Economy

Two Birds, One Stone

Resilience and adaptation

Trade disputes, plunging oil prices, and COVID-19 have given rise to new challenges for countries around the world, putting an added pressure on countries whose economies depend on oil revenues. […]

Trade disputes, plunging oil prices, and COVID-19 have given rise to new challenges for countries around the world, putting an added pressure on countries whose economies depend on oil revenues. While many would think the above holds true for all Middle Eastern countries, there is one exception: Qatar. A tiny state perched between Saudi Arabia, Bahrain, and the UAE, Qatar is in fact showing the world exactly how to deal with supply chain disruptions and unforeseen challenges.

Having lived with a blockade imposed by the Saudis, Egyptians, Bahrainis, and Emiratis since 2017, Qatar has learned key lessons over the years about how to become independent, diversify supply chains, localize supplies where necessary, and build up strategic reserves. Today, Doha is ranked first in the MENA region and 13th globally in the Economist’s Food Security Index, marking a success story that has garnered international attention.

As Qataris placed their faith in a recovery led by government spending, domestic production, and growing entrepreneurism, the government eased restrictions on industrial permits and foreign businesses and pushed banks to open themselves to greater entrepreneurial activity.

Qatar Science and Technology Park, which has attracted more than USD1.5 billion in international research activity, is but one example of the government’s drive to boost FDI. To further enhance its technology offering, the park is offering USD50 million to support start-ups over the next four years to help local firms seek self-sustaining solutions.

The country’s most notable success story is Baladna, a homegrown dairy producer that imported cows from Europe and the US. The 2-million-sqm Baladna dairy and meat farm today has over 18,000 cows and is even capable of exporting dairy goods and meat. Similarly, Qatar has been advancing self-sufficiency in fruits and vegetables, which currently stands at 30% as compared to 10% in 2017. By 2023, the government is targeting self-sufficiency of up to 70% for select produce. One of the game-changing developments in this regard is the 530,000-sqm food security facility at Hamad Port, which manufacturers and stores rice, raw sugar, and edible oils.

Most importantly, since Qatar is inherently limited in scope due to harsh climate, water constraints, and lack of arable land, the government is investing in large areas of farmland overseas. Hassad Food, the agricultural arm of Qatar’s sovereign wealth fund, has bought land in Australia and Sudan and is investing heavily in agricultural projects in Kenya, Brazil, Argentina, Turkey, and Ukraine. By doing so, the government has been able to not only overcome the challenges of the blockade but also survive plunging oil prices and the coronavirus crisis.

More recently, as the heath, real estate, transport, and construction sectors took the brunt of COVID-19 impact, the government was quick to announce a USD20-billion stimulus package, equivalent to 10% of the country’s GDP, exempt excise duties on food and medical imports, and inject USD2.7 billion in the stock market. Soon after, the National Guarantee Program was launched by the Qatar Development Bank to grant interest-free loans to hard-hit sectors and businesses.
With the blockade technically turning Qatar into an island, the government put more weight to the move away from hydrocarbons, a decision that has turned out to be a blessing in disguise in 2020.

Policies curated for SMEs are enabling businesses to develop local solutions for local problems, thanks also in part to a wide range of initiatives taken by the Qatar Development Bank.

At a time when major global powers, as well as regional countries that are dependent on hydrocarbons, are reporting huge deficits, Qatar 2030 vision is bearing fruit and enabling the country to move toward advanced avenues. The fact that Qatar is on course to become one of the few countries in the world to run a fiscal surplus in 2020 will surprise many but not those who have been part of the country’s journey over the past few years.

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