Finding Room for Positive Change and Growth in YemenPublished January 08, 2013 in Arabic Knowledge@Wharton
Despite being away from his homeland for significant stretches, Munir Ali Daair has always found Yemen beckoning him back. With roots in the southern Hadramout province, he grew up in Tanzania until about age 10, returning to Yemen after his father's death. He still speaks Swahili and his English bears an East African cadence. Later, Daair spent decades in UAE as a banker and corporate consultant. A dozen years ago, he again returned to Yemen to become chairman of Dome Trading & Contracting Co. Ltd., a family enterprise executing contracts in Yemen for the oil and gas industry with more than 1,000 employees.
Following the revolution that brought an end to former President Ali Abdullah Saleh's 33-year rule, Daair helped found The Democratic Awakening Movement, known as TAWQ, made up of activists and leaders from various fields that hold regular meetings to discuss the country's course. Ahead of Yemen's official national dialogue, Daair says they're already getting the conversation going. He also serves as CEO of INJAZ Yemen -- part of INJAZ Al-Arab, the regional Junior Achievement International branch -- that runs entrepreneurship programs in schools. He says such corporate social responsibility initiatives that require action from business leaders, and not them merely cutting checks to causes, is gradually taking root in Yemen.
Taking stock of Yemen's present state, Daair is hopeful but also candid in his outlook. In a recent interview at his Sanaa office, Daair talked to Arabic Knowledge@Wharton about Yemen's riches, its current economic challenges, and the prospects for growth in the energy and technology trades. He recalls doing business under the previous regime, and how innovation and the private sector must take a role in the country's transition forward.
An edited transcript of the conversation follows.
Arabic Knowledge@Wharton: Yemen is often referred to as the most impoverished country in the Middle East. What do you think of this label?
Munir Ali Daair: The country is not impoverished, the people are. I always make that distinction. God has been very generous to this country, Yemenis have not. We have not exploited all the generosity that God has given us. And I can count it for you, if we talk in terms of agriculture, if we talk in terms of fisheries -- 2,000 kilometers of fishing area, the only country in this part of the world that has an outlet to the Red Sea and the Indian Ocean -- if we talk in terms of tourism, the history that we have in this country, the weather that we have in this country; today you can go in Sanaa and you are in winter and go to Hadramout and you are in summer and it's a one-hour flight or even less than that -- half an hour to Aden -- you can change seasons within a half-an-hour flight. We have the biggest island in the Arab world, Soqotra; we have the highest number of islands in the Arab world -- more than 100 islands belong to Yemen. We've got oil and gas, mining; we have got a population of about 25 million people, 60 percent of whom are young -- such great energy to have such a young population.
All these are resources; Yemen is a rich country. This is what God gave Yemen. What we gave Yemen: nothing, so far. As people we did not take all these resources, exploit them and make them work for Yemen.
Look at the geographical location of Yemen, we can shoot out in three different directions: to the subcontinent or the Far East, to Europe, to Africa, sitting right here, as a trading post. So if you take the entire network of water resources available in Yemen, there is absolutely no reason that we should be an impoverished country. We are impoverished only because we haven't done what we should do in Yemen, and it's a problem of leadership. Leadership is what makes a country. Look at Malaysia, what was it 25 years ago, what is it today? It's leadership... This is in our lifetime, this transformation, so it's all about leadership. And the leadership we had here over the last three decades is not the kind of leadership that could lift Yemen -- or it could but it didn't because doing so would create a strong middle class and a strong civil society -- and you know that no dictatorship can exist in a country with a strong civil society and a strong middle class. You can't rule it. You need a weak civil society and nonexistent middle class in order to subdue the country, and that is what has been happening here.
Arabic Knowledge@Wharton: Was it difficult for people to build businesses or encourage economic development under the previous regime?
Munir Ali Daair: It was difficult, difficult in the sense that it was restricted. Because in order for you to succeed very far you had to be part of a certain circle, of a very restricted circle... Business you can do, but you can't do on a spread-out [level] - because I mean how many business houses are there in Yemen, that are strong business houses? A handful of them only. And even these handful of business houses, the majority of their business is outside Yemen, they cook in Yemen, but their dining table is outside Yemen. So, the whole economy, the whole makeup of the country was not done in order to serve Yemen. This has been going on in the South for 45 years since the British left. In the North, even longer, more than 50 years since the Imam [the ruler of the Zaydi Shia dynasty] was overthrown, what have we been having? Coup d'etat after coup d'etat, assassination after assassination, one military colonel comes and overthrows another military colonel and that's what we have been having.
Arabic Knowledge@Wharton: Did you ever face any problems in running a business in Yemen before the revolution?
Munir Ali Daair: As a business, we haven't for one reason or maybe two. No. 1, we stayed out of the political life of Yemen. We tried very much and we succeeded to a very very far extent of being not a politically orientated business organization. So, we were neutral. Neutral, because we know that you can't win any of the sides, so stay out of it. And another reason is that we avoided stepping on the wrong stones, so by comparison, we are not a very big organization and that, in a way, protected us. In a different world, we could become much bigger. But in Yemen, we avoided that because at least in the past...you would be entering into a different kind of situation that we would prefer not to.
Let me give you this example instead: We never did business with the government. Now we are looking at it because now that things have changed or starting to change -- in fact, we hope they are changing -- but in the past we avoided doing business with the government, because doing business with the government would require us to do things that we are not willing to do.
Arabic Knowledge@Wharton: In your view, the country has abundant resources. But what does Yemen's economy look like right now?
Munir Ali Daair: Terrible. It is terrible because of the fact that despite the existence of these resources. You need to go back first, before the union [of North Yemen and South Yemen in 1990]. Let's start with the South, you had first the British colony that was taking care of the South, the British left, we replaced it with the Soviet [socialist state] and that started taking care of the economy, so what happened is that we built a country whose economy depended on foreign aid and not on internal capacities, building local capacities. In the North, although it was not under a foreign colony, it was not under the British or anybody, but still the country depended on the generosity of Saudi Arabia -- we depended on the generosity of the Soviet Union in the South, the North depended on the generosity of Saudi Arabia. So again, foreign aid.
The whole mentality of Yemen, Yemeni governments has been to depend on foreign aid and not to depend on themselves to take advantage of the existing resources, to bring up the country. Today, post-revolution, and we have seen this even in the past in the Ali Abdullah Saleh regime, following the union, everything up until the London [donor] conference [in 2006], everything was depending -- in fact, during the London conference, a business associate of mine said, "Why don't you go and join this London conference with the government?" [The] country was supposed to have received about US$5 billion, which never came. My answer was that I am not going to go there, because I am not a beggar. If the government is able to put together a plan that depends on the country to uplift itself, we can work on it. But going to London with a cap in hand, I'm not doing that. I don't think Yemen deserves that kind of humiliation. That was my attitude, that we need to do it internally, and then others can partner with you, but expecting that the economy will be revived through donation is not the way forward.
Even now, we are still depending on donations. We have got Friends of Yemen, we've got these kind of things, which maybe today there might be some justification because of what we are going through; but on the long-term, unless we use these resources that are being imported to jumpstart our own economy, we will find ourselves in a few years again with cap-in-hand, hat-in-hand, "please give us some more donations." People can't do that forever for you. You need to jumpstart your own economy and the only way to do that is to work on the resources that exist within the country. And this is what the governments of Yemen have failed to do from independence, from the Imam falling, 50 years now, they have totally, utterly failed to do. Because they have never been governments that have been created as a result of competence, but as a result of who has the bigger gun. You have the bigger gun, you rule the country. Competence is not a criteria.
Arabic Knowledge@Wharton: If you were advising leaders on how to now build Yemen's economy from within, what sectors would you recommend they tap into?
Munir Ali Daair: Right now, we need to have a short-term and a long-term approach. A short-term approach is to meet the immediate needs of the country, in order for people to survive. And these we can use very well the kind of aid that we are receiving today, part of that aid to use as an aspirin to cure the pains that we are going through -- whether it is electricity, whether it is job creation -- the immediate needs that we need to do today. We need to be able today to show the individual who went out and revolted that this revolution is starting to work. You can't tell him wait five years, he'll create another revolution tomorrow morning. And the best way to show them that it is starting to work is here in the pocket; words are good, but the pocket is more important. And therefore, we need to address the problems of what's happening in Marib, what's happening in Shabwa, in these other areas that have been neglected for so long, the rural areas... Now what this will do is create confidence, you need confidence-building measures as you work on these. There are very many different short-term issues that you need to address; these are just some of them.
As you address the short-term, you are also having the space to work on the long-term. Agriculture is an area we need to address very much. Both in terms of what it can do for us as a foreign currency earner; to export our products, we need to be able to do a lot in agriculture, in order to use this massive agricultural land that we have, to export to our trading partners in the region. But there is a lot of work that needs to be done. You need to meet the export standards that are set by these countries, you need to upgrade your export capabilities, you need also to convert some of your wasteland that is being used for growing qat and all these into to a crop that can earn money for the country.
But also very important -- we are growing at a rate of about a million people a year. In 25 years, we will be double this population, we need to start from now to address how we are going to create enough resources to feed this population, to give jobs to this population; and unless we start now to work on this, we will be in 25 years again having another revolution.
Fisheries is another industry that we can work on. Tourism is another industry we need [to work on]. The problem with tourism is that it has got a very low tolerance level for security and that is an area we need to work, in terms of political stability, social justice, terrorism-fighting, all these fronts have to work together in order to address and bring in tourists to the country.
Then you have got the mining sector, the oil and gas. We need to open up the country and actually show the rest of the world, that we are open for business. And these need investments from our sides to invest first in our own in the country, the resources that we are earning, but also to use these resources in order to get partnerships. The future of Yemen will not be built on donations, the future of Yemen will be built on partnerships. This is the only way forward. Unless we can convince the national and the regional business community that you come here, we want you to make as much money as you can out of our country, we want you to succeed in our country, because by your success we will succeed as well. That's what we need, and that's a long-term approach.
Arabic Knowledge@Wharton: How would you describe the potential of the energy sector in Yemen?
Munir Ali Daair: I think what we are told is not entirely correct. I think Yemen's potential in this oil and gas is much more than what is told. Now you can't ask me for proof because I don't have geological studies to give you, but we know from speaking to people who are scientists in this area, that the resources available are much more than what has been coming out now, especially when it comes to gas -- we are, for instance, finding more and more gas in Yemen. There has to be more than what we have.
See, if you have a mountain that has got gold under it, you can't get the gold unless you invest to extract it. The problem of Yemen, in my view, is not that the resources are not available, it's that the investments to take out these resources have not been done. And the government again is to blame for this, because the government has not had an oil and gas user-friendly policy. As a businessman, I am very disappointed with the way they have handled our relationship with the foreign companies in Yemen. If you go to any one of these big oil companies who might think of Yemen, they will not come first to ask me as a Yemeni, they will go to ask foreign oil companies that are operating here what their experience of Yemen is. If they hear good news from them, they will look at Yemen seriously. So we need to start taking better care of the oil companies that are existing in Yemen, so that they can send out better information about us... We do not have the financial resources to exploit our oil and gas resources. Neither do we have the technology to do it. The technology and the financial resources are out there. We need to bring them here. And the only way to bring them here is to make sure that they hear good stories about us.
Arabic Knowledge@Wharton: What do the prospects of growth look like it when comes to new and emerging technologies, telecommunications and the Internet in Yemen?
Munir Ali Daair: We are still far, far away in Yemen in terms of communication technology with the rest of the world. We're still behind. And the growth in that area is tremendous. However, in order for this growth to happen, again, we have to go back to the government. And make sure that the government has a user-friendly policy in this.
Let me give you a simple example. Before 2008, I could use my BlackBerry in Yemen to get my Internet connection, through the BlackBerry system. In 2008, BlackBerry was banned in Yemen. Obviously, the government of Ali Abdullah Saleh thought that BlackBerry is going to overthrow him. That's why they banned it. Well, they were overthrown in 2012, and it had nothing to do with BlackBerry, it was Facebook. That was the culprit [laughs].
So when you have a tool like BlackBerry, which is today dominantly used everywhere in the world, in the smallest corner of the world, and it has become the tool of choice -- and I'm not advertising for BlackBerry -- but I'm saying as a technology, where me as a businessman can communicate wherever I am in the world, and send and receive emails and do my business is blocked in Yemen, where does Yemen go in terms of applying technology to improve its business capabilities? We are very far behind. The government has got a very weird sense of security, thinking that things like BlackBerry will steal its security, it is the most stupid...kind of policy that is actually hitting the Yemeni businessman. So, if you want to do business, you need communication and the more efficient communication you have, the faster business will develop.
Arabic Knowledge@Wharton: Post-revolution, what does the scope of entrepreneurship look like?
Munir Ali Daair: The government is still very big in our lives, unfortunately. Hopefully we are going towards an area where we will be able to cut down the size of government and grow the size of the private sector. But the government is very much alive and dominating everything in our lives. And so the entrepreneurial spirit, although it exists, to develop it you need to be free. And to be free, you need to have a smaller government. So we're getting there, definitely today is better than it was two years ago, but we haven't reached there yet. Basically, our ambitions are far greater than what we have today.
Arabic Knowledge@Wharton: Is it hard for someone with a new idea to establish a small business or startup here?
Munir Ali Daair: We don't have this. In the Arab world, the concept of venture capitalism, capitalist is not there, not developed yet. You cannot, as a youngster today, have a brilliant idea where you have connected all the dots from A to Z and present it in a very business-orientated way and give it to an investor and say yes, the guy will put in the money. We do not have this venture capital spirit. And this is why, despite the financial resources that are vast in the Arab world, we haven't developed it. And this is why in the Arab world we are still behind when it comes to innovation. Because we have innovators, but we don't have people who will put their resources behind them. So, if you are going to create something and keep it in your cupboard, it doesn't take you far.
Arabic Knowledge@Wharton: Does the business community have a role in Yemen's transition following the revolution?
Munir Ali Daair: They have a role, but are they playing the role? I think the government is too big in our lives and I think the government size needs to be reduced and cut down and that automatically means that the private sector has to grow in size. That is the engine of the economy. We are supposed to be the biggest employers in the country; the government is in fact the biggest employer. I mean the government owns refineries, the government owns cement factories -- we still do not know, we still have not been able to know whether this is a government or a business enterprise. I admire something Margaret Thatcher said once: the business of government is to be out of business. In Yemen, the government is very much in business, and that's one of the problems we have in Yemen. If you take any refinery, it employs about 3,000 people, you can run it with 500 people. So what are 2,500 people doing there? It's government-owned... Show me a government that has tried to become a government enterprise, and I'll show you a government that has failed. You can't do that. You're either a government or a business enterprise.
So, what does the business community have to do? We have organizations like the chamber of commerce and all this, but we need to get ourselves organized and get our act organized. It's one thing to have a chamber of commerce that does what chambers of commerce are supposed to be doing, but we need to have a business community that can influence how the government is operated, how the government is run. And I'm not saying in a corrupted way, but actually making the government realize that this country cannot move forward unless the engine of the economy works. And the engine of the economy cannot work unless the private sector is strong. And again, you can't have a private sector [that is] strong if it is in disarray, if it is working in different directions.
So we need to bring together the different business leaders. Take a look at some of the laws that have been passed in the past -- the VAT law, the investment law -- these are laws that are in the heart of the private sector, yet the private sector hasn't really been involved in discussing these laws with the government. The government will tell you, "Well, you have some members of parliament who are businessmen," when that's not enough; we need a broader discussion.