EFG Hermes, a subsidiary of EFG Holding and the premier investment bank in the MENA region, in partnership with the Dubai Financial Market (DFM), proudly launched the 18th Annual EFG Hermes One-on-One Conference on 4 March 2024. This landmark event, renowned as the largest global investment forum focusing on MENA, is hosted at the JW Marriott Hotel Marina until 7 March 2024.
Opening session highlights:
- EFG Holding Group CEO, Karim Awad, delivered an insightful keynote address.
- A compelling on-stage interview featured Mahmoud Mohieldin, UN Special Envoy on Financing the 2030 Agenda for Sustainable Development, with Sally Mousa of Forbes Middle East.
- The panel ‘Beyond Automation: Harnessing AI, Transforming Industries for Growth and Efficiency’ included Wael Fakharany of Edenred UAE and Renier Lemmens of Geidea, moderated by Patrick FitzPatrick of The Enterprise Company.
- A unique live MENA research poll was conducted, shedding light on investment perspectives.
Karim Awad’s key observations:
- EFG Hermes has experienced a decade of significant evolution, transitioning from a stakeholder in a Lebanese bank to a comprehensive financial entity with three main divisions: the core investment bank, the non-bank financial institutions vertical EFG Finance, and the Egyptian commercial banking branch, aiBANK.
- Despite intense competition, EFG Hermes has solidified its position as the region’s top investment bank, commanding substantial market shares in Egypt, Saudi Arabia, the UAE, and Kuwait.
- The company is mitigating the sell side’s cyclical nature by ambitiously expanding its public and private asset management sectors into more substantial annuity businesses over the next five years.
- EFG Finance is on track to sustain robust growth in 2024, propelled by its leading financial services in Egypt, focusing on micro and small enterprises, particularly through Tanmeyah and Valu, and an upcoming SME license launch.
- aiBANK, acquired in 2021, has achieved a 20% return on equity in its second operational year under EFG Hermes’ stewardship.
- A resilient and diverse business model has been established, capable of enduring multiple unforeseen events.
- Optimism about the GCC’s prospects is coupled with anticipation for positive developments in Egypt’s market.
Key insights from Mahmoud Mohieldin’s interview:
- Recently, ahead of the G20 meetings in Brazil, growth forecasts remained stable for the first time after three quarters. This stability raises a question: should we welcome this ‘soft landing’ or be concerned that a 3.1% global growth rate is among the lowest recorded? The US economy is showing positive trends, being one of the first to rebound from economic hits. This resilience is attributed to market dynamism and effective coordination between monetary and fiscal policies.
- Europe, especially the Eurozone, is struggling to reach even 1% growth this year.
- China is encountering challenges similar to those Japan faced in the 1980s and 1990s, such as an aging population impacting the labor market and potential economic bubbles, especially in assets and real estate. China is working to shift its growth model from manufacturing to services, a transition that demands talent, skill, and patience. Learning from Japan’s past experiences is essential.
- The challenges we face are global. The presence of over 3,000 trade restrictions is concerning. China, which used to depend heavily on a globalized economy, now navigates a changed economic environment. This shift presents a steep challenge not only for China but also for other emerging markets. We observe the usual frictions between ascending powers and established ones. Economist Paul Krugman suggests that China’s economic path could be more challenging than Japan’s past downturn. Additionally, the rising economic influence of India cannot be ignored, signaling a shift in the economic epicenter towards the East.
- Although a global financial crisis may not be imminent, we are witnessing a development crisis with isolated issues cropping up in various locations. The Global Sovereign Debt roundtable, initiated at the G20, has not been as effective as hoped. Support from the global financial system for developing countries is lacking.
- Several nations in Africa and South Asia spend more on debt repayment than on crucial sectors like education and healthcare. Securing financing is a significant hurdle, with high borrowing costs and less-than-expected Foreign Direct Investment. Domestic savings fall short of meeting investment and growth needs, and global debt markets have not recovered enough to provide the necessary funding for developing markets to achieve their development objectives.
- A more nuanced approach is required. Broadly categorizing countries as Emerging Markets and Developing Economies (EMDEs) hinders precise analysis. We should instead focus on fundamental factors like the business climate, the synergy between fiscal and monetary policies, and advancements in eco-friendly transformations.
Key Takeaways from the AI Panel
- AI and Humanity: The prospect of AI leading to human extinction is not a concern at this stage.
- Finance Sector Employment: Rennier suggests that many in finance may face job insecurity. Firms with AI on their investment committees are at the vanguard of opportunity. Personal engagement with AI is crucial for staying ahead.
- AI as a Tool: Fakharany likens AI to legal performance enhancers. It will create a divide between those who adapt and those who don’t.
- AI in Emerging Markets: AI promises enhanced financial inclusion and service access in emerging markets, particularly in the Middle East, according to Fakharany.
- Job Displacement: Lemmens warns that significant AI impact could lead to job losses, citing call center automation as an example. This trend is set to continue, with machines outperforming humans in some domains.
- Understanding AI: Lemmens advises delving into AI technology beyond media coverage to develop critical understanding.
- AI and Regulation: Fakharany notes the historical lag in regulation behind industry innovation, with AI being no exception. He highlights the GCC and Egypt’s youthful dynamism as a source of USD revenue with EGP cost benefits. Fakharany remains optimistic about the enduring synergy between humans and machines. “The combination of man and machine is incredibly powerful. This partnership is here to stay,” he asserts.
