Demystifying the strategy behind UAE’s sovereign investments

The UAE is one of the best positioned nations in the world, to make the most of the post pandemic recovery of the global economy. In part, this has to do with measures and initiatives that were in place prior to the pandemic. By 2015, 70% of the GDP of the UAE was already coming from non-oil sectors⁽¹⁾, and continuous regulatory reform and incentives have only reinforced these strengths since. However, a lot of the advantages that the UAE economy currently enjoys also have to do with how competently the UAE government and healthcare system handled the pandemic itself, as well as the vaccination drive that was undertaken in its aftermath. The UAE now has the highest number of residents fully vaccinated against Covid-19⁽²⁾ worldwide, by percentage!

Even more significantly, the handling of the pandemic ensured that the UAE economy was back on its feet much quicker than many other nations in the world. In fact, it has even initiated a return to in-person learning in schools, and a large proportion of its resident workforce has returned to physical offices as well. The UAE government deserves huge credit for rolling up their sleeves and containing the risk of such an unprecedented global crisis; along with recognizing the exemplary efforts of our front line health workers, and the several unsung heroes who ensured that our essential services remained relatively unaffected.

With the delayed, and much anticipated, Dubai Expo opening; the stage is now set for a rebound that will be an inspiration for other nations – within the region, and well beyond. Let’s have a closer look at the UAE’s sovereign investments, to understand the strategies that the nation is employing to press home the advantage of all these positives.

A Sovereign Investment led strategy, for the next chapter in the UAE’s growth story

A few recent announcements give us some insights into the growth strategy that the UAE is pursuing. And the details indicate a strong emphasis on Sovereign Investments. This makes a lot of sense to me. By its nature, the UAE is a relatively small market – both in terms of area and population. The advantages unlocked by the UAE government’s proactive fiscal and economic policies will be limited to a smaller playing field, if the focus remains on maximizing growth from within the nation’s boundaries and markets alone.

Taking advantage of the lower inflow of FDI into the UK, since Brexit, the UAE is going to invest $13.8 billion into the UK economy, spread across the next five years⁽³⁾. The agreement was announced after a recent meeting between His Highness Crown Prince Sheikh Mohamed Bin Zayed Al-Nahyan, and British Prime Minister Boris Johnson. This investment is in addition to the $1.35 billion ‘Sovereign Investment Partnership’, which had been announced between the UK Office for Investment and the Abu Dhabi based Mubadala Investment Company, earlier in 2021. The new agreement expands the previous life sciences focused investment strategy; into the infrastructure, technology, and green energy transition sectors.

The meeting between the two leaders came hot on the heels of an announcement of more incentives to draw global talent to the UAE, to drive post-pandemic growth – indicating a holistic approach to growth. In the first week of September 20201, the UAE announced plans to further liberalize residency requirements for expatriates⁽⁴⁾; to attract foreign talent in selected fields, and optimize the positive effects of a projected $13.6 investment within the UAE, in 2022, and the aim to inject a total of $150 billion, by 2030.

The UAE is seizing the moment, on the back of a future-ready vision

The inherent strengths of the UAE economy; its attractiveness to global talent; the regional market’s appetite for innovation and technology; and the progressive vision that the nation’s leadership is displaying; all put the country in a fantastic position to play a key role in the emerging global economy and order. These ongoing moves will begin to bear fruit in a relatively short period of time; but the truly exciting possibilities lie in the mid to longer term repositioning of the UAE – as a regional and global hub that is completely integrated into a new era of sustainable, and tech-enabled growth.