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For Emerging Market CEOs, ‘Risk Is the Only Certainty We Have’

Top-ranked chief executives across Europe, the Middle East, and Africa discuss the challenges they’re facing in 2019 — and how they believe this year will be remembered.

Executives in emerging markets across Europe, the Middle East, and Africa are facing pressure to innovate at a time of mounting trade tensions and a great deal of uncertainty.

“Risk is the only certainty we have,” said Adrian Tanase, chief executive of the Bucharest Stock Exchange and one of the top-ranked CEOs in Institutional Investor’s 2019 Emerging EMEA Executive Team.

CEOs recognized in the second annual ranking of the region’s foremost executives cited the trade war between the U.S. and China as the most significant risk to their business models. “With countries taking more protective measures in this environment, global trade shrinks,” said Burak Basarir of CCI, which sells Coca-Cola and associated brands across the Middle East including Turkey, Pakistan, Iraq, and Syria.

Tariffs unleashed by the U.S. and China are part of “a general increase in protectionism,” according to Fuat Erbil, who stepped down from his post as chief executive of Garanti BBVA, the second largest private bank in Turkey, in August after 22 years with the company. He praised the virtues of the “boring” results that hold up in such volatile markets.

For some members of the executive team, macro-economic uncertainty has been compounded by challenges within their industries. Sergey Ivanov of Alrosa, the world’s largest diamond company, noted that the diamond sector has struggled with financing issues at cutters and polishers and the proliferation of online sales in retail. Meanwhile, Orascom Development Holdings chief Khaled Bichara is concerned about political unrest after his firm, which is known for second homes and hotels, entered the “first homes” market with its O West development, a planned town in West Cairo. 

Nonetheless, innovation is a top priority. Russia’s largest food retailer X5 is looking at ways to enrich customer data gathered from its 40 million active loyalty cards by identifying trends in behavior and refining promotions. Igor Shekhterman, the company’s chief executive, said the firm’s focus is on digital transformation. “By creating the best customer experience, we will be able to generate higher revenue as we attract new visitors,” he said.

Meanwhile, Erbil said Garanti is looking to collaborate with fintech companies that are competing with payment systems, money transfers, insurance, and other services traditionally supplied by banks. The Turkish lender is restructuring its workforce into cross-functional, semi-autonomous teams to create a “start-up mindset” among staff.

In Romania, the Bucharest Stock Exchange is at the forefront of efforts to promote the country from frontier market to emerging market. Tanase said his firm is introducing central counterparty clearing, which will allow for the creation of the market infrastructure needed to support more sophisticated products, including derivatives. Reflecting on risks, Tanase suggested the “fear factor” may prove the biggest of all to the global economy — a concern seconded by Erbil.

“The biggest risk… could be reinforced by self-fulfilling narratives as long as people and investors continue to read and hear about the possibility of recession,” he said.

Below, members of the Emerging EMEA Executive Team discuss the challenges and risks they’re facing in 2019 — and how they believe this year will be remembered.


Burak Basarir, Coca-Cola İçecek

What’s the biggest challenge facing your sector right now?

We are operating in a geography that presents many challenges. Among those, [we are concerned about] the fragility of our markets against macro-economic headwinds as consumer sentiment tends to fluctuate along with changes in the macro-economic conditions. The unpredictable regulatory environment is another challenge that we face in our markets, especially for companies like us with long term investments.

How is your company being innovative? 

Changing consumer needs towards a more “route to me” approach is forcing companies like us to change their way of working. Customers now have more decision on what, when, and where products should be delivered to them. For linear value chain companies that do not become agile and innovative this is a big risk. In 2018, we embarked on a journey that would transform all our infrastructure, tools, processes, and services to allow us to serve customers in a more agile manner.

What’s the best piece of business advice you have received?

Always do the right thing; worst case you lose your job, but at least you sleep in peace at night.

What is the biggest risk to the global economy in 2019? 

Escalation of the U.S. and China trade war puts a lot of pressure across the global economy. With countries taking more protective measures in this environment, global trade shrinks. As a result, we see a sharp decline in the world economic growth and a negative global investment climate.

How will 2019 be remembered?

For CCI, 2019 was challenging but also offering opportunities for growth. Putting aside the temporary political and economic challenges, CCI’s operating geography offers great potential for growing our business, giving us a privileged position.


Khaled Bichara, Orascom Development Holding

What’s the biggest challenge facing your sector right now?

We are working in both the real estate industry as well as the tourism industry; many of our destinations are in emerging markets. I would consider our most serious challenge to be the risk of political unrest associated with some of the emerging markets that negatively affect tourism. We believe that we mitigate that risk by having destinations across different countries, as well as destinations that are not in emerging markets like Andermatt, Switzerland. 

As for the real estate industry, in the past we operated mainly in the second home market, which is highly susceptible to economic downturns. This was the idea behind the creation of O West, our first home project in Cairo-Egypt, hence diversifying our dependence on the second home market and reducing our exposure to it. 

How is your company being innovative? 

Innovation differentiates us as a company. We do not just build hotels and residences; we have been successfully building full-fledged towns for the past 30 years. El Gouna is a witness to that.

What’s the best piece of business advice you have received?

To be passionate about my job/work is the best advice my father gave me. I was young and had doubts about joining the family business. Almost every day he said: “When you love what you do, you will always put forth more energy and effort and you will enjoy work.”

What is the biggest risk to the global economy in 2019? 

I believe the main concerns are the uncertainties related to the ongoing Brexit debates and the America vs. China trade war, as well as political tensions between America and Iran. 

How will 2019 be remembered?

Bittersweet for Egypt: sweet for hosting the most successful African Cup of Nations to date; the bitter part for not winning. 2019 also marks my completion of the first three years as CEO of Orascom DH. I will remember 2019 as the beginning of an exciting long-term commitment and collaboration with Orascom Development. I am happy to stay with the company and am working with my team to continue to push Orascom DH to become one of the leading private town developers in the world. 


Fuat Erbil, Garanti BBVA

What’s the biggest challenge facing your sector right now?

It is quite a challenge to sustain profitable growth in an emerging market where there is high volatility and vulnerability to global trends. In Turkey, due to foreign currency savings and investments, banks manage dual currency balance sheets. 

How is your company being innovative? 

We shine a light on the local fintech ecosystem through Open Innovation. As the leading event, Garanti BBVA organizes the local version of Open Talent, the biggest fintech competition in the world, where the local winner is invited to BBVA’s Open Summit to present their projects and compete for the grand prize. Garanti BBVA is also going through an agile transformation where people work in cross-functional, self-autonomous teams. In line with latest industry trends, getting our people understand design thinking and implement a start-up mindset is critical to remain innovative.

What’s the best piece of business advice you have received?

In my earlier days as CEO, one of our investors told me that as long as we deliver boring results and keep it simple, it will be fine. At first, I could not quite relate what he meant by calling results boring. The essence of boring hit me only when we had to bear up with complex market developments and high volatility that hit a little after I took over the helm. No negative surprises in results even under such tough conditions was what he meant, so we ended up shooting for the boring results moving in the right direction.   

What is the biggest risk to the global economy in 2019? 

The biggest risk continues to be the trade war between the U.S. and China and the general increase of protectionism. This could be reinforced by self-fulfilling narratives as long as people and investors continue to read and hear about the possibility of recession.

How will 2019 be remembered?

Another transition year to a new model which needs a  more balanced approach between policies, markets, and people.


Sergey Ivanov, Alrosa

What’s the biggest challenge facing your sector right now?

Our industry suffers from a whip effect: a minor swing in demand at end-consumers of diamond jewelry translates into a significant decrease in demand for mine production. This is a relatively new phenomenon — diamond jewelry consumption almost doubled over the last 25 years, but the ways the business is run haven’t changed much. Challenges faced this year, both external and internal, will speed up change through digitalization, adoption of new technologies, and bespoke marketing campaigns. This will prompt a healthier and more sustainable future for our business.   

How is your company being innovative? 

Digitalization is being rolled out across our sales system to ensure seamless integration with our clients and their clients’ systems — creating digital twins of the stones, and using block-chain technology. Digital is revolutionizing the way we market our products, as a new generation of digital native consumers come into the market. They are different in the way they make their purchasing choices: they want to make a difference and they value the values behind the product rather than just brand loyalty. And this is a tremendous opportunity for us.

What’s the best piece of business advice you have received?

I like Dwight D. Eisenhower’s famous quote: “Plans are nothing, planning is everything.” For us it means that our corporate strategy shouldn’t be carved in stone. It needs to be dynamic and serve one ultimate goal: creating maximum value.

What is the biggest risk to the global economy in 2019? 

The biggest risk is the uncertainty, be it from trade tension talks, or recession risks in the key global powerhouses.

How will 2019 be remembered?

As a year which clearly highlighted a number of structural problems in the sector, and at the same time, a year that set a good foundation for the renewal of the sector, as it always happens after difficult times.


Igor Shekhterman, X5 Retail Group

What’s the biggest challenge facing your sector right now?

Previously we compared ourselves with other offline players, but now we face competition on the broader food market, and our competitive universe includes not only traditional retailers, but also online food delivery services and fast food restaurants.

How is your company being innovative? 

Our key focus today is digital transformation.  It has three key elements: automating business processes in X5's offices and stores, making better use of customer knowledge, and developing our digital customer value proposition.

How will 2019 be remembered?

I think that 2019 will be remembered as a year when businesses that are already actively engaged in innovation and implementing new technologies further enhanced their lead over peers who are simply trying to enhance or improve their existing business model. 


Adrian Tanase, Bursa de Valori Bucuresti (Bucharest Stock Exchange)

What’s the biggest challenge facing your sector right now?

The world is changing at a fast pace in so many directions at once and capital markets are no exception. Look at the trade war and see how political statements interfere with market decisions and how what happens in one part of the world can have significant effects in different international markets. Technology disrupts the “business as usual” manner of doing transactions; technology finds more and more usage in the financial sector.

How is your company being innovative? 

Romania is working the way up to be promoted from frontier market to emerging market. It’s a process, and it’s a cumulative effort of all the entities involved in the capital markets. At the Bucharest Stock Exchange, we are doing our best to have the central counterparty clearing set in place, which is a key component to have the average daily trading value doubled in the foreseeable future. 

What’s the best piece of business advice you have received?

The most important thing in everything you want to do is to start.

What is the biggest risk to the global economy in 2019? 

Risk is the only certainty we have. However, the fear factor might prove the biggest risk to the global economy. Take last year’s media stories and check how many predicted world markets would collapse. Not only did it not happen but some even reached their all-time highs. 

How will 2019 be remembered?

Definitely, 2019 is under the label of the Brexit year and global trade war.

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