JEDDAH, 4 February 2003 — The restrictions on travel to Jeddah for Haj pilgrims are having a negative effect on local trade. Small businesses in the historic Al-Balad district have witnessed a massive decline in turnover and consequent loss of profit.

The restrictions had a devastating effect on Jeddah’s small businesses last year, and the same is happening this year.

Haj tour companies based in Makkah and Madinah are obliged to ensure that their clients do not travel independently outside the cities. The authorities imposed the restriction to reduce the number of illegal overstayers in the Kingdom after Haj has finished.

The majority of small businesses in Jeddah traditionally rely on the peak trading periods of Ramadan and Haj to top up their annual income. An estimated 70 percent of the year’s business is done in the days immediately before and after Haj. Without these peaks to sustain them through the year, many businesses become bankrupt. And with only a modest level of trade last Ramadan and heavily depressed business so far this Haj, traders are worried.

“In Haj, most businesses break even,” said Hadi Al Harthi, a long established retailer of perfumes from a street kiosk on the edge of the Balad district. “This Haj, however, business is well down, more than 35 percent on last year.”

Illegal street traders, who spread their carpets and other sales items wherever they find a space, add to the local traders’ problems.

“Pilgrims often arrive with a few items to sell which will help finance their stay,” said Al-Harthi.

Every riyal, no matter how charitably spent with an illegal trader, is one not spent with the established traders. A shop in Al-Balad with a street frontage of four meters and the same depth costs between SR80,000 and SR150,000 a year.

Nurul Kabir, manager of a watch retailer in one of these units, confirmed Al-Harthi’s observations.

“We have seen a steady drop of trade over the last three years or so,” Kabir said. “Just now, we are trading at 30 to 40 percent below last year’s level.”

He said the restrictions on the movement of Haj pilgrims had pushed down trade to exceptionally low levels.

“The pilgrims fly into Jeddah but are then ferried immediately by bus to Makkah, so we don’t have any chance of winning them as customers” he added.

In the higher priced retail market, gold sales are drastically down.

Abdu Sathar, who manages a mid-range jewelry store, sees other influences affecting his business. “High bullion prices have slowed trade as well as the lower number of customers who decide to buy,” he said. He compared the current year’s trading figures with the same day last year.

“Today, we will top SR25,000 but last year it was over SR60,000,” he said.

At first sight, that looks like good business. However, 80 percent of his business is done in the Ramadan and Haj periods.

“We have to have very good income then to carry us through the year. Moreover, profit margins on gold items are comparatively low. Big numbers don’t mean big profits,” Sathar explained.

For the first time in his recollection, income at Ramadan was lower than at Haj.

“Ramadan sales are usually up to the local market and regular customers. Haj traditionally brings us visitors. It’s just not happening.”

The crowds in the area outside his shop looked decidedly thin. “You couldn’t move out there last year,” Sathar said.

In a shop packed with bolts of brightly colored cloth and prayer mats, Abbas Ibrahim Abbas seemed resigned to declining trade.

“In our business, selling cloth for tailoring, I have seen a steady decline over the last eight years.”

He sees the exchange rate as having a significant effect on sales.

“We used to be competitive with our prices,” he said. “Locally, we still are. But visitors from some of the poorer countries with weak currencies used to save their money and buy a few quality items to take home. Now they spend it on getting here.”

He gets a steady stream of potential customers through his shop.

“We have more local people looking at the goods than before, but each person spends less. Income and visitors are both way down,” he concluded.

The traders agreed that their business was significantly down on last year. For some, it was the continuation of a long decline. The majority identified the lower number of Haj visitors as the root cause. None saw much hope of an upturn soon.

“If we don’t get the Haj customers back,” said Abdu Sathar, “a lot of Balad will go out of business.”