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From business shareholders to society stakeholders

If you think the only responsibility for a business is to make profits, think again. Experts at the World Economic Forum on the Middle East in Sharm El-Sheikh highlighted Arab businesses’ civic duty – alongside governments and civil society – to invest in their communities. “A number of years ago, the only responsibility for business …

If you think the only responsibility for a business is to make profits, think again.

Experts at the World Economic Forum on the Middle East in Sharm El-Sheikh highlighted Arab businesses’ civic duty – alongside governments and civil society – to invest in their communities.

“A number of years ago, the only responsibility for business was to make returns. Now, there is a societal change.an understanding that businesses and governments have to be partners not just in business development but also in social development, said Neville Isdell, chairman and CEO of The Coca-Cola Company.

“Unless we do that effectively, the legitimacy of our economic model . will be jeopardized, he added. “We have to be locally involved; from governance to philanthropy to corporate social responsibility [CSR].

Panellists agreed that in order to sustain their businesses’ profitability, Arab companies have to make the shift from shareholders to stakeholders and engage in their society’s education, healthcare, environmental safety, employment and overall welfare.

“The role of the shareholder is now being replaced by the role of the stakeholder. Business is not only about the economic gains being created, but also about social gains and environmental gains, explained Arif Naqvi, founder and CEO of Abraaj Capital.

“It not all about business and profits. It goes beyond that. Businesses, whether you like it or not, influence society. They are job creators. They are agents for growth, stressed Fadi Ghandour, founder and CEO of Aramex International. “If we think that business is only business, then we are missing an important value: the social dimension. Businesses have to invest in the society. Invest is a keyword here. It’s not CSR. It’s not charity. It’s an investment in society.

He explained that as businesses grow and make more financial returns their responsibility towards societal development grows. He outlined the important social values for businesses such as investment in education and healthcare as well as combating pollution.

This year’s forum on the Middle East – dubbed one of the most successful gatherings – has shed light on the importance of actively engaging in social issues that could hinder growth and prosperity in the region.

“Business has great management tools to offer. The flexibility to move quickly, access to global capabilities and resources; and last but not least, the ability to direct resources and personnel to urgent needs. The link between business and development falls in the area that has come to be called corporate social responsibility, said King Abdullah of Jordan in his inaugural speech on Sunday.

“There are those who think of CSR as a new term for charity or a kind of public relations. I don’t believe that we in the Middle East could ever make that mistake. Comprehensive development is a pillar of our economic future. It is essential to the success of every business here. The more effectively we work together, the faster we can change lives, build stability and create the future our people deserve.

Experts agreed that the public and private sectors must join forces towards this end.

“We need to realize that the region is in transition. The roles are changing. As governments open up and turn into an open-economy, they [also seek] engagement from the private sector, stated Egyptian Prime Minister Ahmed Nazif.

He referred to the Egyptian Education Initiative as an example where Egypt has been successful in public-private partnerships. Backed by Egypt’s First Lady Suzanne Mubarak, the initiative tackles teaching reform in Egypt’s public education institution, in an integrated effort from public entities, private sector, multinational donors, and NGOs.

“Nowadays, the private sector has become more engaged on its own.. People are now talking about partnerships, and businesses realize that reforming governments need that sort of partnership because without it they won’t succeed in the country.

“As we transform our society, there are those who are deprived [of that reform process]. There are those who say that reform only benefits the rich. So now, it’s keen for businesses to bridge that gap, said Nazif.

Several speakers drew on their personal experience in effectively engaging in their communities and building skills of their youth, not only on a domestic level, but also on a regional level.

Mohamed Alshaya, executive chairman of Alshaya Group (a master franchisee of several multinational brands including Starbucks and H&M) said that his company has embarked on training 1,000 students in Kuwait and exposed them to the work environment, preparing them for future work opportunities. The group has also trained and recruited several women in Saudi Arabia to work for H&M.

Again, experts emphasized the importance of adopting an effective educational system that builds the knowledge and skills of the region’s highest assets: its youth.

The infrastructure of the mind is essential. We need to work with the public sector to invest in the human mind, Ghandour said.

He cited a recent McKinsey survey of university graduates in 400 companies in the region that found that 63 percent lacked basic skills for their jobs, 57 percent lacked practical skills, and 48 percent lacked communications skills. If the region is going to provide 100 million new jobs, he said, the private and public sectors will have to decide together on schools required and improve basic education dramatically.

“Education is not only about getting children to schools. It’s about quality of education, stated Robert Zoellick, president of the World Bank Group. “Private sector in the region is increasingly a driver to this.

“Businesses need to work with governments to build better education standards and better curricula of education . They need to connect the educational system to employment. They need to ensure that you don’t have a gap between graduation year and actual employment.

Panellists highlighted the importance of developing education as well as vocational training. “It is not enough to send [children] to schools . We need to create vocational learning because there is a mismatch in this part of the world. Vocational schools will offer an incredible return on our societies, said Naqvi.

Topics: FJP

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