The youth demographic dividend

Conscious investing is on the rise – and is being fuelled by a wave of young investors who have a stake in the future

John F. Kennedy once said: “Change is the law of life and those who look only to the past or present are certain to miss the future.” This is an apt quote for talking about youth in this region: the Middle East and North Africa (MENA) is home to the world’s largest youth population – 200 million, comprising more than half of the entire Arab world’s population.

Although this demographic presents a challenge, given youth unemployment in the MENA is at 30 per cent – the highest in the world – this generation has the potential to be the change that JFK was talking about. The Arab Youth survey reveals a region of young, ambitious digital natives who can lead the wave of technological change. During the Covid-19 pandemic, we saw the acceleration of trends that were already happening, including businesses shifting to digital services, and the rapid transition to online work, education, medicine, shopping and entertainment.

The continuation of technology-led solutions, often referred to as the Fourth Industrial Revolution, will create multiple benefits for the modern world. According to PwC, artificial intelligence (AI) will add 11 per cent or $320bn to the Middle East’s GDP and will contribute up to 13.6 per cent of the UAE’s GDP by 2030. And this combined with technologies such as blockchain, sensors, autonomous machines, augmented reality and 5G will create an abundance of opportunities. Indeed, the Milken Institute predicts that MENA fintech startups will secure more than $2bn in venture capital funding in 2022, compared to $80m in 2017, a 25x increase.

However, we must ensure that these business solutions are sustainable and benefit everyone. Almost half the world remains offline and Covid-19 could push the number of people living in extreme poverty to over one billion by 2030, according to a UNDP study. According to a WWF report, 1.1

billion people lack access to clean water and twice that number suffer water scarcity for at least one month of the year. It is clear that there is a critical need to find new solutions to many facets of our everyday lives, in sectors as diverse as renewable energy, microfinance, sustainable agriculture, water and sanitation, along with new solutions for staples such as housing, healthcare, and education.

A NEW PARADIGM

Thankfully, consumers and investors also want to support ideas and business that add long-term societal value, and this is fuelling conscious investment – a growing global force that has accelerated during the global pandemic. Conscious investing is aimed at making a meaningful impact towards society or the environment while providing returns for investors. The current global market size has been estimated at $715bn and according to UBS Global Wealth Management, 53 per cent of UAE investors already invest sustainably, with 80 per cent of them saying they want to make the world a better place.

An annual investor survey by Abu Dhabi-based accelerator startAD in December found that the average age of GCC investors is 37 – over 10 years younger than the average age for a first time investor in the US market. Regional investors are also inherently global in their outlook, with an even spread between average investments in North America ($42,500), Africa ($41,900), Europe ($41,700) and the MENA region ($41,300), with Asia following up with $30,700.

They are also investing in technology that will secure the region’s post-Covid future. Fintech attracted the highest average investment amount ($43,200), followed by agtech ($42,400), healthcare ($41,400), e-commerce ($40,200) and education ($39,700). Interestingly, cleantech attracted the highest average investments ($49,200) while also attracting the lowest share of all investments at 10 per cent.

In MENA specifically, agtech startups are securing the highest share of investments (24 per cent), after food security became a main concern during the pandemic. GCC countries currently import about 85 per cent of their food.

It is important to highlight that the vast majority (82 per cent) of investments made by 31-40 yearolds were under $50,000, demonstrating that angel investment isn’t the preserve of a super wealthy elite, but rather engaged, young people who have a vision for the future of business and its role in shaping society in a positive way. So I am heartened, but not surprised, to see young investors rallying behind conscious investing. They know that this young generation will power the future growth of the Middle East and beyond, with ideas that will change the world for better.