After 14 years of war, 90% of the Syrian population live beneath the poverty line. Since the Assad regime fell in December, removing the sanctions to kickstart the economy has been a top priority of transitional President Ahmed al-Sharaa, the leader of the victorious rebellion; but Syria has been under severe US restrictions since 1979 and lifting them won’t be simple.

The principal strictures are the 2019 Caesar Syria Civilian Protection Act and the 2003 Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA). Only Congress can fully repeal them, and that will take months, at best. The executive branch can issue temporary waivers, as the Treasury Department did in May, but the real impact on Syrian corporates and finan- cial institutions remains limited.

“Only the full cancellation of US Caesar and SALSA laws, and not just their temporary suspension, could open the door for long-term investment,” argues Samir Aita, president of the Circle of Arab Economists, a Paris-based think tank.

For Syrian banks, which remain largely cut off from global financial networks, rejoining the Swift system for transfer and reporting correspondent banking relationships is first on the agenda. “The Syrian market is very promising; it is almost virgin,” says Ali Awdeh, head of research at the Union of Arab Banks, “but honestly, no banks from the Arab region or elsewhere will dare to enter this market until there is a full lifting of US sanctions.” In Europe, the process is less complicated. Last month, the European Council lifted sanctions on several Syrian companies operating in key sectors like oil production, agriculture, finance, construction, telecoms, and media. Depending on how the situation in Syria develops, other companies could be delisted in the coming months. Restrictions will remain, however, for industries that pose security concerns, such as weapon sales.

“The banking secrecy bill is a tool,” comments Sibylle Rizk, director of public policies at Kulluna Irada, a Beirut-based think tank. “Now it needs to be used: whether by banking authorities for restructuring the sector, by the judiciary, or by the tax administration.”

Since the 2019 crash, the local currency has dropped 98% in value and most Lebanese cannot access their deposits. Bank losses are estimated at $76 billion, raising the critical question: Who will pay?

Producing an answer that satisfies a multitude of parties now falls partly on Karim Souaid, governor of Banque du Liban since March. Souaid’s nomination was controversial, having allegedly been urged by the banks’ lobby.

On his first day in office, he emphasized the need to “gradually return all bank deposits, starting with small savers.”

But the new governor’s immediate priority must be “to launch banking audits to get an accurate picture of assets and liabilities,” says Rizk. “He also needs to work on a gap resolution framework based on a fair distribution of losses that considers public debt sustainability.” Legal frameworks on bank resolution and loss allocation must be approved by Parliament.

None of these reforms will be easy, she adds, but they are key to unlocking negotiations with the International Monetary Fund, reestablishing the banking sector’s ability to fund economic activity, and taming the cash economy, which has dominated since 2020. Last October, the watchdog Financial Action Task Force (FATF) placed Lebanon on its gray list for money laundering and terrorism financing.

“The Lebanese banking sector must reconnect with the international financial system, rebuild relationships with correspondent banks, regain access to global capital markets, and re-establish credibility,” says Wissam Fattouh, secretary of the Beirut-based Union of Arab Banks.

But to restore their reputation and ensure solvency, Lebanese banks will need new partners. Existing shareholders may increase stakes, but regional and international banks must step in as well.

Global Finance: Emirates NBD posted record profits in 2024. To what does it owe this success?

Shayne Nelson: Emirates NBD Group delivered a record-breaking financial performance in 2024, driven by a clear strategic focus, agile IT infrastructure, a strong balance sheet, and exceptional execution. This enabled the group to benefit from healthy economic growth across the United Arab Emirates [UAE]—our home market—and our international footprint.

Total assets grew by 16%, which, when coupled with increased transaction volumes, drove income above AED44 billion ($12 billion) and helped deliver a 15% surge in profit before tax to over AED27 billion ($7.3 billion) in 2024.

Through strategic investments in technology and people, we have elevated the customer experience while delivering outstanding financial results and a solid balance sheet that provides a solid foundation for future growth.

Nelson: We are delivering growth from many sources, including our expanded international network, our enhanced digital offering, and our broadened product offering.

The regional network is enabling us to capture more corporate business across the region. Saudi Arabia now accounts for 5% of total lending and delivered over 20% of loan growth in 2024, while our branches in India are successfully servicing Indian corporates with business interests across the Middle East.  

As the affluent population continues to grow in the UAE, we expanded our digital wealth offering onto ENBD X, our mobile banking app. We have also added many new products and useful features like fractional bonds, sukuks, equities, and mutual funds, and extended the platform onto Emirates Islamic’s digital banking app, making it the first Islamic bank in the region to offer this range of investment products via mobile banking. We are a data-first bank and are successfully harvesting data to identify opportunities to grow revenue and improve our customer experience. 

Finally, sustainable and transition finance remains a big opportunity for us and our customers. We are recognized as a regional leader in applying environmental, social, and governance principles (ESG), and our corporate and investment banks have supported customers throughout the region with landmark ESG-linked transactions and services.

GF: Tell us about your regional and international strategy. How are you building Emirates NBD outside the UAE?

Nelson: Our international expansion story is one of growth, diversification, and resilience. As the largest financial institution in Dubai and the region’s most profitable bank, we have leveraged our unique proposition to expand our footprint across the Middle East, North Africa, Turkey, and beyond. Our extensive branch network comprises nearly 850 branches across 12 countries. This impressive growth is a testament to our ability to capitalize on opportunities in key regional markets and our commitment to meet the evolving needs of customers globally.

We remain focused on international growth and diversification to drive value for our business and our stakeholders. Our international franchise delivered a 23% increase in lending in 2024 and our network of international branches in strategic markets remains one of our core competitive differentiators, offering enhanced connectivity to clients from the region and beyond.

In 2025, we continue to focus on leveraging our regional presence to capture global trade and capital flows. In addition, we will keep enhancing our wealth management platform and product offering to meet the needs of new and existing clients. We will also keep assessing potential growth opportunities across key markets to ensure we have a meaningful international presence.

GF: You are now a veteran with Emirates NBD. How do you see the bank evolving?

Nelson: This is my twelfth year with Emirates NBD, which has a very rich history spanning over six decades. The bank has played a pivotal role in supporting the economic growth of the UAE, our communities, and indeed the wider region. We have a clear vision, world-class information technology infrastructure, a strong brand, and a motivated, agile, and adaptive workforce. The banking industry has transformed immeasurably over the last decade. Emirates NBD has seized this opportunity with great success as we have transformed into a data-first, digital-focused banking powerhouse. We remain ideally positioned to benefit from future change across our footprint.

Global Finance: In fall 2023, the government of Kuwait released its Master Plan 2040, focused on modernizing company law, economic openness, and encouraging non-oil development. In parallel, it passed a new law loosening restrictions on foreign ownership of businesses. What opportunities do Kuwait’s economic reforms open up?

Salah Al Fulaij: Reforms provide a pivotal platform to capitalize on transformative opportunities, particularly in digitalization; environmental, social, and governance (ESG) efforts; and public-private partnerships (PPP). The government’s emphasis on smart infrastructure, fintech innovation, and regulatory modernization has strengthened our digital transformation journey. Our investments in advanced digital banking solutions, automation, and cutting-edge analytics equip us to offer seamless, secure, and scalable financial services.

These initiatives also enable small to midsized enterprises to thrive, supporting the national agenda of fostering financial inclusion and private sector growth.

NBK is strategically positioned to play a leading role in PPPs in sectors like renewable energy, health care, and infrastructure. By leveraging our financial expertise and strong regional presence, we contribute to the successful execution of large-scale development projects that drive economic diversification.

On the ESG front, Kuwait’s reforms are opening doors for sustainable growth. We were the first bank in Kuwait to issue green bonds. We also actively support green financing, and sustainable infrastructure projects and embed ESG considerations into our financing solutions. Reforms aimed at enhancing entrepreneurship and innovation also create new opportunities for NBK to expand our retail and wealth management services.

GF: Which sectors have the greatest potential for growth?

Al Fulaij: In line with Kuwait Vision 2035, NBK identifies high growth potential in renewable energy, technology, digital transformation, health care, logistics, and contracting.

With Kuwait prioritizing clean energy initiatives including solar and wind projects, we actively support this transition by offering green financing solutions and partnerships to reduce carbon emissions and promote energy efficiency.

Moreover, our investments in fintech, e-commerce, and smart infrastructure are unlocking opportunities across industries. NBK continues to lead by enhancing its digital banking offerings, enabling seamless financial services, and supporting tech-driven businesses.

The bank’s digital initiatives include partnerships with fintechs, cashless payment solutions, digital onboarding, and the recent acquisition of a 51% stake in Kuwait’s leading payment service provider, UPayments. Kuwait’s health care sector is also on the cusp of significant growth; NBK has been instrumental in financing large-scale health care projects, including hospitals and specialized medical facilities.

GF: What other challenges do you see ahead?

Al Fulaij: Fluctuating oil prices, geopolitical tensions, and inflationary pressures continue to shape the macroeconomic landscape. But NBK’s strong balance sheet, diversified revenue streams, and prudent risk management help us navigate volatility while maintaining resilience. Regulatory reforms—both local and global, such as heightened standards for transparency, anti-money laundering, and cybersecurity—also demand significant investments in compliance and technological upgrades.

GF: How is NBK addressing these, and what role does technology play in doing so?

Al Fulaij: We leverage digital tools to ensure operational efficiency and adherence to evolving standards. Kuwait’s ambitious sustainability goals also pre-sent both opportunities and challenges as scaling up green projects and aligning stakeholders on long-term ESG priorities require significant coordination.

We also have to keep up with the rapid pace of technological advancement and the need for continuous innovation. 

Finally, I would say attracting and retaining skilled talent, especially in fields like technology and ESG, is an ongoing challenge across industries, which is why we have established programs such as the NBK Academy and NBK Tech Academy.

GF: Where did NBK focus its social contribution in 2024?

Al Fulaij: Last year, we actively supported diverse initiatives to foster innovation, skill development, and entrepreneurship among Kuwait’s youth. For example, the Bankee Program integrates financial literacy into educational curricula, empowering students with the tools to understand the fundamentals of money management. We are also actively engaged in women’s empowerment with our women’s leadership program, NBK Rise. NBK also prides itself on its commitments to the health care sector, including contributions to NBK Children’s Hospital, which has recently witnessed important achievements in stem cell transplant

Global Finance: The UAB has been bringing together the Arab world’s banking sector for over 50 years. What are the critical issues you are working on now?

Wissam Fattouh: Today, we have two key priorities. Firstly, recognizing the critical role of the banking sector in driving sustainable economic growth, we are actively working to align Arab financial institutions with the UN’s Sustainable Development Goals. This includes promoting green finance, investments in climate resilience, and financial inclusion to support small to midsized enterprises, women, and youth entrepreneurship.

Secondly, as several Arab countries—including Syria, Yemen, Lebanon, Sudan, and Libya—face economic crises and geopolitical instability that have severely impacted their banking systems, we are committed to supporting the restructuring and revitalization of these banking systems by providing technical assistance, policy guidance, and capacity-building programs.

GF: What are Arab banks’ biggest strengths in global finance today?

Fattouh: One of Arab banks’ greatest advantages is their strong capitalization. Over the years, they have maintained solid liquidity buffers and adhered to prudent risk management strategies, allowing them to withstand global economic shocks and geopolitical uncertainties. Regulatory reforms have further reinforced their ability to navigate complex financial landscapes.

Another defining strength is their rapid embrace of digital transformation. The expansion of digital payment systems and open banking initiatives underscores the sector’s adaptability and competitivity.

Additionally, Arab banks play a strategic role in regional and international financial markets. Their engagement in trade finance, cross-border investments, and remittance flows has strengthened economic ties between the Arab world and global markets.

GF: Looking to the year ahead, what are your members’ biggest concerns?

Fattouh: Compliance with international banking regulations, particularly those related to anti-money laundering; combating terrorism financing; and climate-related financial disclosures, remain a priority. Striking a balance between regulatory compliance and business growth is essential for maintaining strong ties with global financial markets.

Another major challenge is managing geopolitical and economic uncertainties in the region. Hence, strengthening risk management frameworks and reinforcing financial-sector resilience will be crucial for mitigating risks.

GF: With the UAB’s recent plan to reform Syria’s banking system, what key challenges do financial institutions face in the country’s rebuilding efforts?

Fattouh: The country’s banks have been largely isolated from the international financial system due to sanctions and de-risking measures imposed by global institutions. A key priority now will be reintegrating Syria’s banks into the global financial system, which will involve aligning regulatory frameworks with international standards, rebuilding correspondent banking relationships, and addressing compliance with anti-money laundering and counter-terrorism financing regulations.

At the same time, efforts must be made to recapitalize banks, resolve non-performing loans, modernize the banking infrastructure, and expand financial inclusion. The UAB is taking a proactive role in preparing for the reconstruction of Syria’s banking sector once the political situation stabilizes. We are committed to working with regional and international stakeholders to provide technical assistance, capacity-building programs, and policy guidance to ensure a smooth and effective transition.

The clock is ticking for Saudi Arabia. With just five years remaining on its ambitious Vision 2030 program to modernize and diversify away from its economic dependency on oil, the world’s biggest petroleum exporter and the region’s largest economy is nearing a crossroads.

The kingdom has made significant strides, crossing key milestones that were once unimaginable: granting women the right to drive and dress freely, legalizing concerts and cinemas, and opening its doors to foreigners. Saudi Arabia, which didn’t issue tourist visas until 2019, now claims to have hosted over 100 million visitors.

Over the past decade, the kingdom’s GDP has grown by 70%, driven mainly by non-oil sectors. Foreign direct investment (FDI) has tripled, and the number of investors has increased tenfold.

To strengthen the business climate, Saudi Arabia has enacted a number of regulatory reforms, including a new investment law that came into effect in February. For the first time, foreign and local investors follow a single set of rules. While some sectors, notably the military and activities around the holy sites of Mecca and Medina, remain reserved for Saudi nationals, in others, foreigners appear to have more leeway, or at least the possibility to apply for exemptions. 

The new law streamlines the licensing process, reducing ministries’ decision time from 30 days to five. It also introduces stronger intellectual property protections and simplifies funds transfers. Additionally, investors now have options for dispute settlement other than the local courts, including mediation, arbitration, and conciliation.

In a country where quick change by unilateral decree is the norm, the new framework offers investors a sense of predictability and transparency. It remains to be seen how this will play out in practice, however.

“The countries in this region are changing very quickly, and this is something that businesses must take into consideration,” says Angelica Schempp, head of Swiss Business Hub Middle East, which helps Swiss and Liechtensteiner companies expand in the region. “It creates opportunities, but for example, laws and regulations evolve rapidly. Sometimes you wake up in the morning and something has changed, so as a business, you have to be able to live with this dynamic.” 

One such major change was when the authorities decided that foreign companies wishing to secure public-sector contracts must establish regional headquarters in Saudi Arabia. This policy, beginning last year and often described as a carrot-and-stick approach, aims to reinforce the kingdom as a commercial hub by shifting business away from Dubai. Initially expected to be taken up by 540 companies by 2030, the kingdom surpassed this goal within the first year.

“We have just passed the inflection point,” Khalid Al-Falih, Saudi Arabia’s minister of investment, said during the WAIPAC World Investment Conference held in Riyadh last November. “This is the most comprehensive transformation in our history and there is much more to come.”

OCO Global, an advisory firm specializing in investment promotion, has been working with Saudi Arabia since 2017 and just registered its regional headquarters in Riyadh.

“Many companies have been doing business in Saudi without being in Saudi,” says Gareth Hagan, CEO, “and I think they’re now realizing that for a bunch of reasons, that probably has to change.” While he admits the new law played a role in his decision, he also stresses the commercial logic behind it. “Our philosophy has always been to go where the opportunity is, and when I talk about Saudi, basically, I see investment opportunity everywhere.”

Not everyone is rushing through the door, however. Some companies express concerns over the cost of relocation or the desert kingdom being an unfamiliar market from which to operate.

“There’s still a perception that it’s a difficult place to do business,” Hagan acknowledges. “It is evolving, but perception is not something that changes overnight. So I think the Saudis need to keep reinforcing that message.”

Nineblocks, a crypto hedge fund licensed in Dubai, plans to maintain regional operations in the United Arab Emirates due to its more favorable cryptocurrency legislation.

“There’s a lot of misconceptions that people in crypto want to avoid regulations,” says Henri Arslanian, Nineblocks’ co-founder. “Actually, all we want is a clear set of rules that we can operate by. For everybody in the digital asset space, the big question is, When is Saudi Arabia going to open-up to crypto assets?”

Opportunities getting a look from foreign investors span sectors from food and beverages to retail, automotive, aviation, mining and rare metals, real estate, health, technology, and renewable energy. A significant portion are being driven by megaprojects with, collectively, over $1 trillion worth of planned developments. Some projects, such as the Al-Ula tourist area, the Riyadh metro, and parts of Diriyah’s urban development, are already in use.

So far, most of these have been financed locally, largely with oil money. In recent years, however, lower hydrocarbon prices and production cuts have hurt government revenues, forcing the kingdom to prioritize spending and scale down on some projects, including the emblematic futuristic city The Line, a component of the NEOM desert development that was cut back from 170 kilometers to just 2.4.

“It’s not about raising a pile of capital—we have other means to do that if we have to—it’s about building long-term international partnerships,” says Robinson. “We’re talking to parties in Asia, in the GCC [Gulf Cooperation Council] region, in Europe, and in the US, and those are real conversations, not shaking hands and exchanging cards.”

US companies have long-standing relationships in the kingdom, but their European counterparts are getting into the game as well in such key sectors as energy transition, infrastructure, tourism, and tech. The first EU-Saudi investment forum, held in Riyadh in October 2023, attracted over 1,400 companies; the EU opened a chamber of commerce in Riyadh the following May.

But the kingdom is also courting the global south, countries that represent 60% of global GDP and are often less inclined to tie business decisions to concerns over human rights or political reform. “We make sure we’re having conversations with the widest possible breadth of capital providers,” says Robinson, adding that he is in talks with sovereign funds, family offices, private equity firms, and other sources. “Capital means equity and debt, and debt can mean export credit agencies, bank debt, and eventually, it will mean the capital markets.”

As Saudi Arabia endeavors to wean itself off oil revenue, its transformation is likely to reshape not only its own economy but the broader region as Kuwait, Qatar, Oman, and other states in the region adopt similar “vision” strategies. The path forward remains fraught with challenges, ranging from geopolitical tensions to the acute consequences of global warming in desert areas, but Saudi Arabia is keen to persuade investors that it offers substantial opportunities for those willing to navigate its evolving business landscape.

Last year was a sadly eventful one for the Arab world. The wars in Gaza and Lebanon sent shockwaves across the region: disrupting key trade routes, derailing normalization talks between Israel and Saudi Arabia, accelerating Egypt’s economic bailout, and precipitating the fall of the Assad regime in Syria. Further west, conflicts in Sudan and the Sahel put pressure on North African economies like Egypt, Libya, and Morocco.

The long-term effects of these conflicts are still a question mark, and the arrival of Donald Trump in the White House adds further uncertainty. The new US administration’s economic policies, particularly regarding trade and oil, could have deep implications for Middle Eastern economies.

And yet, growth persists.

According to the IMF, the region is expected to enjoy 3.8% growth in GDP in 2025, up from 1.9% in 2024, while North Africa is projected to expand by 4% compared with 2.9% last year. The United Arab Emirates (UAE), Saudi Arabia, and Egypt—the region’s largest economies—are also expected to be its strongest performers, with projected GDP growth rates of 5.1%, 4.6%, and 4.1%, respectively, in 2025.

The Middle East, and especially the Gulf Cooperation Council (GCC), remain heavily reliant on hydrocarbon exports; a gradual phase-out of OPEC+ production cuts is expected to support immediate revenue growth. In parallel, the non-oil sector is getting stronger year over year, a sign that diversification stra-tegies, put in place over the last decade, are beginning to bear fruit. With over $2 trillion in planned infrastructure projects, the Middle East appears to be at the starting point of a long-promised economic transformation.

Here are some of the trends to keep in mind.

The banking sector is likely to remain a pillar of the MENA economies, as governments remain strongly committed to driving development through local financial institutions, be they in mature markets or war-torn nations (see interview on page 79 with Wissam Fattouh from the Union of Arab Banks).

In December, Fitch Ratings confirmed Middle East banks’ “neutral” outlook. The agency predicted that credit growth will pick up in most countries and that lenders will maintain profitability, liquidity, and asset quality.

While traditional banks remain the region’s main financial players, fintech continues to thrive in the MENA markets, driven by regulatory reforms and a strong push for digital transformation across sectors. The six-nation GCC clearly has the lead in innovation as governments and local banks partner with small companies on projects around digital payments but also blockchain, crypto, and artificial intelligence.

Last year, 119 Arab fintechs attracted $700 million in investment, 30% of total startup funding for the region. The most dynamic market was the UAE, closely followed by Saudi Arabia. The biggest deals include $157.5 million for Egypt’s MNT-Halan, $67.5 million for Dubai open banking firm Lean Technologies, and $50 million for Bahrain payment solution provider AFS.

Fintech enables leading economies to offer cutting-edge financial services to affluent customers and stay competitive in the global AI race, but it also promises to help bridge divides across the MENA region by addressing the needs of the underbanked in the region’s poorest countries. This will be a hot topic in 2025 in troubled countries like Syria, Lebanon, Yemen, Iraq, Tunisia, and Egypt, where financial inclusion tools are creating new ways to handle money.

Opportunities are also opening up in the region’s capital markets. Last year saw a strong rebound in MENA’s investment banking sector, with 701 mergers and acquisitions, up from 679 in 2023, totaling more than $92 billion in value, up 7%. The MENA countries were collectively one of the busiest areas globally for IPOs, with 54 deals raising $12.6 billion, for a 12.5% year-on-year increase in the number of deals and a 17.6% jump in proceeds, according to Ernst & Young’s February IPO EYE MENA report.

The IPO surge is expected to carry on this year with over 50 deals already in the pipeline, including Abu Dhabi’s Etihad Airways, Saudi Arabia’s Panda Retail chain and Dubai’s Amanat Holding, which invests in the health care and education sectors. A growing number of family offices are also expected to list in the years to come.

Saudi Arabia and the UAE dominated the regional IPO markets, both for number of deals and value of shares traded in 2024, but there are signs that the geographical range will be higher this year.

In October, the sultanate of Oman stepped out with its largest IPO ever, selling 25% of government-backed OQ Exploration and Production for $2 billion. In January, Asyad Group, a public logistics company, announced it would sell 20% of its shipping unit, Asyad Shipping. In total, Oman plans to list at least 35 state firms in an effort to reduce debt and increase foreign investment.

Egypt is another huge market for IPOs, also driven by state-owned companies looking to bring in private investors. Last year, the Egyptian Stock Exchange (EGX) saw the successful listing of United Bank, which raised $92 million by selling 30% of its ownership. Act Financial, a private investment company, raised over $30 million. Many more companies are anticipated to go public in 2025, including Misr Pharmaceuticals Industries; the Gabal el-Zeit wind station; Wataniya, a telecom firm; water bottle manufacturer Safi; Silo Food; Tabarak Developments Holdings, a real estate group; Alexandria Bank; and Banque du Caire.

Algeria is another unexpected yet surprisingly dynamic market. Last year, the Algiers Stock Exchange saw the listing of Crédit Populaire d’Algérie, a local bank that raised $837 million, as well as its first digital start-up IPO called Moustashir. At least three more public offerings are expected in 2025 as Africa’s biggest country tries to modernize and open up its financial sector.

While the MENA region is home to some of the world’s biggest hydrocarbon producers, governments are recognizing the need to adapt to climate change. Some see themselves as leaders in tomorrow’s energy markets.

MENA renewable energy capacity is set to triple from 53 gigawatts (GW) in 2023 to 150 GW by 2030, with solar panels driving 85% of this growth according to the 2024 renewables report from the International Energy Agency. Major projects are underway in the region’s largest economies, including Saudi Arabia’s Al Shuaibah solar plant, the UAE’s Mohamed Bin Rashid Al Maktoum solar park, Egypt’s Benban energy station, and the Noor projects in Morocco.

Even crisis-hit countries are joining the trend. In Lebanon and Syria, solar panels have become a common sight on rooftops, providing households with a reliable alternative during frequent power cuts.

The corporate sector is also shifting as more MENA-area companies commit to solar-powered production as one of their sustainability strategies.

Other clean energy sources are gaining traction across the region as well. Last year, Saudi Arabia and Egypt signed some of the world’s first green ammonia contracts, while blue and green hydrogen projects are commencing in several GCC states.

To boost their green energy initiatives, MENA countries are also securing access to rare metals. Last year, Saudi Arabia revised its estimate of its untapped mineral resources from $1.3 trillion to $2.5 trillion and began signing exploration MoUs with international firms. Countries lacking domestic resources are seeking them abroad. The UAE, for example, has inked several mining agreements in Africa, including a $1.9 billion deal with the Democratic Republic of Congo.

For now, however, oil and gas will remain the regional mainstay. Despite growing investments in renewables, fossil fuels still account for over 80% of global energy consumption, according to S&P Global. With demand on the rise, countries like Algeria, Libya, Egypt, Iraq, Oman, Saudi Arabia, the UAE, Kuwait, and Qatar have no plan to stop pumping hydrocarbons.

On the contrary, many will be substantially expanding production capacities in the next few years, ensuring robust revenues and business prospects.

To turn ambition into reality, state-owned KPC, which has long relied on onshore reserves, is venturing into offshore exploration with a 6,000-square-kilometer area under review. Kuwait Oil Company (KOC), a KPC subsidiary, has already made significant strides with the discovery of two new fields: the 74-square-kilometer Al-Jlaiaa field, revealed in January, and the promising Al-Nokhatha field, which could contain up to 2.1 billion barrels of oil and 5.1 trillion cubic feet of natural gas. New gas discoveries are of particular interest to Kuwaitis, who currently rely on imports to meet local consumption needs.

The oil discoveries could pave the way for new business opportunities as well. While Kuwait remains cautious about foreign involvement in its hydrocarbons industry, KOC last year signed a contract with US-based SLB for the drilling of 141 new wells.

Kuwait’s hydrocarbons strategy does not stop at increasing production; it also includes enhancing existing infrastructure. In 2024, the emirate inaugurated the $30 billion Al Zour refinery, Kuwait’s largest and the seventh largest in the world. At full capacity, Al Zour is set to elevate the country’s refining capacity to 1.42 million bpd, up from a current 800,000.

In tandem with this expansion, Kuwait is looking to streamline its tentacular network of hydrocarbon institutions. Currently, KPC oversees eight subsidiaries, including KOC. Back in 2020, the government mandated PwC’s international consulting firm, Strategy&, to advise on possible consolidation. Today, it may be ready to merge some of these entities in a bid to boost efficiency. Local media are already reporting on potential mergers between Kuwait National Petroleum Company and Kuwait Integrated Petroleum Industries Company as well as KOC and Kuwait Gulf Oil Company.

“That’s a game changer for banks in Kuwait,” says Ahmed Al-Duwaisan, acting CEO and managing director of Corporate Banking at Al Ahli Bank of Kuwait. “Once the mortgage law comes out, it would help the retail business significantly. That’s a new avenue for conventional banks like us.”

According to local media reports, the new law would allow commercial banks to lend up to $750,000 over a term of up to 25 or 30 years; the current cap is 15 years. The required debt-to-income ratio is also expected to increase, giving borrowers more flexibility.

With over 100,000 pending home-loan applications, demand is immense, but also a significant growth opportunity for Kuwait’s banking industry.

“As government discussions on mortgages ramp up again,” says Abdullah Al-Tuwaijri, CEO of Consumer, Private & Digital Banking at Boubyan Bank, “we believe there to be an opportunity for all banks to contribute to solving the housing problem in Kuwait, which in turn will lead to additional potential growth opportunities.”

The proposed reforms are also expected to impact real estate investment.

“Reforms such as the proposed mortgage law and the recently implemented laws to prevent land monopoly will support local real estate, which is an important asset class for investors,” says Ali Khalil, CEO of Markaz, a Kuwaiti asset management and investment bank. The emirate’s real estate market has already shown impressive growth, as sales increased 36% year-over-year in 2024. And housing is expected to be a key driver in the government’s ambitious $121 billion suite of megaprojects, further fueling the sector’s expansion.

The Kuwaiti economy is at a turning point. In early February, the Cabinet approved a draft budget for fiscal year 2025-2026, signaling an 11% year-over-year increase in the deficit on slightly lower revenues. The proposal, still awaiting the approval of Emir Mishal Al-Ahmad Al-Jaber Al-Sabah, comes as the Persian Gulf state grapples with the need to diversify the economy in the face of persistent dependence on oil production.

Kuwait’s economy contracted by 1% in 2024 following a 3.6% decline during a 2023 recession. With hydrocarbons accounting for 90% of exports and government revenue, economic performance remains closely tied to OPEC+ production policy, global demand, and competitor output. While the World Bank projects GDP growth will surpass 2% this year, recent calls from US President Donald Trump to cut global oil prices are pressing Kuwait to accelerate its diversification efforts.

For years, political gridlock has stalled reforms. Since 2020, the Cabinet has resigned 10 times and Kuwait has held four legislative elections. But a shift is underway. Last May, the emir dissolved Parliament and partially suspended the constitution for up to four years, a dramatic move aimed at fast-tracking key structural reforms in coordination with international institutions.

“We were very skeptical in the beginning, because they made promises before, but we can see the actions and seriousness about certain reforms,” says Ahmad Al-Duwaisan, acting CEO and general manager of Corporate Banking at Al Ahli Bank of Kuwait (ABK).

Game-changing transformations such as cutting public-sector wages and subsidies, which account for 80% of total spending; introducing a value-added tax (VAT); updating the country’s mortgage law; and passing a new debt law aimed at allowing Kuwait to borrow on international markets, are still under discussion. But some legislation has been approved, signaling momentum toward reform.

In line with the Organization for Economic Cooperation and Development’s Pillar Two requirements on minimum tax rules, Kuwait is introducing a 15% corporate tax for foreign firms with revenues exceeding $750 million in at least two of the last four years. Finance Minister Noora Al-Fassam estimates the tax will target over 300 companies, raising up to $825 million annually.

“This is part of a government strategy to build a more diversified economy, attract foreign investment, and create jobs for citizens,” Al-Fassam told the local media. It also shows Kuwait is “serious in going ahead with the fiscal and economic reforms.”

While some multinationals may look to increase local partnerships or relocate regional headquarters away from Kuwait to mitigate compliance costs, the overall objective of the new measures is to position Kuwait as a competitive business hub, compliant with best global and regional practices.

“The alignment of Kuwait with global tax standards could improve credibility at a global stage and prevents the country from being seen as a tax haven for foreign investors, which could drive more sustainable and high quality FDI [foreign direct investment] inflows,” says Ali Khalil, CEO of Markaz, a Kuwaiti asset management and investment bank. “In addition, this reform sets the base for the implementation of further tax reforms, which could diversify revenue sources for the government. The additional revenue would likely be ploughed back into the non-oil economy to aid in further improving business infrastructure.”

In parallel, the government aims to improve investment frameworks and litigation procedures, and ease foreign ownership rules.

“Kuwait’s economic reforms are paving the way for significant opportunities for financial institutions,” says Khaled Yousef Al-Shamlan, CEO of Kuwait Finance House (KFH), the country’s second largest bank, behind the National Bank of Kuwait. “Initiatives aimed at enhancing the business environment, such as public-private partnerships and regulatory simplifications, will facilitate greater investment inflows.”

Improving infrastructure is also a priority. Kuwait’s road system, once ranked the worst in the Gulf Cooperation Council (GCC), will be revamped thanks to $1.3 billion in maintenance contracts signed last October with 18 companies.

Project activity has surged in sectors including housing, health, water, waste management, electricity, and oil and gas (see sidebar, page 80). Last year, $8.7 billion worth of projects were awarded, marking a 44% year-over-year increase and the highest value since 2017, according to reports from National Bank of Kuwait (NBK), the country’s largest bank. Along with the 2025-2026 budget, the Cabinet has approved close to $5.6 billion for 124 projects.

KAMCO Invest, one of Kuwait’s leading non-banking financial institutions, expects “thriving economic activity, government’s resolve to execute projects before the deadlines, a supportive and strong banking sector, an expected fall in interest rates, stability in the regional geopolitical scenario, elevated oil prices, and supportive government policies for private sector participation” will continue to drive markets this year.

Overall, Kuwait has $121 billion worth of planned projects in the pipeline, with several to be awarded this year. 

Adds KFH’s Al-Shamlan, “I see growth potential in sectors that are critical to the global economy’s infrastructure and energy needs: specifically, oil and gas, construction, and services.”

The financial sector stands at the cornerstone of Kuwait’s non-oil economy. Despite fluctuating global energy prices and a tense regional geopolitical landscape, Kuwaiti lenders are showing resilience.

Standard & Poor’s (S&P) assigned a stable outlook to Kuwaiti banks in January, noting that they “operate with strong capital buffers and typically retain 50% or more of their bottom line, which supports their capitalization. The quality of capital remains strong, with a modest share of hybrid instruments.”

The financial landscape nevertheless is undergoing significant change.

In July, the government introduced legislation to bolster transparency and reduce fraud by adding more stringent screening measures for opening bank accounts. At the same time, the banking sector is beginning to mirror regional trends as consolidation efforts gain momentum.

In December, Burgan Bank announced plans to acquire Bahrain’s United Gulf Bank in a $190 million deal, set to close in the coming months. The deal “aligns with the bank’s new asset reallocation strategy and efforts to build new and diversified revenue streams,” said Burgan Group CEO Tony Daher in an announcement. With subsidiaries in Algeria, Tunisia, and Turkey as well as a corporate office in the United Arab Emirates, Burgan may also leverage the merger to expand further across the MENA region.

Other deals are in the works. In January, Warba Bank announced it would buy a 32.75% share in Gulf Bank from Alghanim Trading, one of Kuwait’s largest family businesses. Last summer, Boubyan Bank floated the idea that it might acquire Gulf Bank which would have created Kuwait’s third-largest bank, with assets exceeding $50 billion. The transaction was later called off.

Since 2018, the number of banks in the GCC has dropped from 77 to 60, primarily through mergers and acquisitions that have created regional giants. Kuwait, however, largely stayed on the sidelines until KFH completed the acquisition of Bahrain’s Ahli United Bank (AUB) in 2022, marking the MENA region’s first major cross-border consolidation and creating the world’s second largest Islamic bank, with $120 billion in combined assets.

But with 21 regulated banks serving a population of over 4 million, Kuwait, like many GCC countries, is still considered overbanked. Moreover, the sector is largely dominated by NBK and KFH, which collectively hold some two thirds of total banking-sector assets, resulting in severe competition between the other players.

“We’re all fighting over good clients, and that creates compression in margins and returns,” says ABK’s Al-Duwaisan.

The anticipated mergers are unlikely to cause significant disruption, however. Typically in GCC bank consolidations, the major shareholders—powerful families or state-owned entities—remain unchanged, with only asset restructuring taking place.

In the case of Burgan and United Gulf Bank, both entities are subsidiaries of Kuwait Projects Company (KIPCO), one of the MENA region’s largest holding companies, backed by the royal family. Boubyan Bank is a subsidiary of NBK, and had it acquired Gulf Bank or any other retail bank, it would have ended up reinforcing NBK’s already dominating position on the market.

Kuwait’s recent initiatives to promote the financial sector also focus on building up its capital markets to drive private-sector growth. The expansion of the Kuwait Stock Exchange (KSE) and reforms to streamline foreign ownership rules are starting to show results.

Last year, 69 million shares were trades on the KSE, making it one of the GCC’s most active and best performing stock markets. While investors remain mainly locals, foreign participation in trading activity represented 7.8% of total trades in 2024, up from 5.8% in 2021.

“Reforms undertaken to deepen the capital markets and improve liquidity have helped increase the visibility of Kuwait markets among foreign investors and allowed asset managers to launch new products such as ETFs and REITs, which was previously not possible,” says Markaz’s Khalil, who recently launched the GCC Momentum Fund, Kuwait’s first passive investment fund. Markaz also hopes to widen its product portfolio focus on thematic funds and products based on alternative asset classes like Private equity and Private Credit.

Following the privatization of Boursa Kuwait, which operates the KSE, in 2016, the stock exchange was upgraded to “emerging market” by global index providers MSCI, FTS Russell, and S&P. It is currently in the third phase an ambitious Market Development Plan, with attracting local family businesses to list being one of the main challenges ahead.

“The IPO wave sweeping through some other GCC countries is yet to take off in Kuwait markets,” notes Khalil. “Similarly, deal activity in Kuwait is subdued. Measures to incentivize the listing of family businesses, privatization of state assets, introduction of parallel markets, and products like ETFs would aid in market development.”

For the first time in a long while, change has come to Kuwait. By modernizing its fiscal framework and ramping up project activity, the authorities are demonstrating commitment to enact some of the long-awaited changes observers have said the country needs to step away from oil dependency.

Enthusiasm over ongoing reforms, in turn, supports increasingly positive investor sentiment. But much remains to be done to encourage and support private-sector growth that eases the state’s dependence on hydrocarbon revenues, especially as the government plans to increase oil production substantially.