Private sector must ‘step up’ for Saudi Vision 2030 goals, says Crescent’s Badr Jafar

Badr Jafar has been involved in panels on philanthropy and family businesses at Davos, among others. (Courtesy WEF)
Updated 30 January 2019

Private sector must ‘step up’ for Saudi Vision 2030 goals, says Crescent’s Badr Jafar

  • Badr Jafar: The private sector in Saudi Arabia has to step up and take authentic ownership of the Saudi Vision 2030
  • Badr Jafar: From our perspective, what is going on in Saudi Arabia is a tremendous opportunity, and we want to work toward delivering on the Vision 2030 strategy

DAVOS: One of the Arabian Gulf’s leading businessmen believes the private sector in Saudi Arabia must play a greater role in the Vision 2030 strategy to diversify the nation’s economy and reduce its dependency on oil revenue.
“The private sector in Saudi Arabia has to step up and take authentic ownership of the Saudi Vision 2030,” said Badr Jafar, president of Crescent Petroleum and CEO of Crescent Enterprises, the Sharjah-based international conglomerate with interests in shipping, ports, energy and several other industrial sectors.
Speaking to Arab News on the sidelines of the World Economic Forum (WEF) Annual Meeting in Davos, he added: “When people think of a country in the Middle East region, they tend to think of just its government but I like to think of the whole ecosystem, both public and private sector. I believe the private sector has to play a bigger part in both Saudi Arabia and the UAE.”
Jafar acknowledged that there are some critics who doubt the ability of the Saudi government to successfully implement the Vision 2030 transformation, but added: “If there were no skeptics, I think that would tell you the Vision isn’t big enough. There will always be skeptics, and in some ways that is a healthy thing because it adds an element of accountability.”
Jafar said that Gulftainer’s port terminal operations in Saudi Arabia, at Jeddah and Jubail, are being expanded. Gulftainer is a subsidiary of Crescent Enterprises.
“We see ourselves as an Emirati company but also as a part of the Gulf community,” he explained. “From our perspective, what is going on in Saudi Arabia is a tremendous opportunity, and we want to work toward delivering on the Vision 2030 strategy. It is too important to fail and we all have a vested interest in making it succeed.”
He said there will be challenges along the way but that Saudi policymakers should ensure that there is enough flexibility in the economic and political systems to overcome them.
“It is all about building into the system sufficient resilience to cancel out the shocks,” Jafar added. “This is the Middle East; there will always be shocks. But one way to do it is to empower the private sector to take charge of its own destiny.”
Gulftainer, of which Jafar is also chairman, recently pulled off a business coup with its $600 million plan to redevelop and operate the port in Wilmington, Delaware, as a major port facility on the US east coast. The US ports sector has presented challenges to Gulf businesses in the past but Jafar said that Crescent’s pedigree in the UAE, combined with its existing ports business at Canaveral, Florida, and its efficiency record in the industry, had helped ease the deal through.
“We had the acceptance and trust of the local community,” he said.
Jafar has been involved in various sessions at Davos, including panels on philanthropy and family businesses. He echoed the views of WEF founder Klaus Schwab that there should be a new approach to philanthropy based on a coordinated, rather than a collaborative, approach.
“What inspires philanthropists in Saudi Arabia or the UAE is not the same as what inspires them in New York and Beijing,” he said.
He sees a strong affinity between philanthropy and family businesses, especially in the Islamic world where the payment of charitable taxes — zakat — is a religious duty. The top 500 family businesses in the world generate sales in excess of $6.5 trillion, making them the third-largest global economy, and they employ 50 million people, he said.

The above text has been changed to make it clear that Badr Jafar is also CEO of Crescent Enterprises, and that Gulftainer, a subsidiary of Crescent Enterprises, runs port terminal operations in Saudi Arabia, at Jeddah and Jubail. The top 500 family businesses generate sales in excess of $6.5 trillion, rather than being valued at that amount. 


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.