UAE merges ministries in ambitious government restructuring

The United Arab Emirates has announced a sweeping government restructuring, merging ministries and departments as the Gulf state chases economic revival in the wake of coronavirus lockdowns.

Sheikh Mohammed bin Rashid al-Maktoum, UAE prime minister and ruler of Dubai, on Sunday also reshuffled cabinet ministers in a shake-up meant to create a more “agile” government, including a plan to merge 50 per cent of federal agencies.

“Our goal in today’s structural changes is a government faster in decision making and better in seizing opportunities and dealing with the new phase of our history,” he wrote in a tweet, giving the new cabinet a year to introduce the reorganisation.

The UAE has been reeling from the twin shocks of lower oil prices and the economic toll of lockdowns imposed to stem the spread of coronavirus. Companies have slashed thousands of jobs, triggering an expatriate exodus as international flights resume.

As part of the reshuffle, three ministers were appointed to look after the economic portfolio, in what Sheikh Mohammed called an “absolute strategic priority”. Sultan Al Jaber, chief executive of Abu Dhabi’s national oil company, was promoted to head a new ministry of industry and advanced technology. Four entities, including the postal service, are to be folded into the federation’s sovereign wealth fund.

The restructuring included a decision to close half of the government’s services centres, shifting their operations online within two years. Ministers were tasked with expanding digitisation and a cyber security chief was appointed.

Since enduring one of the world’s strictest lockdowns in April, Dubai has been gradually lifting restrictions, including reopening shopping malls and offices at full capacity. Later this week, the regional tourism hub will also welcome international travellers.

“We have to be realistic,” said one Dubai official. “There needs to be a balance between health considerations and the economy.”

But oil-rich Abu Dhabi, after a less rigorous lockdown, in June closed its borders to the rest of the country to carry out an intensive testing programme. The capital will nonetheless host four Ultimate Fighting Championship events from next week, sealing off an island where 1,500 staff have been in quarantine to prepare for the televised martial arts fights.

The UAE, which has one of the highest Covid-19 testing rates in the world, has seen a spike in new cases over the past three days after infections eased in June following a peak in May.

A new survey suggests that the lifting of coronavirus restrictions has sparked the beginning of a recovery in the private sector.

IHS Markit’s June purchasing managers’ index jumped back to growth with the first improvement in operating conditions for six months.

The PMI index, a survey of the business environment for the non-oil sector, pointed to higher domestic and international demand since the opening up.

But the report also indicated that companies, struggling from the impact of lockdown measures, were still shedding staff and reducing salaries to cut costs further.

“Renewed growth in June marked only a slight reprieve from the downturn that reached its peak in April,” said David Owen, an economist at IHS Markit. “It may be a long path to recovery for the labour market.”