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Outlook from MESANA: A positive trajectory for businesses in the region

By Andrew Harding, FCMA, CGMA, Chief Executive – Management Accounting, Association of International Certified Professional Accountants

As the virus is brought under control, finance professionals from the Middle East, South Asia and North Africa are broadly optimistic about the future

Throughout the world, different regions – and different countries within regions – are experiencing the COVID-19 pandemic in very different ways. Although Europe is currently battling with an upsurge in infections, for example, the virus is retreating in the US while China appears to have it firmly under control.

In the Middle East, South Asia and North Africa (MESANA), the reflections of our Regional Advisory Panel suggest the picture is broadly positive. In a recent meeting, they outlined the developments and trends they are seeing in their own specific market.


India is carrying out the world’s largest vaccination programme, with more than 40 million people having received at least one dose. Consumer confidence is likely to pick up as more vaccinations take place, helping to drive the economic recovery. The government is also using spending to push growth, with a particular focus on areas such as healthcare and infrastructure.

Indian businesses have generally coped well despite the strains of the pandemic. Those that were already struggling with working capital have either closed or focused on managing their working capital better. Other businesses have used the crisis as an opportunity to cut costs, increase revenues and part ways with unprofitable customers.

During the country’s lockdown, people who could work from home found they valued the flexibility it provided. As a result, organisations are now looking at how they can factor in remote working to their business models – for example, by reducing their office space.

Businesses realise that they now have an opportunity to organise their human resources differently. Previously they hired talent based on who was available to commute to work. Now, remote working allows them to draw from a broader talent pool, including people not necessarily resident in their city. On the flipside, attrition is increasing as workers take advantage of being able to work for a broader pool of employers.

Some organisations have used the pandemic as a reason to reduce the size of their finance functions. This could be a false economy, however, since finance professionals provide the critical advice that can enable them to operate more cost-efficiently overall.

United Arab Emirates

The United Arab Emirates (UAE) has been fairly successful at managing Covid-19, with the virus claiming less than 1,500 lives to date. Life in the federation is continuing fairly normally although restrictions, including social distancing measures and mask wearing, remain in place.

Nevertheless, the UAE has still faced some significant challenges as a result of the pandemic. Numerous expatriates working in sectors such as aviation, construction and hospitality lost their jobs last year and had to return to their own countries. In Dubai alone, the population dropped by 8.4% in 2020. The suspension of the UK’s travel corridor has also damaged the tourism sector.

Sentiment in the UAE remains positive, however. A combination of low property prices and low interest rates is driving the real estate market, especially for completed villas rather than off-plan properties. Dubai will also be hosting Expo 2020 from October while the UAE celebrates its 50th anniversary in December.

At the start of the pandemic, UAE finance teams embarked on a major surge of activity, especially around liquidity and cashflow management, and pursuing bad debt. They also undertook a lot of scenario planning. This kind of activity remains ongoing, although it has slowed as the situation has stabilised.

Sri Lanka

In Sri Lanka, businesses are returning to normal operations and employees are being welcomed back to the workplace. Events such as conferences and seminars have even started up again.

The tourism sector was suffering even before Covid-19 due to the Easter bombings of 2019. Nevertheless, there has been some pick-up in recent weeks, with hotels and resorts recording occupancy rates of up to 75% at the weekends. Tourism is expected to improve further as the year wears on. Meanwhile, low interest rates are encouraging people to invest in real estate and the stock market.

Businesses in Sri Lanka have benefitted from a debt moratorium during the pandemic, which temporarily relieved them from having to repay the interest and capital due on their loans. They have also focused on managing their working capital cycles better and cutting back the amount of credit they extend to customers, transacting in cash instead.

Sri Lankan companies are relying on their finance functions to help them survive the pandemic and thrive going forward. So, finance professionals have a great opportunity to optimise their organisation’s financials, influence its cashflows and liquidity, and act as a strategic partner by advising their businesses on where to invest.

Saudi Arabia

In Saudi Arabia, normal life has resumed for most sectors although tourism faces a challenge due to the lack of international flights. Businesses are focused on adopting new technologies and flexible working strategies, which enable them to save money in terms of travel and rental costs.  

Investors’ attitudes appear to have changed as a result of Covid-19. In particular, they are wary of investing in urban projects as they are not necessarily confident in the future of Saudi Arabian cities following the pandemic.

In Saudi Arabia, there is a trend for companies to rely on external financial advisers, rather than their internal finance team, for support with analysis and forecasting. This could mean that finance and accounting functions end up being outsourced in future, with employees losing their jobs.

Positive outlook

MESANA appears to be emerging from the worst of the Covid-19 pandemic. Assuming that it does not suffer another serious outbreak of the virus, its economic recovery should continue to gather pace. Finance professionals in the region can play an important role in helping their organisations to successfully navigate this recovery so that they prosper in the months and years ahead.