Aqaba finance city?

Surveying the capital markets terrain in the Arab Middle East today, one can see two financial gravity centres emerging: the Dubai International Financial Centre (DIFC) and Casablanca Finance City (CFC).

Although each was launched based on a somewhat different set of assumptions, the two share common themes.

Creating a user-friendly finance city, with good infrastructure, good transportation and ICT ties, a focus on a particular geography, and specialising in certain financial products is of great added value to the economy of its host country and capital market stakeholders, be they intermediaries, issuers or investors — local, regional and international.

DIFC has been around longer and a lot of resources were dedicated to making it what it is today: a viable capital markets regional hub catering to the financial needs of the Gulf Cooperation Council’s countries and beyond.

CFC is catching up fast with its Africa focus and recently formalised strategic partnership with the London Stock Exchange.

Not to be outdone, Dubai currently controls around 30 per cent of Nasdaq.

Once these strategic links to global exchanges are fully activated, DIFC and CFC could function as Mideast capital market nodes, stitching together discreet liquidity pools in their geographies and linking the resulting cluster to international liquidity streams.

The results will mean stronger Middle East capital markets in terms of increased liquidity and adherence to international best practices, particularly on disclosure and corporate governance.

Access to finance, particularly for SMEs, which account for around 70 per cent of employment and 60 per cent of the gross domestic product  in this region, will be greatly facilitated.

Jordan’s Aqaba Special Economic Zone is in the distinct position to launch a similar initiative, an Aqaba Finance City with a focus on an otherwise financially underserviced region in the Middle East, namely the Levant, and certain parts of North Africa.

Geography will always be important, no matter how far technology advances. And Aqaba’s unique position on the Red Sea, in the middle of the Middle East and located between DIFC to the east and CFC to the west is an asset.

Jordan’s security and stability in a troubled region makes it a natural go-to capital markets safe haven.

An Aqaba finance city would capitalise on this and on ongoing efforts to develop Jordan’s only port.

By carving out a niche for itself out of the local legal and regulatory environment, an Aqaba finance city would aim to apply global capital market best practices, focusing on Jordan, Palestine, Iraq, Lebanon, Egypt and Tunisia, adding Syria and Libya to its target geography once reconstruction efforts commence.

Majd Shafiq,

Former Commissioner – Jordan Securities Commission,

Amman