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Strong Economies Lure MBA Schools And Students To Gulf Region

The Gulf states' economic growth is luring western business schools to the Arab world. But there remain unique cultural challenges that business must overcome.

Tue Oct 28 2014

BusinessBecause
A high-profile event for women in business at the Dubai Club, a prestigious private business clique in the city’s financial centre, gave Ehsan Razavizadeh cause for optimism. But there remain many hurdles to jump.

“There are still certainly some cultural and social barriers for women [in business],” he says.

A regional director for the Middle East and North Africa at Cass Business School, Ehsan was hosting an event in Dubai to discuss the challenges and opportunities facing women in business across the Gulf region. The event, which drew 40 female figures including Joanna Shields, CEO of the UK’s Tech City, was symptomatic of the cultural barriers that have characterised business and education in the Arab world.

The oil-rich countries of the UAE are a promising potential market for western academics to extend their international reach. But it is also a market with vast social barriers that can sometimes prevent participation.

London-based Cass set up a camp in the UAE in 2007. Operating from its Dubai Centre and offering a number of courses including an executive MBA, it has emerged as a market leader in business education in the Gulf.

Cass' move reflects a drive in fast-growing Saudi Arabia and the UAE to put education at the top of its agendas.  

This trend is reflected in the number of Middle Eastern citizens adopting the GMAT, the standard business school entrance exam which is administered by the Graduate Management Admissions Council.

The number of Saudi Arabian citizens taking GMAT exams has increased 98% in five years to 2,375 in 2013, according to GMAC data.

Kuwaiti citizens took 78% more tests last year than in 2009, with the majority sent to MBA and EMBA programs.

This has much to do with both countries' national education initiatives, which are supported by their ministries of higher education, according Ben Glover, GMAC director for the Middle East.

He says that as governments continue to invest in improving education, and as more foreign business schools set-up shop on Middle Eastern soil, there may be a slow but “significant shift” in the number of domestic and international students studying business degrees in the region.

Despite falling oil prices and revitalised Sunni jihadist groups emerging out of the Syrian civil war, strong economic growth in the Gulf states has prompted an increased need for high-quality management training.

“Education and training and development are increasingly recognised as a key enabler in realising the region’s economic and social ambitions,” says Randa Bessiso, Middle East director at Manchester Business School.

Private sector growth is helping to drive down unemployment and spur demand for business education.

Crédit Agricole Private Banking’s latest macroeconomic research report found that non-oil, private sector activity was at a record high in the UAE.

This growth is attracting multinational companies, which are setting up their local operations and regional headquarters in the Gulf, according to Randa.

“Multinational companies and their senior executives are increasingly interested in the UAE,” she says.

Dubai in particular has emerged as an operational centre for businesses operating in Africa.

Chinese companies are increasingly using the city as a launch pad for the sub-Saharan region too – four of the five largest Chinese banks are basing their regional operations at Dubai’s tax-free financial centre.

“The expected influx of professionals into the region will also drive demand for post-experience business education,” says Randa.

She says that companies are approaching MBS for tailored executive education programs to train management teams. “Attracting and retaining talent is a common management issue,” Randa adds.

Like a handful of other UK business schools, MBS launched a campus in the Gulf to help scoop up some of this demand.

Its Dubai-based Middle East Centre has grown to have 1,600 part-time MBA students representing 90 different nationalities.

About 50% of students reside in the UAE, but Saudi Arabia and Qatar are where the school recruits the most students.

“We chose to set up in the UAE because of its status as the regional business hub… And the potentially strong local demand for programs,” says Randa.

This demand proved so strong that in June MBS launched a new program, the Global Executive MBA. The course caters for senior executives and has attracted 30 students for its initial cohort.

Other European schools are expanding into the region. Durham University Business School recently won a tender from the British Council to deliver a course for women in Saudi Arabia, and in August hosted a study week for executive MBA students from King Abdulaziz University. London’s Brunel University runs a three-year postgraduate business course in Bahrain. About 40 students are currently enrolled on the program, which costs £13,000 per year.

But companies sponsor some of the Brunel students to pay tuition and fees, and this is a growing trend on MBS’ part-time Global MBA program too, according to Randa.

This represents economic confidence in the Arab world, which has been experiencing a period of buoyant financial activity.

Banking and finance are the strongest hiring areas at Cass, says Ehsan, along with along with the construction, telecoms and real estate sectors.

It is a similar story across many of the Gulf states, according to schools’ regional directors.

Both domestic and international MBA candidates will see the region’s financial centres as attractive destinations, particularly Dubai.

There has been significant activity in the Gulf’s stock markets, while the region has an increasingly vibrant Islamic finance industry.

Private equity groups such as KKR and Blackstone are also moving into the area, benefiting from a revival in deal making and renewed interest from foreign investors.

Strong regional banks such as the National Bank of Abu Dhabi and First Gulf Bank are expanding in Asia, while Qatar National Bank and Dubai’s Emirates NBD have been making acquisitions in Africa.

Cass has been offering an EMBA with a specialisation in Islamic finance since 2007, the first top-ranked course in the world to do so, the school says.

“Demand for Sharia-compliant finance has rocketed in recent years,” says Ehsan.

More Middle Eastern business schools have been warming to western education – 67 programs at these schools received a GMAT score in 2013, up from 49 in 2009 – but there are concerns that the MBA, still relatively new, is not as valued as it is in the US, Europe and Asia.

Ben from GMAC says that the Middle East is trying to replicate the US education model, but it will take time.

But Ehsan says that Gulf employers do value an MBA – if it is delivered by a leading business school, adding that the Cass EMBA has electives designed to reflect the industries and services that power the region.

Still, western students have not flocked to Middle Eastern business schools in great numbers. However, wealthy cities like Dubai are an increasingly popular destination for careers after graduation.

Antonio Gallo Toro is a graduate of MIP Politecnico di Milano, a leading Italian business school. But, like a growing number of Europeans, he has sought out a new career in the Arab world.

He joined Mitsubishi Electric in 2007 in Germany, but now heads the company’s Middle East operations from Dubai, a city which he says has a culture that is challenging to adapt to.

But he adds: “Investors are more likely to invest here than investors in Europe. People are eager to invest and eager to hear about new technologies. It’s moving fast.”

Geopolitical turmoil and falling oil prices present a hurdle for the Arab world to overcome, stunting economic growth away from the Gulf slightly.

But Randa believes that business education providers are part of the economical mix of benefits that will attract more companies and talent to the UAE.

She points to Dubai’s successful bid to host the World Expo, a six-month-long trade event expected to attract 25 million visitors, many of them from big businesses.

“With the successful Expo 2020 bid, the UAE will gain even more prestige and pulling power,” she adds.

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