KUWAIT: A recent survey conducted by MasterCard, consumer confidence in Kuwait remains quite high in the Middle East, second only to Qatar with a score of 95.8. In an interview with Kuwait Times, Safdar Khan, Area Business Head, Qatar, Oman and Kuwait, MasterCard, spoke at length about the reasons of the rising consumer confidence in Kuwait and its dynamics on business growth.
KT: What are the reasons you attribute to the steady rise in the consumer confidence in Kuwait?
Safdar Khan: Consumer Confidence in Kuwait is at its highest since 2010, with an extremely optimistic score of 95.8. Consumers surveyed are most optimistic about regular income (98.8 vs. 96.2 in the previous Index), followed by quality of life (96.6 vs. 91.3), economy (95.7 vs. 88.3), employment (93.9 vs. 88.8) and stock market (93.8 vs. 59.0).
The high consumer confidence score could in large part be driven by the government's ongoing efforts to achieve sustainable financial and economic growth. Deputy Prime Minister and Minister of Finance Mustafa Jassim Al-Shamali recently highlighted that Kuwait's financial policy is aimed at boosting economic reforms, creating feasible investment opportunities for the private sector and increasing the role of the private sector in boosting economic activity in the country.
These efforts not only benefit the economy as a whole, but also increase consumers' prospects for Regular Income and Employment.
Standard & Poor's (S&P) echoes this positive sentiment, and recently granted positive ratings to Kuwait's economy. The agency has assigned Kuwait long-term and short-term ratings of AA and A-1+, respectively, and a stable outlook.
KT: Do you believe that the Kuwait government's proposed plan to balance the demographics by reducing the number of expatriate population will affect the consumer confidence in medium term?
Khan: Many countries in the Middle East have initiated plans to strengthen their economies through nationalization drives. Governments, especially ones traditionally reliant on oil, are increasingly diversifying their efforts to build knowledge-based economies. By creating increased and sustainable job opportunities for local communities, governments are creating long-term prospects for their citizens and ultimately enhancing their countries' capabilities while also diversifying their economies.
KT: Why are consumers in Qatar more optimistic than the consumers in Kuwait? Spell out the Qatari advantage from MasterCard's perspective. In the latest Index, both countries were rated as being extremely optimistic, with Qatar scoring 96.5, and Kuwait scoring 95.8. In fact, when comparing individual indicators, Kuwait scored higher than Qatar for both quality of life (96.6 vs. 96.2) and stock market (93.8 vs. 92.0).
Looking at the Index's methodology, respondents in the respective markets are asked 5 questions pertaining to their 6-month outlook on the economy, employment prospects, the local stock market, their regular income prospects and their quality of life. These results are then converted in 5 component indexes which were averaged to form the MasterCard Index of Consumer Confidence (MWICC) score. The scores therefore reflect the sentiment of consumers, and not MasterCard's outlook for the markets.
Over the last 26 years, MasterCard has remained committed to supporting the development of the payments landscape throughout the Middle East. MasterCard has been investing in emerging markets throughout the globe, and the Middle East and Africa (MEA) is a key focus for us. Over the years, we have worked with partners in both Kuwait and Qatar to develop innovative products and payment solutions that offer consumers meaningful benefits.
KT: How is the general consumer confidence in the Middle East? Do you see any fallout from the lingering Arab Spring turmoil on consumers in the region?
Khan: Across the Middle East, the consumer confidence level remains very optimistic at an average score of 81.1, with positive scores for all five indicators. When compared to the previous edition of the Index released 6 months ago, consumers are most optimistic about Regular Income (85.1 vs. 89.8), employment (80.8 vs. 85.5), economy (80.0 vs. 84.4), stock market (79.9 vs. 74.9) and Quality of Life (79.9 vs. 82.9).
The Arab Spring naturally had a negative impact on the directly affected countries, which created opportunities for other countries in the region. The drop in consumer confidence index in some Arab countries reflects this drop in economic activity. However, the turmoil has also created new opportunities in some affected countries as companies had to re-evaluate their priorities and shift their focus to core activities as they strive to ensure business continuity, and we have also seen companies adapt their strategies in order to augment revenue.
Markets like Egypt, for example, have had to accelerate their domestic business focus to mitigate loss of inbound tourism revenue. As governments assess new investment opportunities and look to set up new industries, businesses should make the use of this new economic landscape to differentiate themselves and bring tailored offerings to the market.
MasterCard has been investing in emerging markets throughout the globe, and the Middle East and Africa (MEA) is a key focus for us. With more than 1.5 billion people, the Middle East and Africa presents a significant long term business opportunity as we see a shift in global consumption from West to East.
The importance of the region stems from the fact that consumers in emerging markets will drive value creation and growth in the global economy over the coming years, marking a major shift in global consumption from West to East.
MasterCard's Insights report Consumer Spending Outlook and Value Creation in the new global economy shows that between 2012 and 2016, emerging markets will add an average of $1.2 trillion of consumer spending to the global economy per year, whereas developed markets will add only around $700 billion. The MEA region is becoming a very important player within the emerging economies.
KT: Give a brief overview of MasterCard's performance in Kuwait and the region.
Khan: MasterCard is deeply committed to the market, and has been working with our partners in Kuwait for a number of years. We are working closely with our stakeholders to develop innovative products and solutions that offer consumers in Kuwait meaningful benefits. We provide support to our customers by assisting with the development of products and offering a wide variety of payment solutions and technologies to appeal to all consumers.
Our collaborations with our partners have brought consumers innovative payment solutions for many years. Recently, The Sultan Center Food Products Co. (TSC) and Ahli United Bank (AUB) announced the launch of a co-branded MasterCard Titanium credit card, which offers customers unique benefits and rewards. The card allows cardholders to earn double TSC reward card points on all purchases from TSC stores across Kuwait.
Cardholders also benefit from a 15 percent discount at TSC restaurants and fashion stores, 20 percent discount on international shipping charges for TSC's "Just Ask" service, while also getting the chance to enter into quarterly prize draws. The Titanium MasterCard Credit Card also allows consumers to avail complimentary access to lounges at select airports throughout the Middle East, and receive fraud protection coverage and exclusive offers throughout the year.
We have also collaborated with Kuwait Finance House and Kuwait Airways to launch the 'Baitok - Oasis Club' prepaid card, which encourages consumers to use their prepaid cards during overseas trips through an incentive scheme with the airline. Cardholders receive 1,600 airline miles upon joining, two free miles for every local purchase worth KD 1, and three free miles for every overseas purchase. Cardholders also receive SMS messages notifying them of overseas purchases over KD 15, and are automatically entered into a monthly draw to win airline tickets to Dubai.
The Burgan Bank World MasterCard Card has been launched to meet the needs of the bank's private customers. The card is part of MasterCard's World platform, which provides an innovative experience-based service platform for affluent customers and is packed with a host of high value benefits and rewards which include travel benefits, lifestyle concierge and insurance, among others. The recently-launched NBK Business Banking card is first of its kind in the region. This MasterCard Titanium offering has been launched for the bank's business banking customers. This is new customer segment for the bank in its offering to the business segment, and has been developed to suit the needs of these banking customers.
MasterCard reports on global and regional levels only and we don't reveal country specific financial information. For the quarter ended March 31, 2013, MasterCard reported net income of $766 million, up 12 percent, and earnings per diluted share of $6.23, up 16 percent, in each case versus the year-ago period. Net revenue for the first quarter of 2013 was $1.9 billion, an 8 percent increase versus the same period in 2012. Adjusted for currency, net revenue increased 9 percent. A 12 percent increase in gross dollar volume, a 16 percent increase in cross-border volumes and a 12 percent increase in processed transactions contributed to the net revenue growth.
© Kuwait Times 2013
