While the situation in the Middle East is fluid and the future is quite uncertain, it is clear that good governance and transparency will be key ingredients for a successful transition to more representative political systems. Just as the political leadership must rise to reach this higher threshold, so too will the private sector as it responds to the backlash against corrupt businesspeople who siphoned millions from the public.
As a resource for businesses looking to reach that higher threshold, CIPE and the Global Corporate Governance Forum have just released a new guidebook and accompanying video, Advancing Corporate Governance in the Middle East and North Africa: Stories and Solutions. The rampant corruption, self-dealing, and lack of accountability that corporate governance seeks to address are exactly the problems that have enraged prompted thousands of ordinary Egyptians, Tunisians, Yemenis, Bahrainis and others to take the streets and demand reform and political change.
The new governments that emerge in the wake of these revolutions – and existing ones that pledge reform – will need to respond to the legitimate demands of its citizens and be accountable for its decisions and actions. With tainted business tycoons and crony capitalists of the regimes under attack by opposition movements and protesters, it is critical that business leaders engaged in legitimate and productive economic activity –which is the vast majority of the business community — demonstrate firm commitment to transparency and combating corruption. CIPE’s partners in Egypt and elsewhere are leading the charge.
One way for businesses to achieve that is by incorporating sound corporate governance practices that ensure proper mechanisms are in place to uphold the core principles of fairness, accountability, responsibility and transparency. Such practices include equal and fair treatment of shareholders, disclosure of financial records, addressing conflicts of interest, and setting clear employment policies based on merit not connections. The resource that CIPE and GCGF developed is a practical guide that describes how companies of different types and sizes in the Middle East and North Africa region were able to overcome challenges and improve their corporate governance practices through a gradual process.
As these new governments increasingly look to the private sector to respond to pressing economic needs and stimulate job growth, the business community has a unique part to play in promoting values of accountability, fairness, and responsibility. This new role will help to advance democratic institutions and strengthen business ethics to the benefit of the public sector, the private sector, and the general public.
Protesters gather outside the National Theater on Bourgeiba Street in Tunis. (Photo: CIPE/Pamela Beecroft)
Citizens in the Middle East have made it abundantly clear that they will no longer tolerate authoritarian rulers who have curbed freedoms, mismanaged economies, and allowed corruption to permeate society. Following political transitions in Tunisia and Egypt, calls for reform are reverberating across the Middle East – from Bahrain to Jordan, and from Lebanon to Yemen.
What is not clear is whether the transitions underway will remove one class of corrupt cronies and authoritarian rulers, only to retain the same social contract between leader and citizen – with the people continuing to look to government to provide jobs and welfare rather than to provide a conducive environment for entrepreneurship and market-based prosperity. The perilous populist policies that are being demanded, considered, and adopted in the current fervor may result in capital flight, loss of more jobs, economic turmoil, and a return to unilateral decision-making.
In his Economic Reform Feature Service article, CIPE Regional Director for Africa and the Middle East Abdulwahab Alkebsi focuses on Tunisia, arguing that the private sector’s immediate and dedicated engagement in reforms is crucial for Tunisia to transition into a democracy, attain its development goals through private sector-led job creation, and gain its place as the economic powerhouse of the region.
Article at a glance
Populism and centralized decision-making authority threaten to undermine Tunisia’s transition to democracy.
Rather than turning to the government for unilateral decision-making and to the public sector for employment, reforms should remove legal barriers that prevent the private sector from becoming the engine for job creation.
To be successful, Tunisia’s transition must encourage participation from a broad range of society, including business associations, other civil society organizations, and political parties.
In the United States it seems like you can’t do anything these days without being asked to partake in a survey. These range from the practical email survey from an airline asking you to rate the service on a recent flight (VERDICT: fair, verging on poor), to the mundane survey question posed on your friend’s Facebook profile (VERDICT: Diet Coke is better than Diet Pepsi). Simply put, surveys are a staple of our everyday lives. In the policy arena as well, the US government, think tanks, and NGOs have regularly used surveys to gather data on various topics in an effort to better delineate policy priorities.
It now seems that Turkey is picking up on the trend.
Voting in Morocco. The poster on the blackboard in the background is of Morocco's King Mohammed VI (Photo: WN.com)
As Egypt and Jordan gear up for parliamentary elections this fall, important questions linger over each contest. Will Egyptian authorities interfere at polling stations? How will the boycott of Jordan’s largest opposition group, the Islamic Action Front, affect the integrity of the vote? The answers to these questions, and many others, will determine the narrative of how Arab dictators sell democratic processes within their own countries and to the outside world. But we shouldn’t ignore what happens in the lead up to elections – how candidates reach out to citizens and how citizens in turn react, or fail to act, at the ballot box.
October 17th is once again the International Day for the Eradication of Poverty. This year’s theme is “From poverty to decent work: Bridging the gap.” Small and medium-sized enterprises (SMEs) are prime candidates to create sustainable work for the poor, but they face many obstacles including corruption and cumbersome business environments. Yet in a 2009 Survey on the Business Environment for SMEs in Egypt, CIPE found that not all SMEs surveyed had to pay bribes as part of licensing and registration, and those that didn’t pay bribes actually went through the process faster, on average, than those that did. How could that be?
Dr. Shiltag Abood, Governor of Basrah Province, speaking at the Basrah Provincial Business Agenda Presentation. (Photo: CIPE)
If you look past the news reports that conjecture Iraq is destined for failure and into the places where Iraqi private sector leaders and policymakers are convening to discuss policy, I wonder if it could be said that Iraq is doing relatively better with the task of building a democracy than say, France in its early days. When the French Revolution ended in 1799, the French were sure that never again would they live under an absolute monarchy that ignored their inalienable rights. Yet France still saw the rise of a dictator, two restorations of the monarchy, and two more revolutions. It wasn’t until 1958 that the France we know now was established as a democracy. With a world of stakeholders and a world of history from which to draw lessons behind them, Iraqi leaders might actually have a democratic advantage.
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.