BCG to help Saudi Arabia with opening of landmark public cinemas

28 December 2017 Consultancy-me.com

The Kingdom of Saudi Arabia has engaged The Boston Consulting Group as it seeks to deploy a new generation of cinemas across the country. In a landmark change, public cinemas are to be allowed in the conservative kingdom for the first time in over 35 years, with the first venues likely to open in March 2018. 

Under a raft of reforms led by 32-year-old Crown Prince Mohammed bin Salman, the government is easing many of its most regressive social restrictions, which also include a ban on women – something the Crown Prince also plans to live next year. The Saudi economy has been hit hard by a fall in oil prices in recent years, and the regime hopes that it will benefit from the growth in a revived entertainment industry.

Global consulting firm The Boston Consulting Group (BCG) has been commissioned to identify venues like parks and theatres for the Kingdom to develop through a mix of government funding and private sector investment. The project is led by the firm's Riyadh office, which launched in October 2015 and has since grown considerably to rival firms such as McKinsey, Bain and Strategy&.

BCG to help Saudi Arabia with opening of landmark public cinemas

Saudi Arabia has promised a shake-up of the cultural scene with a set of Vision 2030 reforms. By 2030, some 300 cinemas with more than 2,000 screens are expected to open, a government source said, predicting the cinema industry would contribute over $24 billion to the economy and create 30,000 permanent jobs by 2030. Regional cinema chain operators are already believed to be studying entry into Saudi Arabia, which could accelerate the process. Licensing and regulations pertaining to the roll-out will be announced over the coming weeks, meanwhile.

While the Kingdom had some cinemas in the 1970s, the entertainment medium was banned in the early 1980s under pressure from hard-line conservative groups in the region, as Saudi society turned towards a restrictive form of the religion that discouraged public entertainment and many forms of mixing between men and women. The ban on cinemas still stands, presently, however, concerts have already started taking place across the country – something which would also previously have been unthinkable. But well beyond the simple lifting of bans, the Kingdom is set to invest in entertainment. The ambitious leisure project announced to date is a giant entertainment city being planned for outside the capital Riyadh, which would aim to draw regional visitors with resorts, golf courses, car racing tracks and a Six Flags theme park. 

Minister of Culture and Information Awwad bin Saleh Alawwad, said, “Opening cinemas will act as a catalyst for economic growth and diversification. By developing the broader cultural sector we will create new employment and training opportunities, as well as enrich the Kingdom’s entertainment options.”

Last month Saudi Telecom Company, the largest telecom operator in the Middle East, joined the Brightline Initiative, a platform which is co-led by The Boston Consulting Group.

Do consultants have a legitimising effect in the Middle East?

19 April 2019 Consultancy-me.com

Do the often kowtowing international consultants operating in the Gulf simply grant legitimacy to local rulers? The answer’s not so simple says regional expert Calvert Jones, who has conducted a fascinating research study on the local consulting industry.

Now valued at $3 billion annually in the GCC alone, the Middle East management consulting industry has exploded since the global financial crisis, growing at a heady 20 percent clip up until 2014 when the dive in global oil prices and attendant austerity measures briefly applied the brakes; ‘brakes’, in this context, meaning growth which at its lowest point in 2015 dropped to around 6 percent.

The slow-down was brief. With the plummet in oil prices spurring regional governments to act on economic diversification – captured in a range of ambitious national transformation agendas – together with the emergence of a range of digital advances now sweeping the public and private sectors, fresh impetus was given to the local consulting market; this year forecast to return to double-digit growth.

Of that $3 billion consultancy price tag – with close to half of it handed over in Saudi Arabia – the public sector accounts for approximately a third of the take, the vast majority of that paid to foreign consultancies and in particular the advisory wings of the Big Four and global strategy giants such as McKinsey and BCG. Scrutiny of these practices – especially in the wake of the Khashoggi killing – has also increased.

Copping much of the media flak, McKinsey for its part has backed itself as a force for good in the region, contributing greatly toward local economic, education and healthcare development. But the question remains, even if making a positive difference, do international consultancies confer legitimacy on authoritarian governments – “helping to prop up and even strengthen repressive, illiberal regimes?”Does the Middle East consulting industry have a legitimising effect?One person well-placed to address that question is Calvert W. Jones, an Assistant Professor in the Department of Government & Politics at the University of Maryland and author of ‘Bedouins into Bourgeois: Remaking Citizens for Globalization’. Jones spent 19 months between 2009 and 2017 conducting field research in the region, including into the consulting industry and the notion of conferred legitimacy.

According to Jones, some of the consultants she interviewed themselves expressed this concern, particularly when due a range of market factors they may have grown less inclined over time to voice too strong of an opinion. Yet, whether this is indeed the case is not so clear. Among other findings and areas of research, Jones conducted several experiments on the subject of legitimacy at universities in Kuwait, involving some 650 students.

“Conventional thinking about experts in politics suggests not only that experts rationalise governmental decision-making, but also that they confer legitimacy – meaning that the public may be more likely to support government initiatives when experts with the relevant knowledge, training, and experience are involved. In the Gulf, both experts and ruling elites tend to think along these technocratic lines,” she states in an article for the Harvard Business Review.

Experiments

While not addressing potential international legitimacy or other geopolitical or business and trade issues, Jones sought to test the idea of conferred legitimacy as to public opinion in the local polity. For the experiments, she asked participants to imagine that their country’s leaders were launching a major reform to improve either education or infrastructure, exposing them to a variety of mock news articles outlining the likely benefits from the government initiative.

In the first experiment, half of the reports featured reference to a team of top international experts assisting with the hypothetical reform, including their credentials and extensive experience elsewhere, with this detail absent from the remaining half. She found that subjects who read that experts were involved were far less likely to support the reform – indicating the ‘involvement of experts’ may have led to a significant drop in legitimacy. The results, however, are somewhat murky.

In the second experiment, Jones explored the impact of nationality on opinion, with otherwise identical reports on expert-advised infrastructure reform referring to either American, Chinese, or Kuwaiti advisers. She found two surprising results. Support for the reform did not differ significantly whether led by Chinese or Kuwaiti experts, but did however for the American-led reports, with subjects expressing significantly lower support.

The Chinese were also considered far more capable than their American counterparts, which may in itself provide a clue. “It’s not necessarily evidence of profound anti-Americanism, let alone a new love for Chinese experts,” Jones cautions; “Most likely, it reflects Kuwaitis’ longer experience with American experts, which includes their frustration with the lack of progress on various reforms.” The Kuwaitis, she suspects, are just far less familiar with Chinese consultants.

“This experimental evidence raises doubts about the ability of experts to rationalise and legitimise authoritarian rule,” Jones concludes. “Indeed, my research suggests that international experts can actually undermine legitimacy, potentially reducing domestic support for autocrats and weakening their regimes… In my experience, residents of these countries are increasingly critical of their governments paying hefty fees to foreign experts and consultants for little in return.”