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Covid-19 has arguably altered the role of the public sector. While the pandemic has placed enormous pressure on many governments, it has also presented opportunities by removing pre-existing inertia.

In some ways, the Middle East seems to have contained the pandemic better than Europe and South America. For example, the Kingdom of Saudi Arabia (KSA), one of the worst-hit countries in the region, witnessed approximately 98 deaths per million, while Jordan recorded 1 death per million. This is compared with Germany, considered a leading example in Europe, which has suffered around 111 deaths per million, whereas the UK has recorded approximately 702 deaths per million.

The economic impact in the region, however, has been no less severe. Many policies, initiatives and innovations are focused on economic recovery and stabilization compared with, for example, Germany, which is more proactively looking to adapt its policies and culture towards a new, digital reality.

Welcome to our monthly, Public Sector Advisory newsletter. Our goal is to keep you up to date on key Covid-19-related policies and initiatives, with a focus on the United Arab Emirates (UAE) and the KSA.  

Finance, Economy, Social and Education

KPMG Lower Gulf

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Analysis of similarities across governments’ responses

  • Regarding re-opening, most countries regionally and globally are now allowing inbound flights from countries which have demonstrated that they have the pandemic under control. Many have also announced that schools will reopen when the new school year starts (with others expected to confirm the same).
  • The Middle East has been cautious regarding religious traditions and associated public events (Eid, Haji), restricting public gatherings to mitigate infection risk.
  • Governments in the Middle East have invested in contact tracing to save lives, while enabling a hamstrung economy to safely inch back open. Excluding Qatar, regional governments have more successfully navigated privacy concerns than other regions, although experts have questioned their efficacy with only modest adoption rates.
  • Governments in the Middle East seem to be accelerating their diversification agenda with investments into tourism, education and medical tourism, among others. It is an open question as to whether diversification will be successful and, if so, will it also support a swift economic recovery.

 

Analysis of differences across governments’ responses

  • While digital transformation is a priority for many governments, the direction of their investment varies. Education is already emerging as a clear area of focus in both the UAE and the KSA, and no doubt other areas of investment will be unveiled in the coming months.
  • While many countries are attempting to transition to a new, more digital reality than before the pandemic, the UAE stands out for its attempt to adapt its government to better handle the change with the appointment of new ministers, including those leading Cyber Security and Digital Government.
  • A few countries in the Middle East are attempting to leverage the cultural change the pandemic has triggered to tackle pre-existing challenges. For example, the new ruling on third-party administration in the Omani insurance sector.

A ‘black swan’ event like the Coronavirus pandemic can be compared to a bushfire in public services, and the economy more widely. The ashes of incumbent business models and redundant government service centers become the fertile new soil which nourishes the green shoots of startup companies and digitized government services. Some of these will succeed and others will not. In the future, successful governments may well be defined less by the resources we recognize today and more by their ability to understand citizens’ underlying needs and create innovative ways to meet them using resources which may or may not have been considered valuable in the pre-Covid world.

For the Middle East, the ‘double-whammy’ of Covid-19 and sharply falling oil prices has provided a catalyst for countries to define what they want to be ‘famous for’ in the coming decade. While investments will inevitably go into technology, the question is what this technology will do. In the UAE, the KSA and Jordan, we see specific sectors being driven by government investment—education, tourism and medical tourism, respectively. We look forward to exploring additional initiatives as they are released in the coming months.