• Donate
  • Our Purpose
  • Contact Us
Executive Magazine
  • ISSUES
    • Current Issue
    • Past issues
  • BUSINESS
  • ECONOMICS & POLICY
  • OPINION
  • SPECIAL REPORTS
  • EXECUTIVE TALKS
  • MOVEMENTS
    • Change the image
    • Cannes lions
    • Transparency & accountability
    • ECONOMIC ROADMAP
    • Say No to Corruption
    • The Lebanon media development initiative
    • LPSN Policy Asks
    • Advocating the preservation of deposits
  • JOIN US
    • Join our movement
    • Attend our events
    • Receive updates
    • Connect with us
  • DONATE
North Africa

Bottling cash

by Executive Staff July 25, 2008
written by Executive Staff

One of the world’s greatest rivers passes through Africa’s newest capital. Unlike much of the dry country, mango green Southern Sudan’s Juba does not look like it should have water problems. But the river is more than just murky; it is reputed to contain a wide variety of waterborne diseases.

Most certainly — and most seriously — it carries cholera, the bacteria that has thousands in agony every year and kills dozens. Bottled water was one of the first products trucked in after the 2005 peace accord and because anyone with money will not risk drinking any other water, it became one of Juba’s most lucrative businesses. The cost of the product was also one of the first to stabilize across the town and then go down as a growth in the number of distributors pushed down prices for businesses buying the plastic bottles.

Three and a half years out of a war that lasted more than two decades, Juba is still without any kind of treatment plant. There is little left of a colonial-era water system that was further destroyed by recent road-building efforts by the semi-autonomous southern government.

Juba’s residents get raw water trucked in from the Nile for showers and taps. Blue barrels, originally used for storing and transporting corn syrup, are common in most households. Filling these, around 200 liters, costs $2, however the barrels are often decorated with growths of brilliant green algae, and boiling the water sometimes produces a strange scum. 

Few would choose to drink the water that is often thick with silt. More than one has complained of worms rushing out of taps and showerheads when the water is turned on.

Another can of worms altogether is the problem in those parts of the South that are endemic to Guinea Worm, a three-foot (one meter) long parasite that looks like cooked spaghetti and grows in the human body, wrapped around muscle tissues. It pushes its head out of a blister, usually on the arms or lower legs, after around a year of growth and on contact with water ejaculates around a million fertilized eggs into the water source. When these are drunk the life cycle continues.

Like cholera, Guinea Worm smacks of the mediaeval, and the South has far more than its fair share. When the American Carter Center — formed by U.S. President Jimmy Carter — first got involved with preventing the spread of the disease in 1986 there were 3.5 million cases. By 2006 only 25,217 cases were recorded in the world. Over 20,000 of those were in Sudan.

A study by Juba’s branch of the Red Crescent found that many of the town’s boreholes — far too few for its growing population — were also contaminated with E. coli bacteria. It’s presence in borehole water is used as an indicator of further contamination.

What the wealthy drink

Hotels and richer households commonly use bottled water not only in kettles but also to wash vegetables and fruit.

“We get through dozens of bottles everyday, in the kitchen,” said Bhandari Guruvir, Indian manager of the Sunflower Inn. A sub-manager of the Juba Raha Hotel — at three years new one of Juba’s oldest — said the cost of water is so high that Raha and a group of other hotels in partnership wanted to build a mini-water treatment plant for their use only.

Like Juba’s international and national aid and development workers, businessmen and everyone else who can afford it, the government from ministers to low-ranking civil servants, is dependent on bottled water. Thousands of crates are trucked in every month from east Africa.

Unlike neighboring Kenya or Uganda, where anyone with a steely stomach can drink from the tap, southerners prefer to drink Rwenzori, Aquasipi or other East African brands which, used up and flattened, pave the roads of Juba Town and stack up in banks on their sides.

While water is a great expense for Juba’s hotels and restaurants it is also a money-maker. Most of the flattened bottles and the giant translucent plastic rubbish piles that have been dumped on the road out of town hold a mere 500 ml. In Juba’s heat these small bottles represent only one sixth the recommended daily minimum water intake but are by far the most popular. Part of hospitality across Sudan — whether in the south or north — demands the provision of water and many offices or homes will provide the visitor with one of the small bottles.

Many expensive restaurants charge two Sudanese pounds ($1) for one of the little bottles. Shops and cheaper restaurants charge half that and the lack of small change in the new currency introduced in 2006 has driven up prices that lack graduation. But even this cheaper price is still more than twice what the mostly Ugandan brands cost in their home country.

“Bottled water is the most environmentally harmful, economically inefficient and wasteful way of providing drinking water to a population,” Sam Huston, a water engineer working in the South for an international NGO, said. “These small bottles are the worst.”

But so far there is little choice and, with the small bottles, vendors provide a thirst-quencher that is easy to handle and light.

Already this year 5,878 cases of cholera across the South have been reported with 44 deaths. The bacteria responsible for the disease, which killed many thousands in Europe in centuries long past, live and multiple not only in the human body but also in water.

The local government and the UN children’s agency UNICEF have  tried to reduce the spread of cholera through regulating the water trucks, including registration, chlorination of the tanks and controlling where the truckers collect water. But so far they have been unable to stop the tankers filling up where it is easiest — beside the river. Attempts to get small businesses to take over the management and maintenance locations where the tankers can collect clean water have not yet succeeded.

Cholera figures this year are smaller than in the past two years, around 8,000 cases in 2007 and 20,000 in 2006. Figures are not known for the wartime, but health workers think the crowding of urban areas with former refugees and displaced people and a vastly increased amount of travel are partly  responsible for the high caseload.

Almost nothing home-made

The South produces little but crude oil, and everything from cooking oil to soap is imported — water is no different.

“We bring up and distribute up to 3,000 cartons a week,” said John Wosuk, a southerner working for Shalom, a Ugandan-owned distribution company.

Each carton of Juba’s favorite Rwenzori product — 24 bottles of 500ml — sells for around 14 Sudanese pounds ($7). The cartons are purchased for around $6 at the factory in Uganda and after transport over the rough roads of the South and passed through the as-yet unregulated customs system there is little profit left, although there is increasing demand and always new business to be found whether for new non-governmental agencies, hotels or consular offices. 

Rwenzori — with its attractive and robust-looking bottle — is still the most-asked for water, hotel managers say. It is also the most common type of water on sale and was the first company to enter the market almost as soon as the peace deal was signed.

The bottle’s distinctive shape has also worked its way into many small home grown industries: now liquid soap, car oil, cooking oil, kerosene and numerous other products are sold in the bottles. But Wosuk said there is also another reason for the hundreds of empty bottles collected by street children.

“Some people are trying to make fake water using the empty Rwenzori bottles,” Wosuk said. Bottling, unfortunately, is at the Nile banks. Newer brands have benefited from this and Wosuk said companies like Aquasipi and Hemma are making their mark.

Also growing in popularity is JIT water. The 1.5 liter bottles, decorated with an unlikely looking green island next to a lake, are taking over from the large Rwenzori bottles in most of the small roadside shops.

This water is Juba Nile Water but has been through a reverse osmosis process (the same technique used for desalination — water molecules are pushed through a membrane to a more pure solution, the reverse of normal osmosis) and treated using ultraviolet light that breaks down micro-organisms.

Others, faced by the difficulties of transport — nothing reached Juba from Uganda for a month last year when an underground spring flooded the road — and its high cost are also planning similar plants.

Shalom’s parent company Mkwano — a massive company producing a wide range of soap, oil and other domestic products with 400 distributors in the region — is also interested in setting up its own factory.

“Of course there are issues, or raw materials and land availability,” Wosuk said. But becoming independent from overland supply is crucial. He remembers when the road became a giant lake in 2007. “We just came to the office without doing anything.”

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
North Africa

Mining Pharaoh’s fortune

by Executive Staff July 25, 2008
written by Executive Staff

The Egyptian government is working with the World Bank to update its mining legislation, in the hope of drawing international investors to the country’s untapped gold reserves.

The International Finance Corporation (IFC), the private arm of the World Bank, has been working with the government since last year on the new legislation, which is expected to see the sector move toward a greater emphasis on royalties and taxes, as well as a greater stream-lining of bureaucracy. According to Amgad Ghoneim, undersecretary for mineral resources, the new laws will be ready within the next three months.

The current legislation requires foreign companies to enter into joint ventures and production sharing agreements with the government. The practice is common for the oil and gas industry, but makes gold exploration a risky business. Mineral deposits are harder to determine than oil and gas plots, making gold miners uneasy about entering into long-term agreements without a comprehensive understanding of a block’s potential. According to Frank Sader, senior operations manager for Middle Eastern policy reform at the IFC, under the current system more than half of a company’s revenues end up going to the Egyptian government.

“We realize that the legislation in place is not satisfactory for foreign operators,” says Ghoneim. “The new legislation will make us more attractive to foreign investors who want to operate in the Egyptian gold mining industry.”

A handful of gold mining companies already operate within Egypt. The Australian-Egyptian company Centamin runs an open-cut mine at Sukari, in southern Egypt’s Red Sea hills area. Hemsh Egypt, a joint venture between the government and Cyprus-based Matiz Holding, is also operating in the country, as is SMW Gold, a subsidiary of the international firm SMW Engineering.

Time to mine

In 2007, Centamin estimated that the Sukari deposits contained some 9 million ounces of gold, worth around $6 billion at the time. With commodities currently experiencing a bull market, the Egyptian government has clearly decided it is time to exploit the nation’s potential for gold. The Ministry of Petroleum and Mineral Resources recently announced plans for the creation of a new company to explore gold reserves in the country’s eastern desert.

Sameh Fahmi, Minister of Petroleum and Mineral Resources, said on the ministry’s website that after establishing the new mining corporation, the government would sell part of its shares on the open market in order to fund feasibility studies for other potential gold mining plots.

Greater liberalization of the sector is being welcomed by the industry. According to Karim Matar, managing director for SMW Gold in Egypt, the new reforms will “reduce government intervention in the sector and allow it to develop faster. There is huge potential”.

One issue yet to be resolved though involves complicated licensing procedures that can hold mining operations back. Exploration permits for land plots need to be obtained from such diverse authorities as the ministry of petroleum and mineral resources and the Egyptian army. “There is a lot of overlapping,” says Matar. In addition, input prices for the sector are currently high due to a global shortage of parts and labor.

“There are not too many companies that can do drilling, for example, and that means they can charge more for their services,” Matar says, adding that most senior gold mining engineers currently operating in Egypt are foreign.

Despite the challenges, there is already extensive interest in Egyptian gold from a number of companies. SMW Gold plans to spend $15 million during 2008/09 in order to develop two concession blocks in the eastern desert, at Um Balad and El Fawakheir. Having completed initial studies, the company is in the process of testing mineral samples and plans to start drilling this summer. Meanwhile, Josef El Raghy, the chief executive officer of Centamin, recently told local press that five of the world’s top 10 gold producers had visited Egypt in the last two years.

“There are definitely lots of mining opportunities here,” says El Raghy. “The key to unlocking them is in applying the new framework. Reform is long overdue.”

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
North Africa

Trade sails to Europe

by Executive Staff July 25, 2008
written by Executive Staff

With the lifting of the last remaining customs barriers, Tunisia’s free trade agreement with the European Union forcefully entered into effect on January 1, 2008, opening a range of prospects to the Tunisian economy. Public opinion, however, is proving mixed regarding its effects.

According to the terms of the agreement, Tunisia stands to benefit from importing products that are produced for less in Europe. In turn, Tunisia can concentrate its own production domains where it is more competitive, like olive oil. With this new partnership, the Tunisian government could also consider pressing for free circulation of workers between Tunisia and the EU.

The Tunisian Minister of Industry, Afif Chelbi, highlighted that with this FTA, “Tunisia becomes the first country of the southern shore of the Mediterranean to have finalized the various stages of setting up a free trade zone with the European Union.” In a press conference, Chelbi lauded the success of the gradual process of opening. This process was spread out over 12 years in conformity with the Agreement of Association concluded between the EU and Tunisia in 1995, which entered into effect in 1998. The cancellation of tariffs only concerns customs laws, whereas local taxes (consumption tax and VAT) are maintained.

Chelbi celebrated the historical achievement of modernization. This success is illustrated by the performance of two key sectors of the Tunisian economy: textiles and the mechanical and electrical industries. Textile exports increased from $1.7 billion to over $4.2 billion in 2007, while the revenues of the mechanic-electronic sector improved by 100%, reaching $4.4 billion in 2007.

Calling on these figures, the minister clarified that globally, Tunisia has quadrupled the value of its sales in Europe to $3.8 billion, even as imports of common products only tripled, meaning a reserve ratio of more than 98% in 2007. Furthermore, the volume of foreign direct investments was multiplied by seven, the number of businesses created in partnership with Europe increased from 40 to 160 per year, and more than 2,000 European companies are currently operating in Tunisia.

Tunisia’s competitive edge

Outsourcing EU businesses, prompted by fierce competition from Asia and rising production costs in Europe, are increasingly attracted to Tunisia citing high local potential and brief waiting periods as advantages in opening Tunisian operations, as well as geographical proximity to Europe. Customs duties erased by the agreement will be replaced with local taxes, and the minister indicated that the prices of imported goods from the EU will be maintained at the same level for Tunisian consumers.

Fatma Oueslati, director of European cooperation, indicated that a new politics of active macroeconomic accompaniment is being set up. The system of multi-sector reforms aims both to protect the country against potential risks and to maximize the benefits Tunisia will derive from the opportunities afforded by the new free trade zone of industrial products. Tunisia has also recently begun negotiations with the EU concerning the liberalization of agriculture and services.

Tunisia has enacted numerous accompanying programs to secure safe passage into the agreement, notably the National Plan for Upgrading Industry, the Plan for Industrial Modernization (PMI), and the Fund for Accessing Exterior Markets (FAMEX). These reforms have society-wide impact and touch all domains of economic activity, such as the progressive liberalization of commerce and foreign trade, fiscal reform, promoting communications and new technologies, and the modernization of ports and airports. Other modernization reforms include those introduced in the banking sector, universities, education and job training, transportation, and the setting up of regional business centers.

Some Tunisians, perceiving the FTA as a double-edged sword, are calling for caution. Monia Jeguirim Essaidi, Director of the Center for Young Leaders, noted that “Tunisian businesses may now underwrite the effective promotion of their products in Europe, but solely on the condition that they modernize their tools and their production processes.” Others see new horizons for growth and hope. The General Secretary of the Association of CEOs, Hedi Jilani, thinks that the country has crossed a new frontier, “full of challenges and rich in promises and ambitions.”

Yet, other politicians and executives do not share this optimism. Moncef Mouallehi, President Director General of a private business, warned that “this agreement is made to the detriment of the Tunisian labor market and the number of unemployed will increase.” The opposition Party of Democratic Union (Parti d’Union Democratique) is concerned that this agreement will only widen the economic chasm between Tunisia and the EU. “In the absence of protections, Tunisia and similar countries will content themselves with being consumption markets for products from the European industrial machine, for as long as citizens hold onto their purchasing power,” it noted.

Tunisia must allay these anxieties and reinforce its economic and commercial integration into the Euro-Mediterranean sphere of business and commerce. In order to  successfully achieve these results, Tunisia will rely upon bilateral free-trade agreements signed with Morocco, Jordan, Turkey, the European Association of Free Trade (Norway, Switzerland, and Iceland) and the Agadir Agreement.

In this way, Tunisia can strategically assure its successful integration into regional and global economic domains, carrying the aspiration for qualitative advancement and for a market that is orchestrated around the best interests of the country’s development.

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
North Africa

Nomadic telecoms

by Executive Staff July 25, 2008
written by Executive Staff

In San Francisco, a “bedouin” is a young urban freelancer, saddled with the latest in laptops and cell-phones, who has traded in the sedentary lifestyle of the office for the nomadism of frequenting wifi cafes. In Mauritania, a sparsely-populated desert country on the Atlantic coast of Northwest Africa, the number of nomads is actually shrinking as drought and urbanization sedentarizes the original bedouins. Those who preserve this ancient way of life, however, are benefiting from their first-ever access to cellular technology.

With telecommunications markets in Europe and North Africa reaching saturation levels of over 100%, providers are looking for growth in sub-Saharan Africa. Phones are rapidly penetrating Africa’s remotest regions, as European and Arab companies compete to tap into one of the world’s last remaining non-wired areas. Improvements in cellular technology have facilitated penetration of these regions, opening them up to communications and information-sharing on an unprecedented level.

A decade ago Mauritanians had to wait, on average, two years for installation of a landline; today, advancing technology and the falling costs of calls and mobile handsets mean that modern forms of communication are more accessible than ever before. The capital Nouakchott’s mobile market features the latest Nokia, Siemens, and Motorola handsets and accessories imported from Europe.

Connecting the economy

Beyond the social and educational benefits of improving communications, the dynamic African telecommunications sector is attracting major foreign investment flows and creating thousands of new jobs in the formal and informal markets. National economies swell by billions of euros through according operating licenses and privatizing state-owned companies.

Industry analysts expect to see the West African market double by 2011 to more than 100 million subscribers. Mauritania’s cellular penetration rate is by far the highest compared to its West African neighbors. A 2003 study uncovered low rates of penetration in Senegal (5.7%), Mali (2.1%), and Burkina Faso (1.9%), while penetration had already reached 13% in Mauritania. Overall, West African penetration is picking up, with the number of GSM users increasing by 58% between 2005 and 2006. Between 2003 and 2007, penetration in Mauritania more than doubled and the most recent study (December 2007) places the rate at 43%.

Noreddine Boumzebra, CEO of Mauritel, attributes the success of mobile communications in Mauritania to the nomadic character of its population. “Mobile services are well adapted to the expectations of the Mauritanian population, who have maintained strong traditions of communication and displacement, which explains the growing success of mobile services in Mauritania,” he said.

Promising potential for growth in the region attracted a series of high bids for operating licenses in Mauritania, three of which have currently been accorded.

Mattel, a Tunisian-Mauritanian subsidiary of Tunisie Telecom, became the country’s first cellular provider in 2000, for a bid of $28 million. Mauritania was the first foreign venture for Tunisie Telecom. “It was a market to conquer,” said Yassine Messai, Director of Services, Offers and Products at Mattel. “Like every mobile operator, we wanted to extend our activity outside of our own country.” The company grew to have 450,000 subscribers by the end of 2007, covering more than 40% of the country’s GSM market. Its strong points are wide network coverage and seniority. Mattel plans to accommodate the nomadic nature of the population by offering ultra mobile services in the future, which will provide customers with a reliable and mobile communications service as they travel between different areas. Mattel currently offers a broad range of pre-paid, post-paid and roaming GSM services.

In 2001, Maroc Telecom became the second provider to enter the market, with its acquisition of 54% of the capital of the historic Mauritanian provider Mauritel in an international bidding process. After ceding part of its capital to the business’s workforce, Maroc Telecom retained control in 2007 of 51% of Mauritel’s capital.

Sector dominance

Mauritel is currently the leading provider, covering 65% of Mauritania’s subscribers and with the greater number of service localities. The company is focusing on streamlining its fixed, internet and mobile technologies. “This fusion will create more synergy between services and a better mutualization of resources, thus optimizing costs, which will allow us to offer services at highly competitive prices to the profit of our clientele,” Boumzebra indicated. Other projects include the construction of transmission dorsals on all the country’s main roads, a fiber-optic liaison between the political capital Nouakchott and economic capital Nouadhibou, and the introduction of 3.5G, the latest generation, into the country. Code Division Multiple Access (CDMA) technology is also in the works, which will pave the way for GPS and transportation logistics in the country’s remotest regions.

In a surprising turn of events, the Mauritanian Regulating Authority awarded a third GSM license in 2006 to Chinguitel, a joint venture between private Mauritanian investors and Sudan’s public telecommunications operator Sudatel. Sudatel’s colossal bid of $101 million US was more than four times what Mattel paid for the first accorded license, and nearly as much more than the next highest bid of $34.8 million US, by France Telecom. After a service delay of eight months, Chinguitel forcefully entered into the competition with its launch of the first 3G services in Mauritania. Emmanuel Hans, Chairman of the Board at Sudatel, said at the time that Chinguitel is meant to promote “an image of Sudan different from the clichés about Darfur, which pains us a lot.”

Currently, there are approximately 800,000 subscribers in Mauritania, which represents a penetration of only 43%. Sudatel’s mammoth bid and the apparent restriction of market entry to Arab-African providers somewhat substantiate rumors of procedural irregularities in the according of licenses. On the other hand, some see telephony’s penetration of Mauritania as a successful example of the benefits of South-South cooperation, both for effectively spreading technology through remote African regions and for generating revenue for developing economies, like those of Morocco, Tunisia, and Sudan.

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
North Africa

Rekindling a cultural Mecca

by Executive Staff July 25, 2008
written by Executive Staff

At the Festival of World Sacred Music in Fes, artists and scholars from all over the world converge on this ancient Islamic capital to ruminate on the sacred and its relation to modernity. American gospel singers, Sufi brotherhoods, French postmodern philosophers, Jewish psychoanalysts, Lebanese Maronite Christians and Vietnamese Buddhists are just a fraction of the various groups represented at the Festival’s three events, which aim to promote intercultural dialogue and to advance an understanding of spirituality as inclusive and pluralistic. A more material objective of the Festival is to shine a spotlight on Fes, which is emerging in recent years as a tourist destination with high potential for investments and hospitality.

A nation-wide movement to generate 20% of GDP from tourism by 2010 is pumping new flows of investment into a city considered by many to be a cradle of Islamic civilization in the Maghreb. Years of neglect have taken a visible toll on the nobility of this ancient medina, whose ramshackle poverty poses a stark contrast to the sacred aura of sanctuaries like Al Qarawiyin University and the Madersa Bouanania. The Festival of World Sacred Music and similar cultural festivities form part of a broad campaign to transform the demoded medina of Fes into a hot spot for travelers seeking an out-of-the-ordinary experience.

“The Fes-Boulemane region is a very important tourist destination, of primary importance on the national scale,” said Lamia Hanoune, press officer for the Regional Center of Investment (CRI) in the Fes-Boulemane region. “The Program for Developing Regional Tourism in Fes perceives festivals as a cardinal asset, in the sense that they translate and valorize the patrimonial, spiritual, cultural, and gastronomical riches of the Medina of Fes.”

In addition to hosting the Festival of Sacred Music, Fes’ other annual offerings include Jazz in Riads, the Festival of Amazigh (Berber) Culture and festivals of Melhoun and Andalusian music. According to the Fes CRI, the amount of global investment projects in the Fes region reached a total of $1.36 billion in May 2008, with tourism-related projects accounting for 27% of the 79 projects involved.

A tapestry of heritage

Moroccan culture, a unique blend of Arab, Berber, Andalusian, Jewish, and sub-Saharan influences, has been drawing foreign visitors for more than a millennium. Fes, which celebrates its 1,200th birthday this year, was historically the cultural and spiritual capital of Morocco, world-famous for the scholarship and art in its two bustling medinas.  In the 20th century, as Casablanca and Rabat became the new economic and political centers of modern Morocco, the money and power that infused these capitals drained out of Fes, which fell into a period of stagnation and decay. Today, this humbled city is badly in need of an extreme makeover.

It was not until 2001 that authorities started to see potential in the old imperial city, as just-coronated King Mohammed VI advanced his socio-economic development plan, Vision 2010, in which tourism plays a prominent role. The plan aims to welcome 10 million tourists a year to the kingdom, creating 600,000 new jobs, and bringing in $14 billion of investment. Under the plan, the tourism industry will grow to constitute 20% of the country’s GDP by 2010. Although the 9/11 attacks contributed to a brief downturn in tourism, indicators were quick to recover, and have since been steadily approaching their targets. Between 2001 and 2007, the number of tourist arrivals nearly doubled, with the kingdom hosting 7.4 million tourists last year, compared to 4.4 million in 2001.

Many tourists choose Morocco for its warm, sunny weather, Mediterranean beaches, and close proximity to Europe (these features being enhanced by the kingdom’s political stability and cultural openness towards foreigners). Nearly all Moroccans speak French or Spanish, and top-notch accommodations are easy to find and cheaper than their European counterparts. But what really sets Morocco apart as a tourist destination is its rich Oriental/African culture. The Festival of Sacred Music and similar events, in celebrating this cultural history, at the same time, propel it into the future.

Ali Diouri, the Festival’s Director of Production, sees a synergy between the culture of the city and its spirituality. “The city has a soul — one feels it. Culture and spirituality go together: spiritual inspiration leads to artistic inspiration,” he said. And while Fassi spirituality is decidedly Islamic, it has always been hospitable towards other religions and cultures. The Festival seeks to reflect this openness. “This is a festival of sacred music from all religions, from all cultures,” Diouri pointed out. “We are succeeding in promoting the message that all religions and all cultures sing of one thing, the same euphoria… The city of Fes has always inspired a sense of peace.”

During the one week of the Festival of World Sacred Music, blessed with a robust global budget of $1.89 million, up to six times the normal number of tourists come to Fes. Organizers estimate this year’s attendance at 30,000, reaching 80% of capacity. The Festival and similar events are breathing new life into the medina and laying the groundwork for further social and economic development of the region, which posts high levels of poverty, crime and unemployment.

Need for social development

Poverty stains the city, creating uncomfortable contradictions between the wealth of foreign visitors in Fes for a good time and the misery of citizens who dream only of leaving the country. The development of culture requires decent living conditions, as an old Moroccan proverb reminds us: When the belly is full, the head will sing.

New efforts are already underway. The National Initiative for Human Development (INDH) has invested more than $30 million in human development projects since 2005, with a budget of $13 million for 2008. Mohammed Gherrabi, governor of Fes, called such efforts “overwhelmingly positive, in the sense that they permit the improvement of the living conditions of the population, reinforce the principal of good governance, and implicate and integrate citizens into the economic life of the city, anchoring their confidence in the future.”

Foreign and national investments are stimulating the local economy and creating jobs, as well as renovating antiquated structures and improving human resources capacity. Local press reports that in 2007, $1 billion was invested in the tourism sector, allowing for the creation of more than 13,000 jobs. Global hospitality magnate Accor Group, present in over 100 countries, supports the Festival of World Sacred Music through its Moroccan partner organization Objectif Maroc. A European leader in the hotel industry and a global leader in services, whose hotels include the ubiquitous Sofitel, Novotel, and Ibis chains, Accor Group’s expanding influence in the region is improving human resources potential by bringing the world’s most modern and professional services and training programs to the regional tourism industry.

Impressive growth in business creation proves that social and economic development efforts are already paying off. According to Fouad Ouzzine, director of the Fes Regional CRI, in 2007 a total of 2, 327 operating permits were granted to entrepreneurs (up 10% from 2006), creating 1,000 businesses (up 36% from 2006). From 2003 to 2007, each year has seen an average increase of 33% in terms of business creation.

Mike Richardson’s three-story Café Clock has barely been open a year, and he has already bought a neighboring riad into which he plans to expand his business. He finds that the city’s cultural heritage and spiritual identity are strong assets that enhance its economic potential. Café Clock’s concerts, henna sessions, and art exhibitions succeed in drawing both tourists and locals, with tourists constituting a slight majority (65%, in his estimate) of his clientele. The Festival of Sacred World Music doubled his business. “I came to Fes to buy a house, but now I’ve realized how important the cultural side is. Moroccans love to be entertained… and there is a collective hurtling toward modernity.”

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
North Africa

Betting on better borders

by Executive Staff July 25, 2008
written by Executive Staff

Oujda, flanked by the Algerian border and the Mediterranean Sea, is Morocco’s potential gateway to the East. Geographically cut off from the rest of Morocco, separated by a five-hour train ride from the nearest major city of Fes, Oujda should be developing its trade with Algerian border cities. But since the 1994 border closing, the Eastern region has been forced to deploy other strategies to develop its economy, buoyed largely by public spending to the tune of $40.8 million. Currently, there are plans to develop strategic infrastructure projects that aim to facilitate economic growth and the spread of ideas.

With no formal trade with its Algerian neighbors and an only insignificant black market trade, the Eastern region has earned the sobriquet of the Maghreb’s Strasbourg, modeled after the interesting positioning of its Franco-German counterpart.

In some ways Oujda remains a small case study on the larger questions of social and economic development in Morocco. With a regional population of some two million, dominated by under-25 year olds who make up 57% of the total, Oujda has the possibility to channel its abundant population, numbering 430,000 in the city comparable to the next highest figure of 133,000 in Nador, into an engine of effective human capital.

When examining the city’s and the region’s economic prospects, one finds that the city is doing better than expected, but recent moves toward rapprochement between Algerian and Moroccan authorities could open up even greater possibilities for the land-rich region.

Human capital

Université Mohammed I Oujda remains the region’s premier institution in fostering the burgeoning and young population. The university remains dedicated to investing in its students who come to study tourism, industry, and transport/logistics. For those who make it through the undergraduate and graduate programs few options are available: they can choose underemployment, find suitable work in Morocco’s more prosperous cities, relocate abroad with enough passion, or choose to engage with industries and firms involved in developing operations in the sea-hugging region, especially with maritime projects on the rise. Nador, one of the region’s main cities ranks second in passenger traffic in Morocco and the region as a whole enjoys a close proximity to Spanish enclave Melilla and the Iberian Peninsula, 200 km by sea.

One push by the government and local educational institutions is to fuel growth in supply for research and development (R&D) projects in the region, demanded to a large extent by an increasing number of European firms, who are choosing North Africa as a supply center for their R&D operations, which can be paid for on the cheap. Oujda’s university has developed five research centers to develop an interface for just this purpose, supplying the region’s engineers, business students, and workers to paired firms looking for local talent for their outsourced operations. Two institutions are driving this, Morocco’s l’Agence de Développement de l’orientale (ADO) and Belgium’s Commission for University Development.

When asked about a local brain drain, the university’s secretary general did not seem worried and cited confidence in the region’s organic macroeconomic growth in industries and trade. Other university officials also remain optimistic and believe that new industries are sustainable over the long-term.

At the same time as the region is extending its intellectual presence through such partnerships, in addition to training workers who will eventually move to develop other regions of the country, the Eastern region has established a physical infrastructure aimed at fostering stronger ties with many nearby cities, including healthy trade with Fes via the highway established between the two cities not so long ago. Additionally, moves to market and develop waterway infrastructure are taking place along the Mediterranean, with a new international harbor set up north of Oujda to facilitate growing trade with Europe.

Location, location, location…

However much the region succeeds in cultivating local talent, the question of geo-economic strategy remains, concerning the depth to which the region can find endogenous prosperity. Although major cities in the region can be accessed from the Mediterranean or by air, local infrastructure, needed for business growth, still lags behind demand, slowing growth and development in the process. In response, Morocco’s King Mohammed VI has initiated several projects aimed at putting in place the roads, rails, and connections to shuttle workers and production between cities and ultimately to market.

The Fes-Oujda highway, covering the distance between the two cities with fresh, modern pavement, was initiated in 2007 with projects of $815 million over a three year timeline, in addition to redoing the Oujda-Nador route during 2008. Local development projects will continue to absorb the nearly $4 billion pitted in public spending for job-creation prospects of 71,000 new positions by 2010.

A stronger internal economic position would doubtlessly strengthen consumer demand. This prospect has already been estimated by large Moroccan retailers like Marjane, which is planning to invest $61 million as well as a smaller investment in the region of $20 million by Asswaq Assalam.

Betting on better borders

An Algerian extremist brought about a general scare in Morocco after bombing a tourist target in Marrakech in 1994, leading the late King Hassan II to close the border with the country whose secret services were blamed for the attack. After years of civil war, Algeria’s government crushed dissent and restored order, but the border remains shut. International institutions like the International Monetary Fund (IMF) are calling on the two sides to change course, reporting that “the reopening of the border between the two neighboring countries would greatly contribute to boost trade in the region.”

The border closure has exacerbated problems inherent to the Algerian-Moroccan relationship, allowing the Western Sahara territorial dispute to fester and creating problems within multilateral bodies like the Arab Maghreb Union (AMU). In fact, confidence building measures take backseat to the Sahara question, an issue that continues to block meaningful policies on bilateral relations.

Nevertheless, moves toward rapprochement have been gaining ground, with travel possible by air between the two countries and softer, more diplomatic language towards each other. According to a communiqué from Morocco’s Ministry of Foreign Affairs and Cooperation, “The Kingdom of Morocco called on fraternal friendship and sincerity in a full normalization of relations with Algeria and a border opening between the two countries.” The ministry added that “Morocco reiterates its willingness to open a new page in relations between the two neighboring countries.” Although Algeria has responded somewhat amicably, the country’s president, Abdelaziz Bouteflika, maintains visa requirements for Moroccans wishing to travel to Algeria, failing to match his Moroccan counterpart’s move in abolishing travel visas years ago.

For now, Algeria’s government believes a closed border signifies punishment of the Moroccan economy, to the tune of $500 million. Although no one knows for sure of the economic implications of the gate opening at the border, some reports use evidence from the 1980s, when the border was briefly opened, that Algerian domestic prices, being much lower than those in Morocco, would rise while Morocco’s prices would fall, thus arriving at a new equilibrium. Conversely, with Algeria income packing more bang than Moroccan salaries, it would seem that Algeria’s prices would fall and its workers would lose in competitiveness.

Now, however, Algerians are barely richer than Moroccans and want to guard industries established in Algeria to serve the country’s larger population instead of opening production for pan-Maghreb consumption.

With rapprochement prospects still remaining lukewarm, officials believe the Eastern region should continue to focus on endogenous growth with the country’s Ministry of Land, Water, and the Environment outlining the changing nature of Morocco’s frontier regions. According to official ministerial notes, “the emergence of territories as actors of globalization signifies a profound change in the state of the spirit in actors of development regarding territories which are no longer seen as simple suppliers or receptacles of public or private assets, but as systems which they themselves produce.” Staying conscious of the region’s needs and paying mind to improving the system are essential for Oujda’s growth prospects.

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
Levant

An elusive European end

by Executive Staff July 25, 2008
written by Executive Staff

The Turkish national football team found itself in the unlikely position of semi-finalist in the European Championship before being despatched homewards in a display that illustrated Germany’s lack of sentimentality. Despite currently playing some largely irrelevant extra time, a similar result is on the cards for Turkey’s bid to gain another European trophy — accession to the EU.

On June 17, the EU opened two new “chapters” of accession talks with Turkey at the fifth Turkey-EU Intergovernmental Conference in Luxembourg. Eight of the 35 chapters have now been opened since Ankara became an official membership candidate in December 2004. So far one, on science and research, has been closed and 15 suspended, ostensibly over Turkey’s refusal to allow ships and airplanes from the Republic of Cyprus, an EU member state, into its ports and airports.

France, with German support, has been particularly active in blocking the advancement of negotiations. “I do not believe Turkey belongs in Europe, and for a simple reason, which is that it is in Asia Minor,” French President Nicolas Sarkozy stated during one election debate. If his only complaint is geographical, he could call for Cyprus’s expulsion from the Union. Sarkozy’s opposition to Turkey’s quest for European glory is as big a stumbling block as the German footballers.

France took over the six-month rotating presidency of the European Union on July 1. While three more symbolic chapters are expected to be opened before December — as a sign of French “goodwill” — they are unlikely to be crucial to accession. That same French “goodwill” also saw in June the rejection by the senate of a bill that would have made a national referendum on Turkish EU membership mandatory. The bill made no mention of Turkey but since it covered any EU applicant with a population of more than 5% of the current EU total it doesn’t take a statistician to figure out who the intended target was. Such thinking, at the time, would have required a French referendum on Britain’s accession.

Accession obstacles

Turkey’s population of around 75 million is equal to more than 10% of the EU’s. Conveniently, that of Croatia, which is at a similar stage in chapter negotiations as Turkey, but is predominantly Christian and on the European mainland, is less than 1%.

Putting on his perpetually brave front in the face of eventual elimination from the competition, Turkish Foreign Minister and Chief EU Negotiator Ali Babacan has put a positive spin on developments, saying that “we expect that our accession process will be advanced during the French presidency.” That seems as likely as the country’s footballers getting to the next World Cup final. This doubt stems not only from opposition within the EU and the national side’s erratic goalkeeper but a growing sense that Turkey itself is losing its drive to join the Union.

An extra dimension to the accession saga was added on June 12, when voters in the Republic of Ireland rejected the proposed Lisbon Treaty. This treaty was, in effect, a slightly rehashed version of the European Constitution that was rejected by Dutch and French voters in the 2006 EU poll.

Stemming from the Irish vote, there are two separate though not conflicting arguments against imminent Turkish membership.

One, posited by Sarkozy, is that further EU expansion is impossible without ratification of the treaty. Lisbon’s advocates have said it is a necessity to promote the smooth functioning of the expanded Union. “I would find it very strange for a Europe of 27 that has trouble agreeing on workable institutions to agree on adding a 28th, a 29th, a 30th, a 31st, which would definitely make things worse,” Sarkozy said on June 19.

German Chancellor Angela Merkel, who is at best skeptical of Turkish EU accession, has supported Sarkozy, saying that “the Nice Treaty limited the (European) Union to a membership of 27 states and for me it is unthinkable that we would change one area of the Nice Treaty without looking at the whole of the Lisbon treaty.”

Sarkozy’s insistence on sidelining Turkey’s bid might assuage the fears of the French electorate (which is rapidly falling out of love with him) over a “flood” of immigrants from new members. On the other hand, also to Sarkozy’s advantage as an advocate of the treaty, it is a mechanism for bullying pro-enlargement treaty-skeptical countries such as Britain and some Eastern European member states into bolstering support for the revised constitution.

The second argument takes the line that the popular rejection of Lisbon in Ireland and the Constitution in France and the Netherlands is indicative of a growing sense of “enlargement fatigue”. This view holds that citizens of “Old Europe” are uneasy about EU expansion and its concomitant migration and administrative complexity. They voted against EU proposals to demonstrate their wish to put further enlargement on hold. Therefore it would be going against the public’s wishes to press on with Turkish accession negotiations.

There is likely to be a grain of truth in this argument — France’s voters are quite enlargement-averse and Holland’s citizens are increasingly uneasy about Muslim immigration in particular. However, this argument is also a little too convenient, as it allows Europe’s politicians to avoid other reasons for their citizens’ doubts about the treaty.

Second thoughts

These include general misgivings about the EU itself: the Union is increasingly seen as unaccountable, remote and expensive. A ream of stories about some Members of the European Parliament (MEPs’) handling of their official expenses in the run up to the Irish vote increased suspicions of corruption. Furthermore, a significant part of the European electorate is wary of the EU’s direction – British voters fear over-regulation, while some in France and, for example Denmark, suspect the Union will force looser labor protection and the dismantling of the welfare state.

There is arguably a third way in which Ireland’s ‘No’ vote could act against Turkey’s accession. From the point of view of Turks who are skeptical about the benefits of EU accession, the possibility of the EU riding roughshod over the wishes of one of its member states is not appealing. Turkish people tend to be strongly independent and would be reluctant to cede their country’s sovereignty to a monolithic, steamrollering EU.

On the other hand, Turkish columnist Semih Idiz has argued, Ireland’s rejection of Lisbon could actually benefit Turkey, by encouraging the formation of a “two-speed Europe” in which some countries moved towards greater integration and others retained greater independence. The theory would be that Turkey could more easily join “slow Europe” without its European voting rights diluting the influence and development of the “fast stream” — which would likely include France and Germany.

The problem with this argument is twofold: not only has no major European leader lent support to the “two speed” principle, or outlined how it would work, but it seems unlikely that even in the event of it being applied that adversaries of Turkish membership would drop their opposition entirely.

Amid the heat generated by Ireland’s vote, and looking beyond the forced smiles in Luxembourg, another factor is being overlooked: Turkey’s changing attitude to the EU.

A Eurobarometer poll last year found that only 49% of Turks considered EU membership “a good thing.” While admittedly only 25% identified accession as “a bad thing,” this feeling is growing as the negotiation saga plays out. Only 26% of Turks now expect their country to join the EU, and 54% agreed that EU global leadership would be “undesirable.”

More to the point, the government’s ardour may also be waning. There are rumors of a split between Europhile leaders such as Babacan and President Abdullah Gül and an influential faction which believes that the time has come for Turkey to focus on developing its ties with the Middle East, the Turkic countries of Central Asia and Russia. Prime Minister Recep Tayyip Erdogan is said to be of the latter opinion. Erdogan has been making visits to the Gulf states to court investment and to offer the services of Turkish companies in developing the region.

Some Turks compare the opportunities for their firms to expand in the fast-growing economies of the Middle East and Central Asia, and the opportunities for becoming a regional leader, to the prospect of being a much-delayed, spayed and mistrusted member of the EU, and know what they would rather plump for. It is also a much more achievable goal than dreaming of a major international football trophy.

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
Levant

Jamal Itani – Q&A

by Executive Staff July 25, 2008
written by Executive Staff

With an extensive background in general contracting, civil engineering, and construction management, the CEO of Abdali Investment & Development PSC Jamal Itani is a man of many colors. As the former president of the Council for Development and Reconstruction (CDR) in post-war Lebanon, Itani helped rebuild the Lebanon we know today, as well as aided in securing all finances for the Lebanese government. Now based in Amman, Itani heads the largest development project Jordan has ever seen. Executive sat down with the CEO for his insight on Abdali’s creation of a new downtown in the heart of Amman.

E How would you describe Abdali’s ownership structure?

Abdali is a pioneer in the private-public partnership (PPP), a partnership that was born between Mawared (National Resources Investment & Development Corporation) — the independent state-owned corporation — with the Hariri family, presented by Sheikh Bahaa Hariri through his company, Horizon Holdings. The idea to regenerate a downtown area for Amman came up in 2002 between the late Prime Minister Rafik Hariri and King Abdullah II. The army owned a piece of land that is demographically well located in the center of Amman and at perfect proximity to all the major hotels, banks, businesses, residential areas and the civic center of Amman that incorporates the Justice Palace, the Court and the renowned King Abdullah Mosque.

The formula was as follows: Mawared provided the land, Sheikh Bahaa Hariri provided the finances, and then they created the company Abdali Investment and Development PSC in 2004. The idea then was translated into a master plan that called for a subdivision of approximately 53 pieces of property, with a total of 72 buildings to be developed, sold to different developers.

Now, each developer has to develop his own property within our guidelines. As master developers, we naturally placed general and particular conditions our developers have to abide by. These conditions were defined for every piece of property to ensure homogeneity and high quality state-of-the-art buildings. Smart buildings, if you may. 

Some of the things that are in the conditions are the building height, the building shape, the footprint, the façade, the mix between the stone and the curtain wall, and other details of the building. So they have to get our approval on the design, before they move on and start the construction… Every step of the way they have to get our approval.

So the master plan was developed and all of the land was sold, and we decided to keep 25% of the total built-up area, which is 1 million square meters of Phase One (approximately), to develop on our own, namely the Abdali Boulevard and the Central Market Place. In 2006, KIPCO through its subsidiary company URC-Jordan (United Real Estate Company-Jordan), joined Abdali and bought 12.5% shares of Abdali — split in half by Mawared and Sheikh Bahaa Hariri — so now Mawared owns 43.75%, Sheikh Bahaa Hariri owns 43.75%, and URC Jordan owns 12.5% of the Abdali company.

On top of this, URC and Abdali also joined hands in developing the boulevard and the mall, where Abdali owns 60% of the boulevard and URC owns 40%, and in the mall it is the opposite: URC owns 60% and Abdali owns 40%. We are developing both of them together. We intended to keep and develop the 25% of the project because we emphatically believe in the economy of this country and of course the success of the Abdali new downtown. We believe that the potential is still young. There is still great potential coming up in the country and we definitely want to be a part of it. We’re not here to sell the land and leave.

E How would you explain the concept of Abdali? What was the inspiration for the Abdali downtown project?

As I said earlier, the inspiration came from His Majesty King Abdullah II and Sheikh Rafik Hariri to regenerate the downtown of Amman. It is a unique project because of many things — first because of its location, second because of its various unique and strong partnerships, and also because of the master plan that was created for the project taking into consideration the traditional architecture of the country, the traditions of the Jordanians, alongside with the modernization of the new technologies, the new buildings, the new architecture, etc.

And this is why we were successful in attracting big international names in architecture, such as Norman Foster (UK), Architecture Studios (France), Norr (Canada); along with the top local Jordanian architectural firms, such as Symbiosis, Consolidated Consultants (CC), and others. So one will see a mix that is not far from the tradition of Jordan yet has put Jordan on the map of contemporary architecture.

On top of that, we intended to be very unique in the infrastructure put in place in the project. For the first time in Jordan, we laid down fiber optics cables for the best technologies in telecommunications, and have created a company for that specific purpose, in order to support sustainability of this project.

We have also introduced district energy through a joint venture with Tabreed. This is very important as we were very careful in improving the environmental impact of the project and at the same time realizing that energy is becoming extremely expensive, and thus we worked hard on incorporating this technology into the project in order to reduce the consumption of energy. By introducing district cooling and heating, energy consumption is reduced by 50% approximately. This is also not to mention reduction of the gases and the CO2 emissions. Aesthetically, this has eliminated the need for chillers on the rooftops, allowing us the advantageous use of all of the rooftops for restaurants, swimming pools, and greenery, etc.

E What is your future vision of your company’s projects? How do you think this will affect Amman?

First of all, the future vision of Abdali is to expand, definitely. We have made the first move by expanding into Phase Two of the project, which we launched at the end of last year. After the success of Phase One, it became the natural thing to expand through Phase Two and make the project more cohesive and more integral. As to the future vision on a larger scale, other projects in the region, and in Jordan, are possible and as a matter of fact we are constantly being offered to partake in them because of the experience that we have now. However, this expansion is still too early to discuss; suffice to say that it is in the back of our minds

As for how the project will affect Amman, the project itself has been and will be of extreme impact on the economy of Jordan from a socio-economic point of view and FDI point of view. With regards to the former, during Phase One alone it will have created over 10,000 sustainable job opportunities, not to mention the employment opportunities during the creation of the phase of around 15,000 at its peak. In terms of FDI, we have attracted approximately $1 billion from the UAE investors, and another $500 million from Kuwaiti investors, and another $1 billion from Saudi investors. So this definitely has a direct impact on the Jordanian economy.

E What is the strategy you are implementing for your projects?

Our strategy is to finish building the new downtown of Amman with the highest quality of buildings and facilities, on time, and at competitive prices. We are not here to really to — if you allow me to say this — to swat the real estate industry, but on the contrary, with our project we have really calibrated the real estate industry in Jordan and assisted it in the first steps of growth to be on par with the rest of the region.

From the start, we purposely did not sell our land at very high rates, thus allowing developers to sell their end product at very competitive prices. Mind you, it is worth noting that internationally the cost of land is usually 50% of the cost of the project. In Jordan however, the cost of land is much below this, no more than 30% of the overall project cost.

Generally, the trend we are witnessing now is an increasing rise of projects’ cost, becoming more and more expensive by the year, but in Jordan this trend has still not quite caught up with the rest of the region, specifically with the increase of land prices.

E Do you expect a correction to happen, within Jordan, within the prices perhaps?

Prices have to increase, yes. It has already started, however, up until now not quite in a big scale, because you haven’t seen big investors coming in strong yet to develop the type of projects, in the regional magnitude that will result in such an impact. But again, as I mentioned earlier, the market is still young and is growing steadily.

E In your opinion, what is the need for this kind of project? Is it a social, demographic need, a need for a new lifestyle? What kind of people will be living in the residential sections of these mix-use developments? How would you describe the standard of living of your projects?

It’s a combination, definitely. Amman is a beautiful city that has beautiful weather for 10 months of the year. Yet, Amman does not have a modern urban downtown that can accommodate all the needs of the people from residential to high-tech offices, to retail. So, we had in mind that we wanted to do something that is complementary to everything in it to catapult it to urbanism. So that you can live, work, entertain, and shop at the same time, in the same central location. This will definitely alter the lifestyle of the Jordanians, indeed the city’s identity. The new downtown is very urban, accommodating new styles of commerce, residences and retail.

The whole idea behind it is to provide a modern state-of-the-art destination for businesses to induce productive and effective work atmospheres; a destination where shopping becomes in itself an open destination, rendering the traveling around from point A to point B finite, as is the current situation in Amman, where one has to travel from one location to the other in order to complete their shopping experience.

And finally, it is to be a destination that allows residents to have accessibility to their every day needs and much more. For the first time Jordanians will have an urban downtown area in the true sense of the meaning, where they can go to spend the whole day and have a plethora of activities at their disposable without the need to commute outside that vicinity. So yes, it definitely satisfies both the social and economic needs of a growing city like Amman.

E What are the current issues and concerns that Abdali faces?

Well, there are very few of them. You know that you are dealing with approximately 28 developers, and some of them are not used to the quality that we are implementing and are enforcing, so we have to take them by the hand and walked through the development process step by step in order to ensure the desired quality and performance is met.

In a country that has not experienced such colossal projects, delivery time is of essence, because everybody here thinks that ‘Oh ok, this project is set to be done in 3 years, inshallah in 10 years it will happen.’ No, we want it to happen in due time, as promised, but with the quality that we have assured the public. So this is the first thing that we faced: the scarcity of contractors with experience of similar large magnitude high end projects, especially when discussing the scope of work to be done on such a project as ours.

Bringing in the international investors that were keen on being part of this unique project to the city was a great advantage, because with them came the international knowledge that comes from their sophisticated and long experience in construction and development in the region of similar scale developments. Their presence has steepened the learning curve for Jordanian developers and others alike due to the vigilant aim of Abdali of creating high-end quality construction.

Moreover, this transfer of skills and know-how is exactly how the standards have been set much higher. In fact, we are really happy with the support of the government in paving the way. The government really understands the importance of this project, and they are putting all efforts to support us, from the municipality to all the ministries and all related government entities, they are very supportive to the project.

E So are the developers having trouble with the regulations that you have in place?

As with anything so new, grasping the new technology, regulations etc, is something of a feat at the start. For instance, we started the high rise building designs three years ago. At that time of design finalization, we were working to the guidelines of the existent civil defense law. However, by the time the building designs of Abdali were complete, and sent for final approval from the Civil Defense in order to proceed, new regulations had been put in place. So we were faced by the introduction of new laws and guidelines for construction of high rise buildings that the government wanted to implement. And this is a perfect example of how the government has been supportive and backing of this project. The new civil defense law required helipads to be present on every tower, amongst other tough restrictions on towers. Due to the fact that most of the developers had already finalized their designs, it would have been prohibitive in many ways to redo the complete designs again. Therefore, we raised our concern to the authorities, as we had been given approvals on these designs before the law was issued. They were very cooperative and approved for us to use the old law for the Abdali project Phase One. So again, some delays have been underway, but at the end of the day the government entities are very supportive to the project.

E How would you differentiate the market in Jordan from other markets in the region?

Other markets in the region have to be separated; the Gulf is one, and the rest of the Levant is another. The Gulf is a story by itself — the oil prices and the excess cash flow — this is speeding up the development of the countries there at a pace nobody can catch up with, really, simply because of the resources. Even the Gulf countries are caught up by the human resources, and the contractors’ resources, and the material resources… they can’t catch up with their development. Here it is a different story. I think the growth in Jordan is healthier and more sustainable than high-rising economies. I think a lot can be done to also attract more investors and make Jordan a thriving business and tourism hub in the region — Jordan has a lot of uniqueness in it: the location of Jordan on the map, its proximity to Iraq, to Lebanon, to Syria, and the peace agreement with Israel has truly made Jordan a safe haven for investors. Also, laws and regulations are very defined here and are respected, so again this is something extremely important and encouraging for investors. Still, I think a lot more can be done to attract investors and a little flexibility on some laws and regulations can attract more investors. Some things need to be worked on in that regard. But again, the goal can be, or should be, slightly higher… But I’m sure by next year you will see the growth catching up with the rest of the region; there is no doubt about this. The demand is there, and it is very big.

E Obviously the role of the state is quite proactive towards development in Jordan. How do you see this culture spreading out through other entities, in quasi-developmental organizations that you are dealing with on a day-to-day basis? For example, Amman for the last 50 years has been mostly two to four floor buildings of white stone. By giving the Jordanians high-rises designed by internationally acclaimed designers, how are they adapting to this whole new culture that you brought with you Jordan?

I’ll be frank with you: it’s not easy to introduce a new concept of life style to any society. High-rise buildings are a new concept for the country, for both the public and the governmental authorities. The former is challenging, as the public still cannot quite fathom the extent of the impact the project will have physically, socially or economically. The latter, in terms of the government authorities, took us a lot of effort at the beginning of our journey. We had to convince them that the master plan for an urban project such as Abdali calls for high rises. At the time, though, ‘50 floors high, 210 meters high’ was unheard of. However, it became clear that it was unavoidable and is actually needed in Jordan, and can be done in an effective and productive manner.

At this moment in time, I can say that we, as Abdali, still have a major role to play, and we can’t do it alone. I believe all the developers have to team up together to start educating the people on the new lifestyle that is unfolding in Jordan.

You’re absolutely right, the majority of people live in a three-four storey building, and they were definitely shocked and possibly in awe, when they saw high-rise residential 35 floors high. And most intriguingly is that we question the high-rise phenomenon, yet developers sold the top floors right at the beginning, and at very high rates… I think also what helped is the experience that Jordanians have got from the Gulf and in the international arena where they live in high rises in the Gulf, Europe, or America… so now when someone wants to buy a home in Amman, and he finds a high rise of 35 floors, he won’t mind because he is used to living in a 35 or 45 floor high rise building in Dubai and will therefore seek something similar to buy in his home country.

E We’ve talked about prices, and foreign direct investment. What type of returns on investments are projects like Abdali giving back to investors?

A simple thing will give you the indication: People are talking so much about the returns in Dubai… astronomical returns in Dubai. One can figure it out for oneself: $1 billion from Dubai is invested in Abdali, what does that tell you? It tells you that serious returns are happening in Amman, protected returns and, moreover, here you have freehold ownership status, while this is not the case in the Gulf states. There you basically don’t own the building or the apartment that you buy but instead you have a long lease. Returns are definitely competitive or even better than many other countries. But they are certainly and extremely competitive in Dubai and the Gulf region.

E Successful projects like Solidere, for example, which more or less is a similar project to what’s happening with Abdali, have also decided to also give it a try in the GCC with Solidere International. Is Abdali aiming at similar strategies?

Well, I’ll tell you frankly, every time we go to Dubai or to Abu Dhabi or to Saudi Arabia and those exhibitions, we are offered so many projects based on what these markets are witnessing with what we are doing with our project, the Abdali downtown.

The quality is really something that we are so proud of, and you can’t find it everywhere. Really, even in some mega-projects that are happening in the Gulf, you don’t see quality projects. So we have been offered a lot of opportunities, and it is in the back of our mind.

Nevertheless, at the moment, we are focusing on making this project successful and happening. We want to see it growing above ground and operating. In the meantime lots of projects are in the back of our mind. What I will tell you is that it’s not an immediate plan to go outside Jordan, but definitely the appetite is there.

E What CSR initiatives do you have in place and how are you giving back to the community?

In fact, a lot. We believe that we can’t be this big in the country without contributing back directly to the community — to the community around the project first, and to the community of Amman next, and then to the community of Jordan. And for that reason, we have designed several initiatives for the CSR under the umbrella of ‘Ruyatuk’ that are both community based and academic based. Abdali’s success greatly depends on its relation to the greater community. We have made it a priority to address the needs of Amman and take into consideration the social and environmental aspects of its development. The Ruyatuk program will bring together all the activities sponsored by Abdali with the theme “Let your vision come to life.”

Abdali aims to provide youth with life skills that encourage them to become active in the society they live in. In addition to harnessing their talents, sustain their enthusiasm and realize their potentials, through providing them with the adequate opportunities to gain valuable experience and become active members of their respective communities, thus allowing them to compete in the emerging labor market.

E Overall, how do you see Abdali’s role in Jordan’s future?

The Abdali project is certainly going to change the lifestyle of the Jordanians and I think it is something that will be the pride and joy of the Jordanians in the future.

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
Levant

Building Amman’s future

by Executive Staff July 25, 2008
written by Executive Staff

Breathing modernity into the center of Jordan, the Abdali Urban Regeneration project will truly metamorphose the mundane architectural conventions of the country. As the largest mixed-use development project Jordan has ever seen, Abdali will completely recreate Amman’s central downtown district. With the fast-growing economy of Jordan, there is definitely a need for an upscale development like that of Abdali.

Strategically located in the heart of Amman, the new downtown project is based on 447,000 square meters of land — owned by the National Resources Investment and Development Corporation (Mawared) — and holds an investment value of just over $3 billion. As the military’s business arm, Mawared, is the largest real estate developer in Jordan. The total built-up area (BUA) of Phase I alone is 1.08 million square meters, and is planned for completion by 2010. Phase II’s BUA measures in at 723,000 square meters and is hoped to be finished by 2013. The Abdali master plan’s total BUA is approximately 1.8 million square meters, integrating a vibrant mixed-use development into the city.

For the first time, Jordanians will be able to be able to work, reside, learn, and entertain in one area. According to Abdali Psc, the project plans “to support Jordan’s drive towards the knowledge economy by providing an electronic infrastructure for a contemporary business and residential environment.”

Conveniently, the site of the development is adjacent to major municipal buildings, such as the House of Parliament, the King Abdullah Mosque, the Palace of Justice, and the Ministry of Education.

That’s what friends are for

The Abdali project has significant partners and investors. In June of 2003, the project was launched from a partnership between Mawared and Horizon Development, owned by Bahaa Hariri, which will head the development of the 80-hectare smart urban center. The initial agreement concluded that the joint venture between Mawared and Horizon would construct the new downtown with a budget of $800 million, providing a superlative infrastructure to promote the notion of metropolitan living in Amman.

Horizon and Mawared intend to create a blended assortment of public and private usages for the site. The project will encompass alluring and animated urban spaces for the public on a 24 hour per day basis, which will be comprised of 40,000 residents and approximately 90,000 people total to be living, visiting, and working in the new downtown on a daily basis. Abdali boasts that 15,000 job opportunities will be created. The project will also provide a network of pedestrian-friendly roads, gardens, central shopping facilities, entertainment centers, an American University campus, office complexes, a civic plaza around the proposed King Hussein Memorial Library, a performance arts center, exclusive residential buildings, medical and legal quarters, and underground parking facilities.

Additionally, on the sidelines of the World Economic Forum in 2004, Mawared signed a Memorandum of Understanding (MOU) with mammoth developer Emaar of the United Arab Emirates. This MOU emphasizes Emaar’s desire in partaking in the development of select residential complexes within the Abdali project.

The United Real Estate Company, an investment company acquired by the group of Kuwait Projects Company (KIPCO), is also a major partner in the Abdali project. KIPCO is known to be one of the leading investment companies in the MENA region. The latest partner boasts significant real estate and management advisory service experience, which will certainly aid the project in reaching its superior goals.

Abdali gives back

The last few years have witnessed a swelling trend in large organizations to jump on the bandwagon of giving back to their respective communities, and Abdali Psc is not one to be out of fashion. With traditional Corporate Social Responsibility (CSR) initiatives in mind, Abdali has recently launched its full-blown program known as ‘Ruyatak’, in order to nurture the aspirations of Jordanian youth. Acting as the CSR arm for Abdali, and boasting the theme of ‘Let your vision come to life’, Ruyatak aims to empower the Jordanian youth from various ages and underprivileged backgrounds. Seeing as approximately 60% of Jordan’s total population is under the age of 25, these young individuals face a higher risk of unemployment than any other demographic in the country. Believing that the youth are “the pillars of the future of Jordan,” the main focus of Ruyatak is to educate adolescents by providing life skills, encouraging them to play a dynamic role in Jordanian society. “In addition to harnessing their talents, sustain[ing] their enthusiasm, and realiz[ing] their potentials,” Abdali says it provides “[the youth] with adequate opportunities to gain valuable experience and become active members of their respective communities, allowing them to compete in the emerging labor market.”

Under the umbrella of Ruyatak hang three initiatives by Abdali. The first component is comprised of a partnership between Abdali and the eminent Save the Children foundation, resulting in the NAJAH Program. This initiative aspires to address two of the most key challenges facing Jordanian youth today: the inability to find employment in the midst of the country’s economic inequality, and the deficit of skills and knowledge to not only enter but also to remain in the labor market.

The second addition to Abdali’s CSR arm — NAJAH by Abdali Phase II — was formed after the great success of Ruyatak’s initial program (NAJAH). This initiative looks to expand the original CSR project on a larger scale by creating a long lasting agreement, addressing the perpetual challenges faced of youth unemployment throughout Jordan. It aims to do so by eroding the inherent idea of societal exclusion possessed by these deprived youths. The NAJAH project trains Jordanian youth, aged 18-24, through three various learning cycles on life and work skills (such as CV writing classes, internships, field research, etc.), enabling them to benefit from the considerable economic investment taking place in their country. Abdali aims to improve the employability skills of the participants of up to 80%.

The third social responsibility initiative under Ruyatak — Alwaan Al-Abdali — was founded by the partnership between Abdali and Relief International Schools Online (RI-SOL), a global NGO promoting education and community development. This scheme builds on the qualities of experience and human resources by engaging youth ages 12-30 that are living in the most poverty stricken areas of Amman (i.e. Wehdat, Jabal Naser, Ashrafieh, and Al Hashimi Al-Shamali). Participants are offered to take part in youth-led projects; familiarizing them with team work, the needs of their society, social cohesion, and the best communication skills at hand.

As the CEO of Abdali Psc, Jamal Itani comments, “We hold great faith in the Jordanian youth. We understand their situation, and highly believe in their potential; that is why we invest great efforts in finding new opportunities for the young people to achieve their ambitions and complete their goals… They are not just the future, they are today; and we offer them in the present a reliable vision to shape a better tomorrow that will be up to their expectations.”

Undeniably, the Abdali project is reaping with priceless benefits for Jordan. With three CSR schemes, such social programs are sure to aid the Jordanian youth in building better futures. Also, by implementing the Ruyatak program Abdali hopes to guarantee its sustainability amongst its numerous stakeholders and to build local partnerships. Abdali’s social responsibility initiatives will, without a doubt, further ensure a better community comprehension of the socio-economic opportunities created by the new downtown project. With a new, smart urban center in Amman, the overall effect of the Abdali project will bear immeasurable fruits for the Jordanians and tourists alike. 

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
GCC

A pearl in progress

by Executive Staff July 25, 2008
written by Executive Staff

Access to Qatar’s busiest real estate development site is tightly controlled. Trucks, buses, and cars rolling across a dusty dam have to pass checkpoints before they can reach what for a few more months is a feast only for the eyes of engineers and connoisseurs of construction work in progress.

Past the security cerberuses, visitors encounter an orderly maze of infrastructure and buildings in every stage of construction, from anchoring of foundations for residential towers to a finished power substation. The Pearl-Qatar, or TPQ in the jargon of people involved, is the domain of the United Development Company (UDC), one of the country’s leading private sector enterprises.

The first of The Pearl’s towers —  out of 66 being built — will be ready for tenants once Qatar’s oppressive summer heat has passed for this year, according to the UDC engineers working at the site.

To be that challenging and thrilling a task, it has to be a new island — what else, one is tempted to ask, given that island building has shaped up into a sort of coastal obsession in the Gulf. With 16 million cubic meters of earth moved in less than three years after the start of the project (8 million cubic meters were dredged from the shallow waters in the immediate area, another 8 million were trucked in from elsewhere), The Pearl-Qatar island has been put vis-à-vis the Qatari capital Doha.

Marvel in the making

Engineering of the island involved meeting technical and environmental challenges as well as accommodating sales interests by increasing the number of apartment towers and undertaking a spectacular ceremony of flooding the surrounding areas that had been blocked off from the sea during an early phase of the project.

The most demanding task, however, was to make it all come together. “We have about 15 districts on the island and each has its own theme of design, like pieces in a jigsaw. It represents a universal world,” chief engineer and construction manager Abdulrahman Jawhari said. “The biggest challenge is to make all these elements come together and make them fit.”

The task was made no less challenging by the fact that UDC, while being the master developer of TPQ, has pursued a path of farming out parcels and aspects of the project to over 60 partner firms whose involvement Jawhari described as ranging from over a billion Qatari riyals ($275 million) to a few million but which all have to fit with UDC’s set of standards and development guidelines for the Pearl.

The esthetic perception of the Pearl will vary from visitor to visitor and no one today can reliably predict if the long-term role of man-made islands in the quest for a livable planet will be positive, detrimental, or negligible. On the investment side, TPQ fits the pattern for a mega-plus project where cost is not the first consideration in all decisions. From initial cost forecasts of $2.5 billion, the project value estimations have moved up to a range of between $7.5 billion and $9 billion, insiders say.

Seen in context of both Qatar’s national development ambitions and the corporate growth aspirations of UDC, the TPQ project is pivotal beyond its financial aspects and earnings potentials.

As for national ambitions, Qatar is driven. The peninsular country in the Gulf does not kid around when it promotes itself on the airwaves as building the world’s fastest growing economy. Per capita, the citizens of Qatar enjoy a world-leading nominal GDP whose phenomenal double-digit annual growth has been forecasted to continue unabatedly in the next three to four years.

Qataris also bear tremendous inflation which will reduce the purchasing power gains — but at a projected total GDP scratching at the $100 billion mark in 2011 and with a population of 1.2 million people (Economist Intelligence Unit estimates), there will be many wealthy residents. 

This economic wonder was and will be propelled by gas exports, the larger hydrocarbons sector, and related industries. In consequence, the country’s planners have to find ways to deal with the challenges of increasing financial wealth of their citizens and to work on economic efficiencies. An image of having world-class residential and commercial real estate landscape and the successful creation of tourism destinations would help in meeting these national needs. 

The Pearl has a significant tourism and boutique retail angle. According to Hussam Ahmed, the manager in charge of retail development at TPQ, the average daily inflow of visitors to the hospitality and retail areas on the island (which will feature a 2.5km waterfront promenade with up market retail and restaurants in the first-to-be-inaugurated Porto Arabia section of the island) is calculated at 25,000 to 30,000 persons, stipulating a multiple of Qatar’s population in annual visitors.

Catering to a customer range

In addition to the high-end boutiques in its fanciest quarters, other retail areas on the island are set to tickle younger and broader lifestyles and cater to wider audiences. “We are not branding The Pearl as upscale destination; although we have higher percentages [of high-end retail], we are addressing different levels,” Ahmed said, adding a reference to the government’s goals in developing tourism in Qatar.  

Qatar’s real estate development activity is intimately linked to the emirate’s state interests, ruling family, and political class. The dominant real estate companies with the largest development projects — the Lusail project on land near to the Pearl — and those with the highest market capitalization on the Doha Securities Market are state-owned and state-backed enterprises.

UDC vowed unequivocal alignment with Qatar’s development aims under the “directives and wisdom” of the emir, Sheikh Hamad Bin Khalifa al-Thani, as the message of UDC chairman Hussain Ibrahim Alfardan stated in the company’s 2007 annual report — a 130-page compendium of the highest gloss whose every page is made from paper so heavy that it would be suited as magazine cover or for printing an invitation card to the most lavish of dinner parties. 

In the same report, UDC announced a net profit of $94.5 million in 2007 (38% up year-on-year). It listed partnerships with Belgian, Turkish, Spanish, UAE-based, and Qatari companies in joint ownership of subsidiary companies that are active in construction materials and services, tourism operations, real estate management, utilities, wastewater treatment, and petrochemicals manufacturing.

Several of the joint ventures were born during the work on TPQ and address needs that serve the project. The dredging activities for the new island inspired a partnership with a Belgian specialist company; the resultant joint venture firm, MEDCO, is now a major contender for dredging and land reclamations in the region.

When addressing an estimated cement need of around 3 million tons for TPQ, UDC teamed up with Belgium’s Besix for a ready-mix joint venture. As the issue of operations for the various marinas with over a 1,000 berths around the island arose, UDC in 2007 found a partner in a Spanish firm, Ronautica. For managing real estate, UDC has recently entered a new venture with Asteco, a property management firm headquartered in Dubai.

There is a special potential that can be assessed for Qatar Cool, the Qatar District Cooling Company established in 2003 as joint venture between UDC and the regional pioneer in district cooling, Tabreed of the UAE.

The firm’s first plant started operations in 2006 with capacity of 30,000 tons of chilled water in Doha’s West Bay office and residential district. This year, a second plant in West Bay and the first two phases of a massive district cooling plant on The Pearl will become operational, adding 37,000 tons capacity in West Bay and about 60,000 tons in TPQ, said Qatar Cool general manager Fayed Khatib.

Looking ahead

By 2009, the integrated plant on the Pearl will be at full capacity of  130,000 tons, making it the world’s largest district cooling facility, he added. Serving air conditioning and cooling needs from a central plant is a strong business model for Qatar where 60 to 70% of a building’s annual power consumption goes to mitigating the impact of the country’s hot and humid climate.

Qatar Cool claims 40% to 60% lower power consumption per client than decentralized units in each building would incur, saying its solutions offer benefits to Qatar’s economy and environment as well as allowing customers to reduce capital expenditure on oversized individual cooling systems and associated costs, including insurance.

At a startup capital of $2.75 million in 2003, Qatar Cool was a small initial investment with low risk that has grown into a joint venture with $82.4 million capital and net profits of $2.9 million in 2007 which are projected to grow at rate of 80-100% in 2008. “Our revenues and profits will keep multiplying,” said Ahmad Chehadeh, Chief Financial Officer of Qatar Cool, and clarified that this expectation is alone from the existing schemes and does not include eventual new projects.

The company is learning and collecting data that will serve as basis for optimizing its operations and development of new solutions. Although it does not presently use alternative energy sources, it has a great interest in processes that conserve energy and has already achieved substantial efficiency gains from studying and improving its own production processes, the company’s managers said.

One day, UDC and its partners in Qatar Cool could even reap technology leadership benefits from the experiences and skills that Qatar Cool has begun accumulating in the operation of remote cooling schemes in a very hot climate. Even before such lofty hopes will be tested, the cooling firm is a definite asset for future projects that UDC will compete on. As Khatib said, “Having Qatar Cool in their portfolio, UDC has a nice selling point in future projects by being able to offer complete solutions.”

July 25, 2008 0 comments
0 FacebookTwitterPinterestEmail
  • 1
  • …
  • 520
  • 521
  • 522
  • 523
  • 524
  • …
  • 696

Latest Cover

About us

Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

  • Donate
  • Our Purpose
  • Contact Us

Sign up for our newsletter

    • Facebook
    • Twitter
    • Instagram
    • Linkedin
    • Youtube
    Executive Magazine
    • ISSUES
      • Current Issue
      • Past issues
    • BUSINESS
    • ECONOMICS & POLICY
    • OPINION
    • SPECIAL REPORTS
    • EXECUTIVE TALKS
    • MOVEMENTS
      • Change the image
      • Cannes lions
      • Transparency & accountability
      • ECONOMIC ROADMAP
      • Say No to Corruption
      • The Lebanon media development initiative
      • LPSN Policy Asks
      • Advocating the preservation of deposits
    • JOIN US
      • Join our movement
      • Attend our events
      • Receive updates
      • Connect with us
    • DONATE