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Thanks to cultural differences and huge petrochemical revenues, much of the Middle East/North Africa (MENA) region has managed to escape the impact of recession, says Brian McHale, chief executive officer of Wared Logistics.
Two major factors have protected the MENA region from the impact of global recession, says McHale. One is obvious: the area's huge reserves of oil. Saudi Arabia alone has received more than $800bn in revenues annually for the last 30 years, from sales of petroleum to the West. That money has been distributed among a relatively small population, providing the basis for enormous consumer wealth.
The second factor lies in the very culture of many Arab nations - the absence of interest or debt. With monetary systems based on the gold standard, the Middle East "has been insulated from the credit crisis," says McHale. "Put those elements together, and you've got a society and region of the world that's clearly growing."
The biggest driver of growth has been demand for consumer products. And that raises a number of supply chain challenges. Supply chains for retail and food distribution are sharply different from those for oil, McHale notes. As a result, companies entering the region's consumer markets for the first time will encounter an antiquated, even "non-existent," distribution network. His company is focused on building out a channel for large multinationals and regional suppliers in food and retail.
A raft of government constraints, varying widely from country to country, make doing business in Saudi Arabia and surrounding nations even more of a challenge. Non-national service providers, manufacturers and distributors "realize quickly that there's just so many elements they don't know anything about."
The most serious physical drawback is a lack of adequate roads beyond the major highways that link populated areas. The government has undertaken a major effort to upgrade that portion of transportation infrastructure, McHale says.
Companies looking for help from local logistics providers should seek out entities that are native to the region and have been in business for some time, he says. The situation will improve with the growth and maturation of locally based, integrated logistics partners. Notes McHale: "The whole idea is new."
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