic location for trade and commerce
• Abundance of natural resources, including oil and gas reserves
• Investments in infrastructure and transportation
• Diversification of economies beyond traditional industries

Egypt and Oman

• Egypt and Oman are among the densely populated and rapidly progressing nations in the Rest of Middle East and Africa region. Despite encountering some obstacles both countries have exhibited impressive economic growth and possess promising prospects for future advancement.
• Egypt has been experiencing an annual economic growth rate of 5.3% over the last five years propelled by its extensive and varied economy, strategic geographical position, as well, as its ambitious reform initiatives.
• Oman has experienced economic growth averaging a 3.7% annual rate over the last five years. The country’s emphasis, on diversifying its economy and developing infrastructure has successfully attracted investment and promoted sustainable growth.

Qatar and Saudi Arabia

• Qatar’s economy relies heavily on its oil and gas sector, which contributes to more than 50% of its GDP.
• The nation has introduced plans for economic diversification, such, as the Qatar National Vision 2030 in order to reduce dependence on oil and gas and boost sectors like tourism and finance.
• Saudi Arabia’s economy is highly dependent on oil as it contributes to 42% of its GDP. In order to reduce this reliance and promote diversity the country has introduced several initiatives like Vision 2030. These initiatives aim to develop sectors such, as tourism, renewable energy and entertainment.

United Arab Emirates and Others

• The UAE boasts a varied economy that centers on industries like oil and gas tourism and finance. To encourage investment the country has implemented favorable policies and created a business environment that is conducive to growth. Additionally, the UAE has made investments in vital infrastructure projects such as airports, seaports and transportation networks.
• Similarly, other countries in the Rest of Middle East and Africa region like Bahrain, Kuwait and Lebanon have also witnessed expansion in recent years. This can be attributed to their governments focus on investing in infrastructure development and diversifying their economies beyond reliance, on oil and gas. These nations have actively cultivated business environments while striving to attract foreign investments.

Research Nester utilizes data analysis and analytics to offer insights, into the Middle East and Africa regional markets. These insights encompass market trends, competitive environment, customer preferences and growth prospects. By leveraging this information customers can make informed decisions regarding their products or services while also exploring potential new markets or opportunities.