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Middle EastJuly 1 2016

The Dubai International Financial Centre: forward on all fronts

The Dubai International Financial Centre has risen to become a major trade, investment and logistics hub over the past decade. However, as James King discovers, it is eyeing further growth through its strategy to become a leading global centre by 2024.
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Arif Amiri embedded

In a little over a decade, the Dubai International Financial Centre (DIFC) has emerged as one of the heavyweight contenders in global finance. Benefiting from Dubai’s rise as a trade, investment and logistics hub for the Middle East, Africa and south Asia, the DIFC has attracted a diverse range of financial institutions looking to prosper in a stable and well-regulated business environment.

Employing a common-law legal framework and profiting from having both an independent regulator and judicial system, today the DIFC boasts a broad range of about 1500 registered companies and a workforce of nearly 20,000.

Like other institutions in Dubai, the DIFC is looking to build on this success. In June 2015 it unveiled its 2024 strategy, under which it aims to position the centre among the top financial centres in the world. To do this, it intends to increase the number of active domiciled financial firms to about 1000, up from 362 in 2014. The centre’s workforce is expected to increase to about 50,000 as part of this vision.

“The DIFC is used by financial institutions around the world as a platform to tap into opportunities across the Middle East, Africa, south Asia and beyond. We want to accelerate that process,” says DIFC chief executive Arif Amiri.

Keeping it simple

As part of this strategy, the DIFC is also looking to generate further growth from its existing business core. This will mean adding investments to infrastructure, improving regulation and streamlining the process through which businesses can operate through investments in smart technology.

“We continue to invest in our physical and legislative infrastructure,” says Mr Amiri. “As a result, we are seeing existing financial institutions upgrade their licences and expand their businesses across the spectrum of front-, middle- and back-office operations. This trend alone has been a strong contributor to the DIFC’s growth in recent years.”

Located along the so-called 'south-south' corridor, which includes some of the world’s most dynamic emerging economies, Dubai is becoming a conduit for trade and investment flows from across the region. But this international status also means that global headwinds can hit the local economy, as well as the activities of the financial services sector, hard. 

China’s economic rebalancing and tumbling commodity prices have therefore taken their toll on a number of markets in recent years. Yet, for its part, the DIFC has continued to grow in this more volatile setting. “The level of demand we are experiencing despite the global environment has been really encouraging,” says Mr Amiri.

This positive growth is reflected in the numbers. In 2015 the DIFC reported a 27% year-on-year increase in the number of company registrations to 309. Total workforce grew by 11% over the same period. In line with this progress and in anticipation of future growth, the DIFC added 2900 square metres of office space, an increase of 19% on 2014.

New to the table

In the past 12 months the UK units of two of Nigeria’s largest banks, Access Bank and Zenith Bank, opened offices in the DIFC. Both lenders cited Dubai’s role in facilitating trade flows between Africa and Asia as reasons for the move, as well as the role that the DIFC can play as an investment platform for entities considering opportunities in Nigeria and the rest of Africa. 

“This year is shaping up well and we expect growth to be as strong, if not stronger, than in 2015,” says Mr Amiri. “It has taken a lot of hard work and we’re not going to take our success for granted. We need to up our game all the time and ensure that our value proposition remains intact.” 

In this respect, the DIFC is looking to strengthen its role in the regional insurance and reinsurance market. In 2015, Lloyd’s opened a specialist underwriting operation in the DIFC to service the Middle East and north Africa region, a significant endorsement of the centre’s ambitions for the regional insurance market.

“It’s a testament to the confidence that the global insurance and reinsurance industry has in Dubai, and what the DIFC can do as a platform,” says Mr Amiri. “We continue to be encouraged by the progress being made in the insurance sector.” 

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Read more about:  Middle East , United Arab Emirates