Kuwait: the GCC's underachiever?
The performance of the Kuwaiti economy as benchmarked by global indexes is not commensurate with its potentials. In reality, Kuwait is rich in both human and material resources.
Sadly, Kuwait is regarded as the under achiever among Gulf Cooperation Council (GCC) countries by some key business and economy indexes. These surveys entail the choice of a destination by businesses, the logistics and information and communication technology support systems, to name a few.
For instance, the ‘Doing Business 2014’ report issued by the World Bank Group, grants Kuwait 62nd place among 189 economies ranked in the survey. This makes Kuwait the sole GCC member state outside the Top 50 performers on the index.
The report stands out for providing quantitative comparisons on business regulations and the protection of property rights with regards to small and medium enterprises. Globally, SMEs are rightly considered as primary sources of employment opportunities in developing and developed countries alike.
Another study by the World Bank, the Logistics Performance index (LPI), grants Kuwait a ranking of 59 among some 160 economies in 2014. This suggests that Kuwait lags behind the rest of the GCC with the exception of Oman. The UAE leads by clinching the 27th position globally.
To do well in the survey, reviewed economies must excel in numerous areas, namely efficiency of customs and border clearance; quality of trade and transport infrastructure; ease of arranging competitively priced shipments; quality of logistics services including trucking, forwarding and customs brokerage; tracking and tracing consignments; and timeliness of shipments reaching consignees within scheduled delivery times.
Kuwait is ranked the 72nd worldwide, the lowest performance among GCC states, in the Network Readiness Index (NRI). It deals with ICT or technological readiness.
The Swiss-based World Economic Forum is the primary source behind the survey. With a ranking of 23rd globally, Qatar leads the GCC region followed immediately by the UAE.
Judging by the resources at the country’s disposal, Kuwait is in a position to post better results, an assertion that is supported by a plenty of evidence.
According to the ‘BP Statistical Review of World Energy June 2014’, Kuwait controls a notable 6 per cent of global proven oil reserves. Only Venezuela, Saudi Arabia, Canada, Iran and Iraq are known for having stronger oil reserves than those of Kuwait.
In addition, Kuwait reportedly possesses a substantial amount of sovereign wealth fund, serving as a source of non-oil income. As per the Sovereign Wealth Institute, Kuwait’s SWF stands at $410 billion (Dh1.5 trillion).
The UAE leads with $1 trillion, while Saudi Arabia had $743 billion in assets.
Much to its credit, Kuwait is ahead of other GCC states in setting up its SWF... the Kuwait Investment Authority went operational in 1953.
Abundant natural resources have helped Kuwait obtain attractive sovereign ratings, with Aa2 and AA from Moody’s and Standard & Poor’s respectively. The ratings are similar to those granted to Abu Dhabi and Qatar.
The ratings suggest a strong capacity to meet financial obligations, especially those short-term in nature, a fact that provides a cushion to those entities dealing with Kuwait.
Certainly, Kuwait is in a position to post promising performances in global indexes. But that objective requires making the best possible use of the state’s resources amidst a regional competition for business.