How Abu Dhabi is spurring economic activity and investment

Ghadan 21, or Tomorrow 21, is Abu Dhabi’s Dh50bn ($13.6bn) economic accelerator programme and one of the most ambitious development strategies deployed by the emirate. Launched in September 2018, the programme represents the government of Abu Dhabi’s response to a series of external shocks, including geopolitical tensions, a low global growth scenario and a prolonged decline in oil prices that began in mid-2014. The overall ambition of Ghadan 21 is not only to spur economic growth in the short term, but also to establish Abu Dhabi as a more attractive place to live and do business – a particularly important goal in the context of a region where competition for investment is increasing. Initiatives undertaken within its framework are focused around four main pillars: business and investment, society, knowledge and innovation, and lifestyle. The first phase of the plan earmarked spending of Dh20bn ($5.4bn) for 2019. The Abu Dhabi Department of Economic Development reported that 50 of the strategy’s proposals were launched that year, and that further initiatives will be rolled out in 2020 and 2021.

In March 2020 the Abu Dhabi Executive Council announced a 16-point stimulus plan under Ghadan 21 in an effort to ensure economic stability and the health of the population amid the global spread of Covid-19. The initiatives include electricity and water subsidies for citizens and businesses, an allocation of Dh3bn ($816.6m) to the credit guarantee scheme for small and medium-sized enterprises (SMEs), and a suspension of tourism and municipality fees. The government expects the combined effect of these initiatives to significantly improve the emirate’s standing across a wide range of indicators.

Business

The Ghadan 21 programme launched a number of initiatives in its first year aimed at improving Abu Dhabi’s business environment. For new businesses, an overhaul of the licensing framework has sped up the application process and opened up new opportunities. A new digital portal streamlines the application process for a wide range of business licences, and even allows for instant processing. By early 2020 more than 7400 Tajer licences had been issued to SMEs, including online businesses and food trucks, which permit them to operate without the need for physical office space. Additionally, dual licences were issued to offshore free zone firms, allowing them to operate onshore.

The Ghadan 21 strategy also enlists the assistance of the Abu Dhabi Investment Office (ADIO), established in 2018 by the Abu Dhabi Department of Economic Development, which acts as a centre for domestic and foreign investors aligned with Abu Dhabi’s economic priorities (see Trade & Investment chapter). The organisation offers a range of programmes to private sector entities, including cash and non-cash incentives, SME support and public-private partnerships (PPPs). In the agri-tech sector ADIO is working to attract foreign direct investment and research and development (R&D) activity to segments such as indoor farming, agri-robotics and algae-based biofuels. ADIO is also providing support for start-ups in Abu Dhabi through its Dh535m ($145.6m) Ventures Fund, which makes direct investments as a lead or follow-on investor in innovative concepts.

Another programme, Advantage Abu Dhabi, aims to attract global entertainment and business events to the emirate. Led by the Department of Culture and Tourism – Abu Dhabi, Advantage Abu Dhabi had helped set up 47 events in the emirate by February 2020, including Cirque du Soleil, Abu Dhabi Engine Week and Abu Dhabi Family Week, which welcomed more than 250,000 people.

Innovation

ADIO’s start-up support and focus on R&D feeds into a wider ambition of Ghadan 21 to foster a culture of innovation in Abu Dhabi. Around Dh300m ($81.7m) was committed to a new government initiative carried out in partnership with XPRIZE Foundation, a non-profit organisation that aims to incentivise the development of innovative technology across a wide range of disciplines by awarding large cash prizes. XPRIZE will work with the Abu Dhabi government to launch a series of competitions to unite UAE talent with global innovators to develop solutions to some of the emirate’s critical challenges. The competitions will focus on six key themes: water scarcity, energy efficiency, food security, artificial intelligence (AI), human ageing and environmental conservation. The most promising concepts that emerge from the competitions will be offered local incubation opportunities in Abu Dhabi, including access to the Hub71 start-up ecosystem, which was launched in March 2019 to support and invest in tech start-ups (see analysis).

XPRIZE is one element of a more comprehensive Dh5.6bn ($1.5bn) R&D strategy announced by Sheikh Mohamed bin Zayed Al Nahyan, crown prince of Abu Dhabi, in 2019. This includes Dh40m ($10.9m) from the Department of Education and Knowledge (ADEK) as part of its R&D mandate. ADEK’s R&D initiatives include establishing a competitive funding platform; opening an innovation lab to create prototypes and nurture private sector partnerships; building virtual research institutes that will connect experts from around the world; and collaborating with global partners in fields such as advanced materials, AI and biotechnology. In January 2020 ADEK awarded a combined Dh40m ($10.9m) to 54 R&D proposals across seven sectors: life sciences, aerospace, education and social sciences, ICT, material sciences, manufacturing, and energy and the environment.

Human Resources

The business-promotion and investment-boosting aspects of Ghadan 21 are complemented by a social programme that aims to ensure that the emirate’s human resources are capable of meeting the demands of a modern economy, with a focus on citizens. “Emiratisation is crucial to the development of the economy. The expected increase in investment in testing, inspection and certification activities in the UAE has to tie in with investment in local employment and human capital development, thereby delivering long-term benefits for the market,” Saeed Al Maskari, CEO of Tasneef, the Emirates Classification Society, told OBG.

Therefore, education options are being broadened through a new charter school project that grants public schools in Abu Dhabi access to a curriculum based on the US model. By early 2020, 12 charter schools had been established, offering 15,000 places to students. In a similar vein, the Department of Community Development in Abu Dhabi launched Ma’an in May 2019. The social incubator aims to encourage innovation and entrepreneurship in competitive sixmonth cycles. Successful proposals are expected to offer a well-defined and measurable social impact, and address the societal challenges that Abu Dhabi faces. In September 2019 the programme completed its first cycle, which involved 10 winning teams, and by early 2020 it had launched a second cycle, which focuses on mental health issues.

Facilitating home ownership is another avenue of support for citizens: Ghadan 21 aims to double the number of housing loans granted each year, building on the progress made in 2018, when 12,100 loans were granted under a housing loan distribution plan – a figure that included approved requests from previous years. In July 2019 the Abu Dhabi Executive Council announced that year’s first instalment of 2000 housing loans, at a total value of Dh3.4bn ($925.5m). By the end of the year the government of Abu Dhabi had distributed 6000 new housing loans, as well as houses and residential plots, with a combined value of Dh11.6bn ($3.2bn).

Looking Ahead

The programmes that produced results over the course of 2019 will continue to pass milestones in 2020: around 9000 more student places are planned under the charter school project, for example, while the Hub71 incubator and various R&D programmes will follow their regular schedules of competitive rounds. Residents in Abu Dhabi will also see a range of new social infrastructure in 2020, as a result of plans under Ghadan 21 to redevelop 16 community parks, lay more than 200 km of cycle paths and beautify 300 public spaces.

Of more interest to the emirate’s economic planners, however, are the programmes that at the outset of 2020 had yet to achieve momentum. Of these, the most potentially significant is the PPP 2020 Tendering Plan by which the government aims to issue around Dh10bn ($2.7bn) worth of PPP tenders for infrastructure projects across the emirate. The PPPs will be carried out according to legislation passed in 2019, which has more clearly defined the working relationship between the government and the private sector in such arrangements. An expansion of the PPP model beyond the utilities sector, where it has traditionally been utilised in the region, would represent a major success for Abu Dhabi’s new development strategy.