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Irish entrepreneurs must be prepared for changes in Middle East, India and Africa

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A crash in oil prices will affect 2020-21 budgets across the oil-producing Gulf states. (Stock image)

A crash in oil prices will affect 2020-21 budgets across the oil-producing Gulf states. (Stock image)

A crash in oil prices will affect 2020-21 budgets across the oil-producing Gulf states. (Stock image)

Covid-19 is a global pandemic affecting every corner of the world - India, the Middle East and Africa included. This is a region that encompasses over 40pc of the global population and so the tightened lockdown across the globe and the unprecedented changes to society have presented extensive difficulties for business.

Borders have been closed, major international events cancelled, and most companies are looking to cut overheads and focus on cash flow.

Despite all sectors experiencing the effects of the crisis, it is anticipated that business and manufacturing will resume far sooner in the Middle East than in Africa or India. The timeline and response to counter Covid-19 in MENA is similar to that in Europe.

The double blow of a crash in oil prices and a worldwide pandemic undoubtedly will affect 2020-21 budgets across the oil-producing Gulf states. A sharp increase in business defaults and liquidations in the aviation, tourism and travel industries can be expected - all of which directly contribute billions of dirham to GDP each year.

Early indicators are for a double-digit decline in GDP. The Gulf Cooperation Council has seven of the world's largest sovereign wealth funds and these will be used to cushion the worst effects of the downturn.

Elsewhere in the region at present, the number of confirmed cases of Covid-19 in India and Africa is thought to be about three weeks behind, and the state response in both areas is consequently yet to be intensified to the same degree as in Europe.

The number of cases across sub-Saharan Africa is rising but has not yet reached the levels seen across Europe and the US.

Africa has had a fair amount of experience in the area of epidemics, with ebola, TB and HIV. Africa also has a very young population, which should help with keeping the mortality rate lower than in countries with a more aged population.

Commodity prices have also declined, and this will be an additional factor in the overall economic impact on Africa.

Irish companies doing business in this region need to therefore closely monitor the changing business environment and be prepared to quickly pivot their offer or business model, should the market demand.

The eight Enterprise Ireland offices in the region are guiding Irish companies and helping them to keep up to speed with expert market insights, and stay connected with existing customers in order to weather the storm.

As a result of the Covid-19 pandemic, it is likely that there will be increased investments in digital transformation, customer experience and cybersecurity, and all indicators point to a technology-led recovery. Artificial intelligence is becoming pivotal in managing the huge amounts of data needed to deliver products and services.

For instance, the near-collapse of numerous online grocery retail platforms in MENA is driving demand for process automation and intelligent self-service.

When things get tough, the temptation is to become engrossed in the immediate problems, and while these should be fully addressed, developing a strategy for recovery is just as crucial.

Business leaders need to invest time away from crisis management to show leadership, optimism, and strategically focus on the future opportunities which will quickly emerge when these economies rebound.

  • Conor Fahy is Enterprise Ireland's regional director of the Middle East, India and Africa

Sunday Indo Business