In the early 20th century, during the British colonial rule, an Egyptian suddenly decided to establish the first national bank. He was motivated by a moving experience. An Egyptian farmer was crying in shame, anger and sorrow because the British bank tricked him. Typically, they gave him a loan, drove the cotton price down and confiscated his land for payment. Now, he was going to work as a laborer in his ancestors’ land. Young Talat Harb Basha decided then and there to establish Misr Bank. Many laughed at him. He proved them wrong. Within a couple of decades, Misr Bank set up 28 Egyptian companies producing everything from cotton dresses to heavy industries. They went into every field from hypermarkets for local products to cinemas for local movies, to sea, air and land transportation.
In addition, the bank helped start 60 more businesses in all kinds of production and service fields and supported them.
The bank trained and maintained a competent and competitive professional Egyptian workforce. Not only did Talat Harb Basha supervise them during work hours, but he also insisted that as representatives of the bank they must behave well in their private lives. He would fire anyone who mistreated his wife or stole his neighbor’s. The bank’s image had to be upheld at all times.
When the British forced him out, Misr Bank was worth more than two billion Egyptian pounds. He commented: “They could fire me but they can’t fire the professional generation this nation now has.”
Many Arab banking pioneers were inspired by this example. In Saudi Arabia, Salem Bin Mahfouz founded the National Commercial Bank to break the “economic colonialism” in his country, as he explained to the founder of modern Saudi Arabia, King Abdul Aziz. He set up companies, built low-rent flat blocks, and supported hundreds of factories, farms and businesses. The bank played the role of a central bank before one was set up at a later stage.
Suleiman and Saleh Al-Rajhi started, like Bin Mahfouz, from the bottom. They well understood the needs and aspirations of their nation and business environment.
Their banks were more like a holding company of specialized units. They entered the fields of modern agriculture, poultry, manufacturing and marketing, among others.
In addition to supporting businesses, those pioneers helped their people. As much as a third of their fortunes was spent on charity, with billions set aside for the poor and the underprivileged.
In the beginning of the 20th century, Mohammad Ali Xenel set up a network of schools. Apart from providing free education, he supported the poor students’ families and sent the best of them to India for higher studies. In the 1960s, Abdullah Al-Suliman donated a vast swath of land, including his palaces and farms, to support the establishment of King Abdul Aziz University in Jeddah. Abu Bakar Bakhashab was the first to support the project with a million riyal donation, a fortune by the standards of those days.
Today, fewer people act and think the same way. The best among those who do is Mohammad Abdul Latif Jameel. He put up SR100 million to establish pioneering schools, services and funds. Hundreds of poor women are getting micro financing of up to a thousand riyal to start small businesses individually or in small groups. Young girls and boys are taking training courses like food catering, hairdressing, fashion design, event management, and car maintenance — something new to Saudis. Others are sent abroad to study in prestigious universities like Massachusetts Institute of Technology, Oxford and Cambridge. Before they graduate, Jameel finds them secure jobs in and outside his group. Abdulrahman Fakeeh is another shining example. His free training schools are focused on modern tools like computer and languages, as well as traditional ones like farming and poultry. After graduation students are free to work for him or anywhere else.
The same can be said of charitable business groups, like Alkherieji, Alamoudi, Bin Mahfouz, Xenel, Binladin, Al-Juffali and Bugshan.
There must be many others working silently. But the number is too small, the help insufficient, and the philosophy rapidly changing. Banks today are more concerned with fueling consumerism than nurturing small businesses. Most investors prefer to make easy money by building malls, importing and selling consumer goods, and providing services and entertainment. Productive businesses that provide jobs and reform the economy attract fewer investors.
Charity is less smart, focused and directed toward sustainable help, such as training, cottage industry and productive families. Investment avenues are hardly enough to absorb more than SR500 billion in private bank accounts alone.
We blew our first economic boom of the late ’70s, and need to dramatically change strategy, philosophy and attitude before we blow our second chance.
