Qatar is striving to be about more than just its natural resources, despite holding the third largest gas reserves on the planet and last year becoming the world’s top exporter of liquefied natural gas (LNG). By 2012, the government aims to generate 40 percent of gross domestic product (GDP) from non-energy related activity. It is still quite a way off from achieving this figure, although the GDP contribution from the mining and quarrying sector, which includes the oil and gas industry, dropped to 51 percent at the end of 2010, down from 60 percent in previous years.
Doha is using the billions of dollars derived from hydrocarbon exports to diversify the economy and improve its knowledge base. But it is a long road ahead given the slow roll out of small and medium-sized enterprises, the fact that the government is still the country’s largest employer [see commentary page 13] and the lack of economies of scale. The country’s small population creates further problems; the low numbers of university students graduating creates difficulties in implementing the pan-Gulf Cooperation Council (GCC) nationalization employment policy aimed at getting more locals into the private sector, in this case Qatarization.
The most important organization in the knowledge-based economy drive is the Qatar Foundation, a non-profit organization set up some 16 years ago by Sheikh Hamad bin Khalifa al-Thani. The Qatar Foundation, has been on a spending spree aimed at attracting private Western universities and researchers to its purpose-built Education City on the outskirts of Doha. The ventures in the complex include the Qatar Science and Technology Park (QSTP), a conference center, radio stations, the Qatar Luxury Group, a joint venture with mobile phone operator Vodafone and the soon-to-be-finished $7.9 billion Sidra medical center.
The government has further bolstered spending on public education, rising from $57 per capita in 1991 to $3,750 in 2009, according to a report by the Qatar Permanent Population Committee. Since 2006, 2.8 percent of GDP has been allocated for spending on research and development (R&D) projects — placing Qatar just behind Japan and the US in R&D spending as a percentage of the economy.
“There is a genuine emphasis on education not evident anywhere else in the Gulf, and Qatar has invested in education like no other country in the region,” said David Roberts, deputy director of Britain’s Royal United Services Institute, a think tank with a branch in Doha.
A multi-million dollar education
The move to improve education is certainly needed, particularly at the school level, which is currently being overhauled by advisors from the RAND Corporation. Indeed, in the US Department of Education’s 2007 Trends in International Mathematics and Science Study rankings, based on education levels of fourth and eighth grade school students in these subjects, Qatar was placed last in the Middle East (including Iran). In the 2009 Organization for Economic Cooperation and Development (OECD) Pisa study, which rates student performance in reading, math and science, Qatar ranked fifth from bottom behind Indonesia, Kazakhstan and Albania. Such low academic achievement is presenting problems at the university level. While Qatar Foundation, will have spent a projected $33 billion on Education City by 2016, according to KEO International Consultants, and shelled out $132 million for the campus of Carnegie-Mellon, $154 million for Georgetown University, $186 million for Northwestern University, $332 million for student housing and $250 million for the library, the admission standards of these prestigious universities remain unattainable for most Qataris.
“The problem is that these institutions have such high standards to get in that they have to draw on expatriate students as few Qataris are meeting the requirements. So it is essentially a program run for expats as they wouldn’t have a program at all if they limited it to Qataris,” said an academic who wanted to remain anonymous.
This mismatch further exacerbates the amount the government spends on education. A high percentage of expatriate students are on scholarships due to tuition fees of around $60,000 a year. “Some 88 percent of the branch campus students receive financial support. Of those, 50 percent are on scholarships,” said Tariq al-Sada, a spokesperson for Qatar Foundation. Given the small student body, the cost of educating each student at Education City is in the millions of dollars, said the academic.
This is reflected in the low numbers of students graduating from Education City’s six universities, with less than 250 finishing this year, the largest number yet. Since being established in Doha in 2003, Texas A&M University has graduated only 200 engineers, of which just 100 were Qatari. This year, there were 52 engineering graduates from 16 countries, of which 30 percent were female. As a reference, the state-run Qatar University has graduated 30,900 students since 1973, and alumni comprise 80 percent of the Qatari workforce.
However, according to Sada, Qatar’s education drive is already gathering momentum. He said, “Qatar Foundation is already providing a continuum of world class education, work experience and career opportunities to our young people, and the benefits of that are already being seen, with Qatar’s first homegrown doctors graduating in 2008.”
Complicating the knowledge-based economy drive, and the Qatarization drive, is that while an estimated two-thirds of Qatari university students are women, young men favor working for the public sector with its stable jobs, good salaries (which a government decree recently increased by a whopping 60 percent) and generous pensions that can be accessed as young as 40, according to a National Development Strategy report.
“Many Qatari students find it is easier to go and get a job with the government, so it is not easy to convince them to go into the private sector, whether to start up a business or work for one,” said the unnamed academic. Indeed, according to government data from 2007, only 5 percent of Qataris work in the private sector.
Some educational reforms are being opposed, such as the mixed-gender education of the Qatar Foundation universities, which the government had planned to implement at Qatar University. In a questionnaire carried out in 2009, 80 percent of parents opposed introducing co-education at the university instead of the current segregated class set-up.
A positive example of the successes of the education drive is found at the College of the North Atlantic-Qatar (CNA-Q), a Canadian institution originally set up as a public college in the province of Newfoundland and Labrador. Here some 80 percent of the 1,500 students that have passed through its doors are Qatari and there are over 2,500 students currently enrolled in classes in technical and post-secondary school education.
CNA-Q has been pivotal in improving the workforce and contributing to Qatarization of the workforce. “Qatar Petroleum, Qatargas, Qatalum and other government companies are the largest sponsors at CNA-Q, sending people for technical training, business studies, accounting, marketing and human resources programs, and we are helping to educate the workforce,” said Curtis Avery, an entrepreneurial mentor at CNA-Q. “When the government got serious about having 20 percent of the financial and banking sector Qatari it was good for my department, as we trained a lot of people.”
Such Qatar Foundation-linked programs have helped boost the number of Qataris at major companies, with Shell employing 204 nationals as of 2011, 10 times more than four years ago.
The Qatar Financial Center is also working to improve young Qataris’ acumen through the Qatar Finance and Business Academy (QFBA). Currently in its first year, the QFBA has eight students enrolled in a 12-month course aimed at developing the skills required of future financial leaders.
“The government is focused on the macro level [and] so often misses the micro due to unintentional oversight, and there is an enormous need to broaden the financial knowledge of 25 to 40-year-olds, which earlier education didn’t address,” said Solveig Nicklos, director of operations at the QFBA.
But the education drive will take time. “We are already seeing the fruits of the investment, but to affect the whole population will take generations, not just 10-15 years. It is a numbers game — if you train 1,000, 100 end up being successful,” said Avery.
R&D and healthcare
The knowledge-based focus is as much about creating a research and development hub as a pipeline of skilled graduates. In R&D, the Qatar Foundation universities are involved with the QSTP, set up in 2006, which currently has 31 member organizations and over 100 research partnerships. Meanwhile, the National Priorities Research Program has provided over $230 million to fund 266 research projects involving some 620 researchers, half of which are in Qatar and the rest carrying out research in 30 different countries.
“There has been a strong focus by the Qatar Foundation on technical education, and at the QSTP we are seeing quite a few successes,” said Anil Khurana, director of operational strategy and private equity at management consultants PRTM. “It will take time for there to be a return on investment, but it will… help build the value chain.”
Research has focused on Qatar’s hydrocarbon sector, downstream projects, alternative energies and mechanical products. Indicative is Shell’s unit, which filed its first patent in 2009 for a fixed-bed Fischer-Tropsch reactor that prevents catalyst activity loss, a part of the gas-to-liquids process.
“What we are really seeing now is knowledge-based investment,” Khurana added. “Investment is getting more technology intensive, particularly in industrial products, pharmaceuticals and medical devices, and the government push to develop healthcare has led to such demand.”
In 1990, Qatar’s population was around half a million. By 2010, it was 1.67 million, with 1.27 million men and 399,421 women, according to the Qatar Statistics Authority. With foreigners around three-quarters of the population, Qataris are seriously outnumbered. This rapid change in demographics has presented problems for Qataris and foreign workers alike.
For expatriates, race and skills differentiate them from one another, with professionals paid good salaries while laborers earn as little as $250 a month. Yet all — from the managing director to the window washer — are reliant during their stay on Qatari sponsors, who have full control over residency, employment and travel in and out of the country.
The government is addressing some of the shortcomings in the treatment and status of workers. Qatar’s National Development Strategy (QNDS) notes that the current sponsorship system “hampers the development of a workforce commensurate with aspirations for a knowledge economy”. As such, it is considering granting permanent residency to expatriates who meet “pre-determined criteria”.
“The subject of sponsorship is going to raise its head soon,” said an economist, who wanted to remain anonymous. “You can see why it is important when a small local population is vastly outnumbered, but a system where nationals are able to prevent staff changing jobs or leaving the country is archaic. As Qatar moves forward to the World Cup, the eyes of the world’s press will be on the country and issues like human rights and the treatment of the under-class will come to the fore.”
While laborers are still banned from walking on the corniche or entering upscale malls on weekends, officials are keen to tout certain improvements in living conditions. State-owned real estate developer Barwa is to build housing for laborers, while stricter guidelines for “labor camps” and improved space requirements have been introduced, increasing it from 3.2 to 4.6 meter square per person. [See last word page 88 and photospread 32] Yet by comparison prisons in the US and Europe have an average of 10.5 meter square per inmate.
While Qataris have by and large embraced the socio-economic changes in the country and the subsequent clout the state now has on the world stage, progress has its price. “Some people are afraid of change but happy to be part of the international community,” said Ali al-Humaidi, managing director of Almaras Management Consultancy in Doha. “Either you are part of the change or a bystander, and more Qataris are choosing the first and embracing change. Yet there is this feeling that everything we have is borrowed from another culture.”
Consumerism is one of the most striking societal changes, evidenced in a report released in April by the QNDS that showed that three-quarters of Qatari families are in debt, with many in the red by more than 250,000 Qatari riyals (QR) [$68,650]. The report attributed such high debt levels to an insensible financial culture among Qatari families and a tendency to spend beyond their means. A 2007 study covering a sample of 1,368 Qatari households showed that loans for speculation on the stock market reached QR297,000 [$81,500], entertainment and traveling loans QR203,000 [$55,477] and the average car loan QR111,000 [$30,480]. The QNDS aims to halve the number of families in debt in the next five years.
While the consumerist lifestyle has had its pitfalls, it is the lack of integration between Qataris and expatriates, which Qatarization arguably exacerbates, that is affecting attitudes about the country and its direction towards a knowledge economy.
“Expats can live for years without having social contact with Qataris other than in the workplace. And there is the myth that all Qataris are rich, whereas that is not the case; a comfortable life maybe, but people do have concerns like everywhere else,” said Humaidi. “I want to take away any feeling of differentiation. I feel Qatarization is divisive as it puts people into two groups. Instead of people working together this disappears when you say Qatarization,” he added.
Humaidi advocates a “Qatarcentric” approach, whereby new expatriates are assigned a mentor to ease them into the country and its culture, and at the introduction of majlis gatherings in the workplace to foster communities. “We really need to introduce Qatari culture into the workplace, as for Qataris and Arabs this would make them feel the workplace is not alien and strictly geared towards expatriates.”
The Qatar Foundation’s Sada argues the answers for Qataris and expats alike is to build the knowledge economy as outlined in Qatar’s Vision 2030. He said, “Over the next 10 years, the people of Qatar will increasingly recognize themselves as part of a progressive society, where debate and discussion are an everyday part of life, where cultural life is enhanced and heritage protected… our work to address social needs will also continue, ensuring no one is left behind in this exciting journey.”