THE economic crisis took its toll on Dubai earlier than its steely rulers might like us to believe. The economy of the emirate was built on expatriate labour — just 10% of the city- state’s population are Emirati.
More than 50% of the emirate’s expatriate population was involved in the construction and real estate sectors.
A substantial portion of Dubai’s success rested on its booming real estate industry. According to global financial services group UBS, real estate prices fell 50% from their 2007 peak by the third quarter of this year.
The group predicts that worse is still to come.
Sheikh Mohammed bin Rashid al-Maktoum, the supreme ruler of Dubai, may have told markets not to worry, but fleeing expatriates tell another story.
As the real-estate bubble burst, freshly unemployed expatriates fled the emirate — in February the UK Sunday Times reported that they were abandoning their cars at the airport and fleeing home rather than risk jail for defaulting on their Dubai loans.
With Dubai World as heavily invested in property as it is, it was unlikely to escape the mess.
’s interim results again underlined the importance of diversification for media groups, despite the short-term costs of developing new products and markets.
Its print operations in SA and Brazil saw a 2% rise in turnover and a 29% drop in operating profits in the six months to September because of a slowdown in advertising spend.
, owner of the Sunday Times, last week reported a 5% fall in revenue and an 11% drop in gross profit for the same reason.
Despite fears of the death of print media, the problem, according to Naspers CEO Koos Bekker, “is not usage, it is advertising”.
Naspers circulation was fairly steady in this period, and Avusa reported the Sunday Times had actually grown circulation.
But unlike Avusa, Naspers was able to show bottom-line growth as a result of its long-term strategy of diversifying operations into emerging markets and into different types of media technology, from pay-TV to internet services and cellphone messaging.
A breakdown of revenue shows it earned 42% of interim revenue from subscriptions and only 15% from advertising. Investors’ expectations of a resilient performance are reflected in Naspers’s share price. Since March, when the stock dipped below R140, it has more than doubled to more than R283.
Avusa’s share price, at R17, is a more modest 25% higher than its March level of R13,50.
AMID the flood of Cosatu’s policy proposals outlined on Wednesday, there is one element that is to be widely welcomed. The union federation has recognised the need for a campaign to “change the work ethic” in the public service as one way to tackle poor service delivery.
Cosatu general secretary Zwelinzima Vavi says public sector unions that “share a revolutionary understanding” of transforming the state are also obliged to help the government improve the lives of citizens.
“There is no management capacity in the public service; those who are there are either useless or unskilled or are there because they are deployees, so workers at a lower level are completely not motivated,” Vavi says.
“That is something that needs to be addressed if we are to transform the public service and build a developmental state.”
Instituting a culture of responsibility and accountability (from a base of about zero) in the public service will be no easy task.
This column has recently praised good service in two government entities: Randburg’s Home Affairs office (yes, really) and the South African Revenue Service. Should this sort of service become more widespread because of Cosatu’s refreshing new approach, hopefully we will have reason to publish more positive articles about government and municipal departments.
One can only hope.
- The Bottom Line is edited by Colin Anthony.