Tuesday, September 27, 2005

The Economic Boom: Our Second Chance!

In the early 20th century, during the British colonial rule of Egypt, an Egyptian suddenly decided to establish the first national bank. He was motivated by a moving experience. An Egyptian farmer was crying in shame, anger and sorrow because the British bank tricked him. Typically, they gave him a loan, drove the cotton price down and confiscated his land for payment. Now, he was going to work as a laborer in his ancestor's land.
Young Talat Harb decided then and there to establish Misr Bank. Many laughed at him. He proved them wrong.
Within a couple of decades, Misr's Bank sat up 28 Egyptian companies producing everything from cotton dresses to heavy industries. They went into every field from hypermarkets for local products to Cinema for local movies, to sea, air and land transportation.
In addition, the bank helped starting and supported sixty more businesses in all kind of production and service fields.
The bank trained and maintained a competent and competitive professional Egyptians work force. Not only Talat Harb Basha suprvised them during work hours, but he also insisted that as representatives of the bank they must well behalf in their private lives. He would fire anyone who mistreated his wife or stole his neighbors. The bank's image had to be upheld at all times.
When the British forced him out, Misr Bank was worth more than two billion Egyptian pounds. He commented: "They could fire me but they can't fire the professional generation this nation now has."
Many Arab banking pioneers were inspired by this example. In Saudi, Salem bin Mahfouz, founded the National Commercial Bank to break the "economic colonialism" in his country, as he explained to the founder of modern Saudi Arabia, King Abdulaziz. He sat up companies, built low-rent flat blocks, and supported hundreds of factories, farms and businesses. The bank played the role of the Central Bank before it was sat at a later stage.
Suleiman and Saleh Alrajehi started, like bin Mahfouz, from the bottom. They well understood the needs and aspirations of their nation and business environment. Their bank was more like a holding company of specialized units. They entered the fields of modern agriculture, poultry, manufacturing and marketing, among many others.
In addition to supporting businesses, those pioneers helped their people. Charity works accounted for as much as third of their fortunes, with billions sat aside for helping the poor and underprivileged.
In the beginning of the 20th century, Mohammad Ali Xenel sat up a network of schools. Not only providing free education, he also supported the poor students' families and sent the best to India to pursue higher studies. In the sixties, Sheik Abdullah Al-Suliman donated million of acres of his land, including his palaces and farms to support the establishment of King Abdulaziz University in Jeddah. Sheik Abu Bakar Bakhashab was first to support the project with a million Riyal donation, a fortune by the standards of those days.
Today, fewer people act and think the same way. Tall among the best is Mohammad Abdulatif Jameel. He, alone, put up 100 million riyals to establish pioneering schools, services and funds. Hundreds of poor women are getting micro financing of up to a thousand riyal to start small businesses individually and in small groups. Young girls and boys are taking training courses in untraditional courses for Saudis like food catering, hair dressing, fashion design, event management, and car maintenance. Others are sent aboard to study in prestigious universities like Massachusetts Institute of Technology, Oxford and Cambridge. Before they graduate, Jameel finds them secured jobs in and outside his group.
Abdulrahman Fakeeh is another shining example. His free training schools are focused on modern tools like computer and languages, as well as traditional like farming and poultry. After graduation students are free to work for him or anywhere else, without any strings attached.
The same can be said of charitable business groups, lik Alkherieji, Alamodi, Bin Mahfouz, Xenel, Bin Laden, Aljaffali and Bugshan.
There must be many others working in silence. But the percentage is too small, the help insufficient, and the philosophy rapidly changing. Banks today are more concerned with fueling consumerism than nurturing small businesses. Most investors prefer to make easy money by building malls, importing and selling consumer goods, and providing services and entertainment. Productive businesses that provide good paying jobs and reform the economy attract fewer investors.
Charity is less smart, focused and directed towards sustainable help, such as training, cottage industry and productive families. Investment venues are hardly enough to absorb more than 500 billion riyals in private bank accounts alone.
We blew our first economic boom of the late seventies, and need to dramatically change strategy, philosophy and attitude before we blew our second chance.

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