Earlier this month, the Hajj (pilgrimage to Makkah) was performed by around 3 million pilgrims. The Hajj — an Abrahamic tradition dating back to the pre-Islamic era– has been a cornerstone of the Gulf economy since ancient times. The “Hajj economy” has shaped the development of the Gulf throughout history.
While the direct economic impact of the Hajj is easily observable, the strategic implications for GCC — and particualrly Saudi — competitiveness are more subtle. If fostered and applied more deeply, capabilities and skills linked to the Hajj can be pivotal in developing and expanding world-class initiatives and companies. The skill set of the Hajj economy can, if viewed strategically, be a significant source of competitive advantage.
Infrastructure and logistics management
The infrastructure demands linked to the Hajj are enormous. From investment in airport facilities (e.g. an additional terminal for the Hajj season) to the need for roads and tunnels to procuring fleets of buses transporting pilgrims, facilitating the Hajj requires significant infrastructure. On top of this physical infrastructure, the logistics of managing the flow of people, water, food, electricity, and other utilities are daunting.
Institutions involved in Hajj infrastructure and logistics have developed a set of skills and competencies that are immensely valuable. Creatively leveraging, replicating, and applying those skills in a broader range of ventures represents a unique opportunity for such institutions and for the Saudi economy at large.
Public health and safety management
Managing the public health and safety aspects of the Hajj is another unique challenge. No other venue brings together millions of travelers — mainly from the developing world — in close quarters where infectious diseases can spread rapidly. The techniques used to mitigate risks and prevent outbreaks are immensely applicable in other contexts.
With investment in research and improvement, one can envision Hajj-related policies becoming a reference and a source of best practices for health and safety professionals worldwide. Firms with expertise in this area could compete for projects worldwide.
Connectivity with the Muslim world
In bringing together Muslims from around the world, the Hajj naturally fosters trade and commerce across borders. In fact, the famous “Silk Road” of regional trade in the Middle East and Asia was paved largely by pilgrims and by merchants seeking to serve them.
As host of the Hajj, Saudi Arabia enjoys a natural advantage as a potential trade hub for the Muslim world. Taking on this role, however, would require significant economic reform in the Kingdom as well as fundamental enhancements to the Saudi business environment.
Shariah-compliant savings and financial services
In saving for the Hajj, Muslims worldwide are particularly mindful of the need for complying with the Shariah. A Muslim who may otherwise not always invest Islamically will be highly inclined to invest his or her Hajj savings according to Shariah guidelines, since the Hajj is an inherently religious journey.
Malaysia’s Tabung Haji — an institution created to facilitate saving for the Hajj — is a prime example of the link between the pilgrimage and Islamic finance. The need to save for Hajj naturally channels funds towards Shariah-compliant vehicles, and Hajj-related entities are advantaged in attracting Islamic capital.
Throughout history, the “Hajj economy” has been a source of prosperity. In today’s global economy, the skills associated with the Hajj — if strategically leveraged — could also become a source of competitive advantage.