Author Archives: Dorothy Smith

Hope on Yemen’s horizon

Overlooking the Sana'a cityscape. Masjid Al Saleh (Saleh's Mosque) is brightly lit towards the middle of the shot. (Photo: CIPE)

After living in Egypt, Kuwait, Jordan and Oman, and traveling through other countries in the region, Yemen remains one of those still left on my list of places to visit. Since the country took a turn toward political uncertainty, I wonder what will have to happen before I get a chance to cross it off.

It is apparent to me that Yemen has democratic prospects on the horizon and that there are strategies to halt what may seem an inexorable march toward crisis. I was heartened to read Christopher Boucek’s testimony before the Senate Committee on Foreign Relations’ Subcommittee on Near Eastern and South and Central Asian Affairs. In his remarks this Tuesday, Boucek stressed that,

“Washington must do more to address the underlying sources of instability—a collapsing economy, rampant corruption, unemployment, and resource depletion—if Yemen is to avoid becoming a failed state and a breeding ground for terror.”

The Arab Spring has confirmed that there is no state stability when citizens live under regimes that squash their dignity and fundamental freedoms – the freedom to participate in the political process, and the freedom to work and provide for one’s family. At this unique point in history, it is becoming increasingly clear – not just for Yemen experts such as Boucek, but for representatives in Congress, the administration, and State – that a “Yemen strategy” focused solely on combating terrorism follows the age-old metaphor of the doctor who treats the symptoms not the infection itself.

Instead, Boucek offers reality-based solutions to address the systemic problems that Yemen faces: improve the legal system, support land reform, and build state capacity.

Some will inevitably say, “Great, but how?” But we cannot under appreciate the importance of correctly identifying Yemen (and the region’s) core challenges.

Only then can policymakers apportion government funds to most adequately support Yemen’s retreat from failed state territory.

Only then can international actors and local partners construct programs that adequately respond to issues that negatively influence daily life for Yemenis.

Only then do I have a chance of someday visiting Bab al Yemen.

CIPE’s groundbreaking film, Destructive Beast, exposes the economic and social costs of corruption in Yemen. Directed by acclaimed filmmaker Khadija al Salami, the 43-minute documentary film captures the toll that abuse of power, neglect, and bribery have taken on economic growth and development in a country already on the brink of collapse. Please e-mail Yemenfilm@cipe.org if you would like to view or download a copy of the film, available in Arabic with or without English subtitles.

Acquiring a taste for women’s issues

Assilah Z. Al-Harthy, the first woman to found and head a private equity firm in Oman, speaking on the second day CIPE's Democracy that Delivers for Women Conference last week. (Photo: CIPE)

Though I am a woman, I have never focused in depth on women’s issues. Perhaps it was a counter-feminist within me that thought, “If we talk about women’s issues we’re perpetuating a difference between men and women. Or maybe it’s just that as a researcher on the Middle East, I steered clear of the ubiquitous discourse on the “Arab woman.” But a few recent events and stories have begun to chip away at this shell and spark in me a genuine interest in women’s political and economic empowerment.

The first was my participation in CIPE’s conference Democracy that Delivers for Women. In case you missed it, Stephanie Foster has a nice recap at the Huffington Post. Over the course of two days, women from across sectors and different countries spoke about education, entrepreneurship, technology, and more – and their relationship to women’s empowerment. But I’m not one for long, drawn out, up-in-the-clouds debates. So I was happy to hear examples of programs that have made it easier for women to start and maintain their own businesses, and to learn how financial independence has translated into political empowerment and support for democracy.

Soon after that, I was performing some background research on women and entrepreneurship, ahead of the Business Women Forum’s annual conference in the West Bank at which CIPE’s Chair Karen Kerrigan, Regional Director Abdulwahab Alkebsi, and Program Officer Amy Thornberry are presenting and facilitating discussions.

A quick internet search on women and business in Palestine returned this World Bank statistic: in the West Bank and Gaza women with a college degree or above account for 82 percent of unemployed women, compared to only 12 percent for men.

Why is that? What factors inhibit women working in Palestine, and how can these hurdles be removed? I’m sure this will be a central point of discussion at the conference.

Next, I read an article that describes how, while facing greater obstacles to doing business in the Middle East, women are slowly knocking down barriers to finance. The story gives excellent examples of how regulations and cultural characteristics have restricted women’s entry into the workforce. For instance, a woman entrepreneur in Saudi Arabia is likely to have difficulty registering her business because one cannot legally run a business from a home address. But as the article relates, more women becoming proactive: building their own investment vehicles, establishing their own financial firms, and creating outlets for their entrepreneurial spirit.

So women face all the same barriers to doing business as men, but these barriers disproportionally affect women because they are compounded by social and cultural norms, and in many cases unique legal environments.

I’m sliding, a bit reluctantly, down the path of women’s issues, and I’m actually eager to learn more about the unique circumstances that create disincentives for women to become entrepreneurs and work in the private sector, and how women and men are blazing paths to equal economic and political empowerment.

The 128th most influential Arab

Click. Scroll. Click. Scroll.

I sat paging through Arabian Business’s list of the 500 most influential Arabs. #2 Wael Ghonim – Google exec made famous by his role in the Egyptian protests. #21 Amr Diab – played his pop music on repeat while in Egypt. #22 Amin Maalouf – one of my favorite authors. Click. Scroll. But the most powerful Arab names in business, science, media, sports, and culture soon became less and less recognizable. I began to become discouraged: Do I really have such a narrow understanding of this region after years of study, learning Arabic, and living abroad?

Then I got to #128 Elia Nuqul. Here was a prominent, though likely lesser known, businessman of whom I knew a disproportionate amount. Elia Nuqul is the founder and current chairman of Nuqul Group, a Jordanian firm established in 1952 that has grown to encompass more than 30 companies. No, I don’t follow the region’s corporate developments with microscopic attention, though I wish I could. But Nuqul Group made a powerful impression on me after I read about the group in CIPE’s case study guide Advancing Corporate Governance in the Middle East and North Africa: Stories and Solutions, and listened to Vice Chairman Ghassan Nuqul explain the group’s self-discovery of corporate governance.

In fact, on June 12, CIPE Program Officer Danya Greenfield presented alongside Ghassan Nuqul at the Third Strategic Corporate Governance & Responsibility Forum, which took place in Amman, Jordan. Danya launched the case studies guide and accompanying DVD on a panel that included Philip Armstrong, Head of the Global Corporate Governance Forum (CIPE’s partner in producing the case studies), and Slim Othmani, chairman of NCA-Rouiba (an Algerian company also profiled in the case studies and DVD).

I was not surprised to find Elia Nuqul listed as one of the most powerful individuals from the Arab world. I remembered from the case studies that Nuqul Group had undergone a rapid expansion since its establishment, but found that implementing corporate governance practices allowed for the decentralization of decision-making and formalization of roles and procedures to allow the group to sustain its growth. As Vice Chairman Ghassan Nuqul explained, “I can tell you in my case what developed and what evolved in Nuqul Group was done in response to challenges and actual needs on the ground — and it turned out to be what you call corporate governance.”

I wouldn’t be astonished to find that many more of the 500 most influential Arabs were implementers of corporate governance in their corporations.

For Egypt, investing not spending

Street vendors from Beni Suef, Egypt offer feedback on a draft law governing street vendors at a meeting held by CIPE partner the Federation of Economic Development Associations (FEDA) in May 2011. (Photo: CIPE/FEDA)

John Sullivan has been traveling to Egypt for the past 20 years. As the Executive Director at CIPE, he has keenly followed Egypt’s democratic and economic trajectory and was eager to visit “Misr” following the January 25 revolution.

What he found surprised him in some ways, prompting John to write an article for the Huffington Post describing his impressions and attempting to focus debate on the central issues facing an Egypt in transition. In his article, John highlights the three primary economic challenges confronting Egypt today: revitalizing tourism, renegotiating debt, and harnessing the power of the informal sector.

The revenue lost from this year’s near collapse of the tourism industry is intimately linked to the pressing need for Egypt to renegotiate its debt. Loan concerns have been covered in detail by the press, following President Obama’s speech two weeks ago and the continuous actions of international donor organizations. The third issue he highlights, the informal sector, is less often taken up in analysis. With Egypt’s informal sector accounting for an estimated 35-40 percent of the Egyptian economy and the majority of its workforce, it is an issue that lies at the center of any debate on Egypt’s democratic and economic aspirations.

John calls on Egyptians and the international community to focus on how best to invest in a democratic, market-oriented Egypt:

If Egyptians can think of this…as an investment and use this time to liberate the forces of entrepreneurship, bring in the informal sector, encourage the dynamism of Egypt’s small- and medium-sized companies, and most importantly, to immediately launch skills training programs and a reform of the education system, Egypt stands a very good chance of overcoming many of the issues and barriers that kept it from becoming one of the large, emerging markets along the lines of Brazil or India.

To explain such investment, John draws attention to the work of long-time CIPE partner the Federation of Economic Development Associations (FEDA), a grassroots coalition of small and medium-sized enterprises (SMEs) that has worked to study Egypt’s informal economy and advocate for policies that include these entrepreneurs and businesspeople into the formal marketplace. With CIPE support, FEDA has successfully advocated in recent years for the repeal of more than 500 Ministry of Industry and Trade decrees that were unfavorable to SMEs. FEDA’s work has garnered significant media attention highlighting the business environment for Egypt’s smallest, but most numerous, businesses.

When John and MENA Senior Program Officer Greg Simpson visited Egypt in May, there were signs that Egyptians are moving to invest in the future of their country. FEDA was holding town hall-style dialogues with its members to solicit feedback on a FEDA-led draft law governing street vendors. And independent news source Al Masry Al Youm partnered with CIPE to gather leading thought leaders together to discuss the relationship between political and economic freedoms and the connection between democratic governance and market-oriented reform. Though there is no linear path to a democratic peace in Egypt, investing in the institutions that will underpin participatory government and an adequately regulated economy will ensure that Egypt is on the long path to prosperity.

Building democracy one conversation at a time

The world is anxiously watching Egypt: How will the country reconcile more than 80 million voices so that it can proceed along the path of democracy?

Egyptians now widely recognize that the difficulty of toppling Hosni Mubarak – once seen as an insurmountable challenge – pales in comparison to the complexity of building consensus on the steps necessary to construct institutions of democratic governance for a new Egypt.

CIPE Egypt office staff and partners recognized this challenge early on. From February 22-24 CIPE partners Al Masry Al Youm and the Federation of Economic Development Associations (FEDA) organized a conference at which more than 200 representatives of business associations, political parties, youth and other political movements, think tanks, media outlets, academia, government, and the Supreme Council of the Armed Forces itself presented a set of recommendations on the transitional period and future reforms.

As part of this series of seminars to foster an inclusive discussion on Egypt’s future, CIPE co-sponsored a roundtable with Al Masry Al Youm last week to discuss the relationship between political and economic freedoms and the connection between democratic governance and market-oriented reform. As featured speaker, CIPE Executive Director John D. Sullivan stated,

Our purpose today was to gather together some important thought leaders and to begin to identify the most fundamental issues that Egypt has going forward.

Journalists, academics, political party leaders, youth movement leaders, and business association representatives sought to answer: Why did Egypt’s earlier attempts at market-oriented reform fail to deliver for most Egyptians? And, what democratic institutions will need to be in place for the majority of Egyptian citizens to share in the country’s economic growth and prosperity?

Learn what prominent Egyptians have to say about the need for institutions that support transparency and accountability in Egypt, public awareness about the functions of democratic institutions, and more by watching Al Masry Al Youm’s segment on the roundtable discussion.

Opportunity amid concern in Yemen

Sana’a street just inside Bab al Yemen, Sana'a (Photo: CIPE)

These days, many can rattle off the statistics on Yemen – half of the population in under the age of 18; more than 50 percent of youth are unemployed; per capita income is a mere $1,200; GDP for a country of 24 million is only twice that of Bahrain, a state of just 800,000; and 54 out of every 100 individuals owns a gun. But few can give context to these figures as can CIPE Regional Director for Africa and the Middle East, and Yemen native, Abdulwahab Alkebsi, interviewed yesterday alongside former Ambassador to Yemen Barbara Bodine on the Kojo Nnamdi Show.

Alkebsi emphasized that while there is great cause for concern in light of changing political currents in Yemen, the country has remarkable potential. As Alkebsi underscored, Al Qaeda’s presence in Yemen is a result of the hopelessness of an overwhelmingly young population that is forced to live without political and economic freedoms.

Yemenis need to recover their dignity – through meaningful work and economic empowerment, and the ability to participate in the political process. Recent protests have given Yemenis a seed of hope, but only institutional reforms that address systemic issues such as corruption, arbitrary implementation of the law, unprotected property rights, and a weak education system will create an environment that will allow a possible democratic transition to deliver for citizens.

CIPE has a robust program in Yemen, as Alkebsi mentions, which seeks to break down obstacles to market-oriented reform. Destructive Beast, a CIPE-produced documentary film, not only highlights the destructive effect of corruption on the Yemeni economy, but offers constructive solutions to jumpstart a debate on policies to combat corruption.

Entrepreneurship, civic education, economic journalism, and corporate governance work have also placed CIPE and its partners at the intersection of local efforts to promote economic and political reform in Yemen.

Though Yemen is often discussed as a failed state, Alkebsi points out just a few of the advantages Yemen has in its back pocket: the Yemeni diaspora has capital to invest in the country and assets such as the Aden port can blossom – should the investment environment improve and security be ensured.

Listen to Alkebsi and Bodine discuss these topics and more – including religious, territorial, and security issues in Yemen as well as the challenges facing a political transition.

Cheat sheet for reformers: New corporate governance case studies

Masses of people in Cairo's Tahrir Square during the protests earlier this year. Can private sector experiences with improved governance provide reformers a roadmap to meet protesters' demands? (Photo: Flickr user YaZzZz)

Calling all Middle Eastern reformers! Download and share your copy of CIPE’s newly launched publication, Advancing Corporate Governance in the Middle East and North Africa: Stories and Solutions. Take cues from these models of good corporate governance and deduce the benefits that politically-inclined good governance could reap for your state!

For instance, when reading this lesson learned, substitute “government/state” for “company/corporation,” as well as “officials” for “employees,” and…well you get the idea:

“The company’s state’s transparent practices have attracted high-caliber employees officials, which the vice chairman president emphasizes is a main factor contributing to the company’s state’s success. Employees Officials are fairly compensated according to corporate government policy, and are clearly informed of the paths for advancement within the company government. The corporation government is structured so that, even though the company state is family-founded owned and managed, any capable person can move up the ranks, even to the level of CEO president.”

Diagnose the common ailments of your state administration. Such as,

“For family-founded businesses states…the board legislature sometimes acts only as a formality. In this structure, boards legislatures tend not to operate in a strategic manner but rather perform functions according to what is legally stipulated by law, such as approving financial documents. Board Cabinet meetings tend to be infrequent and short, occurring perhaps one or two times a year. It is common to find the board cabinet comprised strictly of family members, or occasionally close friends who are accomplished in their careers and trusted by the family. Those on the board cabinet also tend to be employed in positions of top management in the company administration as well as being owners stakeholders.”

What can corporate governance do to correct this imbalance? Try these changes:

“In order to function effectively and provide strategic guidance for the company state, the board legislature and cabinet must be comprised of people with the right know-how and independence of judgment to guide senior management decision-makers. This often means that the board legislature and cabinet need to expand beyond family members and bring on independent directors representatives.”

Ultimately, CIPE’s guide notes that,

“Many family-run businesses states never consider having a non-family CEO president.”

But as one case highlights, a company state is most successful when,

“The CEO president does not exercise corporate power unilaterally, but rather executes the wishes of a well-functioning board legislature, which, in turn, represents shareholders citizens. As a number of family-founded businesses governments have discovered, it can be better if the CEO president is not a family member, particularly in the second and third generations and beyond. An effective CEO president may be found within the family, but seeking a CEO president from outside the family can widen the available talent pool, as well as minimize or prevent friction between various parts of the family….Family members can, in the absence of specific policies outlining performance expectations, take their positions for granted and fail to exert maximum effort.”

How can your country obviate head of state succession crises?

“The idea of a family state constitution…can help family-founded owned businesses states navigate these challenges by…setting up mechanisms to transition.”