Shift toward sustainable business models in MENA could unlock over $600 billion by 2030
As countries in the Middle East and North Africa (MENA) look to capitalise on new opportunities and grow their economies, an accelerated and radical shift toward sustainable business strategies could unlock more than $637 billion and generate 12.4 million jobs across the region by 2030.
These opportunities are the focus of Better Business, Better World MENA, a new report from the Business & Sustainable Development Commission.
“As countries in the Middle East and North Africa rise up to open new opportunities for women, welcome refugees and diversify their economies, there remains a long road for the region as a whole to become inclusive and sustainable. Better Business, Better World MENA shows there is a compelling economic incentive for business and government to accelerate, embracing sustainable solutions and rolling out innovative strategies to ensure that the region exploits fully its potential,” said Mark Malloch-Brown, Chair of the Business and Sustainable Development Commission.
Better Business, Better World MENA is part of a series of reports, first launched in January 2017, which makes the business case for the Sustainable Development Goals, or Global Goals—17 objectives to eliminate poverty, improve education and health outcomes, create better jobs and tackle environmental challenges by 2030. The research shows companies pursuing strategies aligned with the Global Goals could open economic opportunities across 60 “hot spots” worth more than $12 trillion and generate up to 380 million jobs globally by 2030. The report breaks down the estimated $637 billion of economic value for the MENA region across four key systems: energy and materials at $229 billion; cities at $183 billion; health and well-being at $133 billion; and food and agriculture at $92 billion.
The Business Commission in the report has identified 20 of the largest opportunities across the four systems, which account for nearly 75 per cent of this prize. The top five include: improved energy efficiency in buildings ($52 billion); affordable housing ($50 billion); circular models in the automotive industry ($37 billion); resource recovery ($33 billion); and risk pooling in healthcare ($31 billion).
“The Sustainable Development Goals offer a coherent framework to effectively address fundamental societal challenges. Most importantly, they also serve as a guideline for targeting where capital can be allocated most productively for investors and corporate leaders,” said Arif Naqvi, Founder and Group Chief Executive at The Abraaj Group, and Commissioner of the Business and Sustainable Development Commission. “The Goals are relevant to the Middle East and North Africa where we see a young dynamic population, motivated to seize opportunities and make positive contributions to the wider society. This is the time for CEOs and investors within the region to step up, take the lead, and partner together for inclusive growth.”
A number of oil-exporting countries in MENA, including Saudi Arabia, Bahrain, Oman, Qatar and the United Arab Emirates, have launched plans to diversify their economies, as oil prices drop and the primacy of fossil fuels wanes. Oil-importing economies in the region are also establishing goals to advance social progress and protect the environment. Better Business, Better World MENA puts a price tag on the economic opportunities if the entire region pursues a more inclusive, sustainable pathway, as outlined by the Global Goals. The total economic “prize,” however, could be far larger if other sectors, such as information and communication technology, and achieving women’s equality, were factored into the analysis. According to the report, pricing of externalities alone, for example, could boost the total prize value by 40 per cent.
According to the Business Commission, 12.4 million jobs could be generated through SDG-aligned business models in the region. Developments in urban construction, mobility, and infrastructure will generate nearly 6 million jobs. One World Bank study shows that the region could generate 2.5 million jobs by meeting its estimated annual basic infrastructure needs. Almost one-fifth of the total employment potential in the region—around 2.2 million jobs—comes from just one opportunity: affordable housing. Sustainable business models could also open up three million jobs related to energy and materials, 2.1 million in health and well-being, and more than 1.5 million in food and agriculture.
“We believe in being a positive force by developing communities with balanced living environments, while building affordable, eco-friendly, and innovative solutions. As an early disruptor in affordable housing in the region, we believe this report underscores the significant value of sustainable and inclusive strategies for companies," said William Ali Mills, Chief Executive Officer, Red Sea Housing Services, which is featured in the report.
To unlock these opportunities, the report argues that business must bridge the investment gap needed to achieve the Global Goals by 2030. It is estimated that an additional $2.4 trillion a year to 2030 will be needed to achieve the SDGs across the world, with $1.6 trillion needed globally for infrastructure financing alone. Blended financing—where public and philanthropic bodies take on the high risk and more policy-sensitive tranches of investment—can fill the funding gap and help bring in private investors at lower risk. One study shows that such investment could boost growth by as much as an estimated 3.7 percentage points among the region’s oil producers, and 1.5 percentage points for oil importers. Despite high levels of investment, the region still needs $106 billion a year to 2020 to bridge the infrastructure gap.
The Business and Sustainable Development Commission argues, however, that business can only realise the Global Goals opportunity by paying its fair share of taxes, creating good jobs with fair wages and conditions, and addressing rising unemployment, particularly among young people and women. Businesses in the region can also provide solutions to promote inclusivity and connectivity to displaced and refugee populations.
Governments can build on the progress they have made in implementing reforms and opening opportunities for business. It now takes on average just 17 days to start a new business in the region, compared to more than 43 days in 2003. Governments can do more to combat corruption, work with business and create enabling policies to support growth, competitiveness and productivity. Finally, civil society must continue its important work monitoring companies and holding them accountable. As we move closer to 2030, the world will need more companies working closely with civil society to ensure the fulfilment of labour rights, gender equality and environmental stewardship.
The release of BBBW MENA is a highlight of the American Chamber of Commerce (AmCham) Egypt and the United Nations Development Programme’s (UNDP) regional conference, “The Private Sector’s Role in Implementing the Sustainable Development Goals,” from 4 to 5 December in Cairo.
Tarek Tawfik, AmCham Egypt President said that AmCham Egypt, through its longstanding partnership with UNDP is committed to advancing the implementation of Sustainable Development Goals, through engaging the private sector and governments in an active dialogue on new paths for building local and regional partnerships. He added that the launch of the Better Business, Better World MENA Report as part of this Conference reiterates the evidence and provides the economic incentive for better alignment in pursuit of the Global Goals.
“There is a global agreement that the private sector holds the key to a sustainable future for the planet. We will need to unlock the power of the trillions that are being invested in the market economy. Sustainability can be good for business; it opens up new areas for investment such as renewable energy, climate resistant agriculture or sustainable cities. New economic growth potential and directions can be uncovered when we adjust our thinking. We are proud of our partnership with the American Chamber of Commerce in Egypt and the Business & Sustainable Development Commission. Our joint efforts and the recommendations of the report will stimulate a discussion for expanding engagement with the private sector in Egypt,” said said Richard Dictus, UNDP Resident Representative in Egypt.