LONDON, 23 September — The Saudi Arabian General Investment Authority (SAGIA) is studying plans to open a one-stop investment window for women investors in the Kingdom. SAGIA plans to similarly tap funds of millions of expatriate and migrant workers in Saudi Arabia.
Commercial banks too are targeting women depositors and family units including children, as underlined by Saudi American Bank (SAMBA’s) just-launched Meraati Account and SAMBA Stars Account respectively. The Merrati Account, according to Eisa Al-Eisa, deputy managing director of SAMBA, is designed to meet the needs of Saudi women, and especially “to satisfy the ambitions of the Saudi businesswomen.” Gulf banks of course have pioneered the concept of dedicated women-only branches, which are an established feature of the Gulf banking architecture.
Women often form one of the largest and economically most powerful consumer and investment groups in many countries including the Kingdom, where savings and deposits of women investors alone are estimated by SAGIA at SR60 billion. Add to this the other assets which they own such as land, real estate, commercial property, precious metals such as gold jewelry and bullion, precious stones, then the figure could easily be four or five times as much.
But what are the drivers of this sudden realization of the potential of women deposits and savings as an asset class?
While many financial institutions worldwide do have women as individual customers, and some (as in the Gulf states) have women-only branches, very few have structured dedicated investment products and portfolios aimed at harnessing the financial management needs of women investors.
In New York, a few years ago, women from various countries got together to launch a women-only bank in New York, against the background of the UN Conference on Women held in Beijing. Malaysia has an Islamic unit trust, Amanah Saham Wanita (ASNITA), which is aimed exclusively at women investors. In the Gulf, Al-Rajhi Bankiing & Investment Corporation (ARABIC) launched the Al-Johara Ladies Fund; and in Doha, the Qatar Ladies Investment Company (QLIC), headed by Sheikha Hanadi bint Nasser Al-Thani by run mainly by men, manages a portfolio of both Islamic and conventional funds aimed at women and ‘family’ investors.
The family, dominated by the matriach – the mother or wife, has traditionally been the core of the capitalist free market system, because it is regarded as the supreme consumer unit — the house, the car, the weekly shopping, clothing, toys for the children, the holidays, etc.
Despite changes in social demographics and societal values, such as the emergence of one-parent families, the increasing number of women at work, equal employment and anti-gender discrimination legislation, the family as a consumer unit seems to have maintained its dominance.
Consumer advertising is still targeted mainly at families as a unit, and/or key components within that unit such as mothers, wives, and children.
While the impact of technology such as the Internet and globalization may not have a direct impact on creating a level playing field for women as employees, employers, depositors, investors, and even policymakers, it has tended to speed up the above socio-economic evolutionary progress in many countries.
To put this in a global perspective, this level playing field is still largely lacking in the industrialized societies, where control of vital economic activities and sectors are firmly entrenched in the clutches of often aggressive men.
Technology and globalization have an almost innate power to reach those societies and parts of societies which other phenomena seemed to have spectacularly failed to do over the last few decades.
Of course events such as oil price volatility; persistent budget deficits; local currencies pegged to the US dollar; spiraling defense costs; wars; political instability; lack of good governance as manifested by a democracy deficit; and phenomena such as terrorism manifested by the attack on New York and Washington on Sept. 21, 2001, impact on countries, regions, and the world.
How revealing that all the above events have impacted dramatically in one way or the other on the Gulf states, in particular the Kingdom. The Gulf economies are not yet ‘seize economies’. However, incidents of frozen assets of Gulf investors and organizations as a result of President Bush’s heavily flawed and one-sided so-called ‘War on International Terrorism’; talk of mass repatriation of Gulf funds from the US; boycott campaigns of American consumer products in the Gulf; and even loose talk of the seizure of Saudi oil fields after a leaked controversial and ill-researched report by the Rand Corporation alleged the Kingdom to be a ‘kernel of evil’ and sponsor of terrorism, have all served to put additional pressures on the Gulf economies.
These economies are already faced with the challenges of structural adjustments and reforms due to oil price volatility and the impact of globalization, and in the case of Saudi Arabia, the impending and inevitable membership of the World Trade Organization (WTO).
The Kingdom, like many other countries, have been pushing through a package of economic reforms including a new law aimed at liberalizing procedures for attracting foreign direct investment; allowing foreigners to own property in the Kingdom; and the launching of a privatization plan aimed at a part sell-off of utilities such as Saudi Telecom, the postal services, and Saudia, the national airline.
FDI flows can be fickle and subject to economic and political stability. As such governments also try to harness domestic savings to encourage domestic investment, which bankers specify is still a hugely under-utilized asset class. With all this talk of some $300 billion to $500 billion of Saudi private investment in the US, why do Saudis invest outside their own country and region? The answer is simple — investors want security and performance for their investments. The Gulf countries also lack the structural capacity to absorb such a potentially huge inflow of funds. Even if most of the money is repatriated, it would inevitably flow out to other institutions and regions. Citigroup, for instance, has assets of over $1 trillion, compared with the combined assets of the top 25 GCC banks of $259 billion.
SAGIA’s efforts to harness the deposits of Saudi women and expatriates could be read either as a sign of vital on-going economic reforms or as an act of desperation to harness domestic liquidity.
This attempt to allow women to become stakeholders in the national economy as direct investors through this one-stop agency as opposed to the hitherto practice of depending on (male) legal agents should be welcomed.
However, SAGIA should also promote these efforts once they are translated into reality with an awareness and education promotion campaign aimed at women depositors and investors.
