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Wed 15 May 2013 04:49 PM

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Time for change

Saudi-born Dr Nahed Taher has led an extraordinary career, from being the only woman in a company of 4,000 men at National Commercial Bank to becoming the first Arab female to set up her own investment bank. She talks to CEO Middle East about Saudi Arabia’s economic diversification plans and why the kingdom must embrace privatisation

Time for change

With her trademark blonde hair and immaculately applied lipstick, Dr Nahed Taher looks nothing like a stereotypical banker or economist — much less one from Saudi Arabia. Despite being born in a country known for its strict Islamic regulations, the Jeddah-based businesswoman has been breaking with convention even since she left her position as chief economist at National Commercial Bank (NCB) to set up her own investment bank.

“When I worked at NCB I had a big opportunity to advise some very senior people and see the whole world through the bank. The male-dominated environment was hugely supportive, even the ministers and princes, so when I decided to quit, people thought I was crazy,” she tells CEO Middle East.

Disillusioned by the increasing emphasis that Saudi lenders were placing on selling consumer loans, Taher co-founded Gulf One Investment Bank in 2006, becoming the first Arab woman to set up a bank and the only woman in the Gulf to run one. In seven years, her firm has raised over $10bn for infrastructure projects across the Gulf, Asia and Europe and currently boasts more than $2bn worth of assets under management.

“I decided that Saudi Arabia needed a bank that really focused on investment banking not in trading and mutual funds but really investing [based on] Islamic principles. Islamic banking not conventional — because I don’t believe in many of them, it’s just sugarcoated — so in every project we share the capital and sit on the board — we are not passive. We sometimes take distressed company, sometimes projects as a whole or create companies,” she says.

Gulf One Investment Bank, which is based in neighbouring Bahrain, may be run on Islamic principles but Taher is a supporter of more progressive policies in her home country, supporting moves to put women in the driving seat, encouraging more females into the workplace and calling for greater government collaboration with the private sector to boost economic diversification.

Her departure from NCB may have been a surprise to many of her colleagues but Taher has enjoyed an unorthodox career for many years. She studied for a PhD in economics at Lancaster University Management School in the UK, is a former professor and head of the accounting department at King Abdulaziz University in Jeddah, and turned down a career with the International Monetary Fund to return to Saudi Arabia, eager “to do something for my own country”.  Following her return to the kingdom, she became the first and only woman to join the 4,000-strong National Commercial Bank.

Saudi Arabia has made several reforms in recent years aimed at making it easier for women to work in the Gulf state. King Abdullah swore in the country’s first female members of the Shoura Council, an appointed body that advises on new laws, in February, has built new universities for students of both sexes and encouraged women to participate in the labour market. Taher supports such moves, adding that women can play a key role in the oil-rich state’s diversification.

“Women have a big role to play in terms of entrepreneurship; it is key to the success of women in terms of creating jobs for them. The government has been making huge efforts to increase the employment of Saudi women but they have succeeded [in achieving] very little because it is not in their hands,” she says.

“It’s the whole economic strategy and I think the time is very much geared for us — with all of these uncertainties surrounding us and the problems outside [of the country], I think we should focus more on the inside,” she adds.

Focusing on the inside means creating jobs for Saudi Arabia’s rapidly growing population. Currently around 90 percent of Saudis in work are employed by the government while 90 percent of jobs in private companies are filled by around 8 million foreigners.

In recent years, the government has stepped up its efforts to encourage more nationals into the private sector and reduce unemployment, introducing the so-called Nitaqat system, which aims to boost the number of Saudi nationals in the private sector by fining those that do not meet quota requirements.

While Taher supports quota systems, she adds that it is important that those employed are fully qualified for the roles they take on.

“If the Saudis can do the job and have the capacity to do the job — the skills and experience or can be trained for the job — then I am 100 percent [behind it]. But if the quality is lower or they cannot succeed in the business then it is harming the economy. It is not about replacing a Saudi with an expat, it is about the skills [required] and whether or not they can do the job,” she explains.

She adds that the availability of jobs will undoubtedly depend on the creation of new industries. “Job creation is the only way [to reduce unemployment] and it will not happen when the oil and construction [sectors account for] the majority of the economy. It will only happen if we can focus on finding new sectors that are available and actually proven to work.

“King Abdullah has been doing a great job at sending our kids to universities and coming back as skilled engineers, business people and lawyers but where are we going to put them? It’s not only finding them jobs but about finding them skilled jobs and adding value to society.”

Gulf One Investment Bank’s investment strategy is very much based on areas that Taher believes should be developed not only in her home country but across the region. The Bahrain-based firm has financed a desalination plant in Jeddah, and owns a stake in the Singaporean water company Moya Asia as well as companies that develop technology to reduce carbon emissions.

“The three things [we look for when looking to invest] are: make money, be green and create jobs,” says Taher. “It is brain intensive — we have around 75 employees in four branches, Saudi Arabia, Kuwait, Bahrain and Munich — but the beauty of it is that the job creation is not with the bank itself, it is with the companies that we are [investing] in,” she adds.

While Gulf One Investment Bank’s priority is Saudi Arabia and the Arab world, it will continue to operate the same business model — co-investing in projects — and expanding its business across the world in areas, explains Taher. “Our capital goes into each fund and each project until the client or the customers exit and then we exit. It’s not simply a case of us taking the money off the client and then investing it and whatever happens we take our fees. [Our fees] come from the profit with the clients.”

Taher sees huge potential in raising finance for infrastructure projects in Saudi Arabia and the rest of the Middle East and is currently looking at collaborating with companies in the energy, recycling and waste management sectors. The investment bank also plans to launch a home healthcare service in Saudi Arabia in partnership with an international partner, says Taher.

“We estimate that there is around $1.5 trillion worth of projects in the region. In all of the budgets [governments] talk about a surplus but it’s not really a surplus, the finance we need is more than we have and the only solution is having international intelligent money and international partners to come in and enjoy the profits,” she says.

“In the health sector we are planning home healthcare in Saudi Arabia and the region. There is almost nothing around or if it is, it’s on a very weak basis. We are planning a national strategy with a very prominent investor — an international partner that has experience and can put equity in it.”

Privatisation, which Saudi Arabia has yet to fully embrace, is the key to its economic diversity, she adds. “Saudi Arabia has a lot of potential [with] huge diversification plans in terms of infrastructure, energy-related sectors such as renewable energy and alternative energy and we also have a lot of mines. A lot of things can be created but it must be done through privatisation,” she explains.

“The privatisation started with a lot of passion but then a lot of structural problems came in and some have stopped while others have not been executed at all. That of course has a price on the economy and the creation of jobs,” she adds.

“If we still continue to have oil contributing towards 90 percent of our GDP and relying on oil… we are going to have a serious problem,” she adds. “That’s why I believe future projects have to be really well structured through a national strategy of privatisation. The UK strategy of public-private partnership is very good because its more government controlled.”

She adds that ensuring new energy initiatives are green will further benefit the economy. “Recycling, for example, creates new products such as treating waste water. Being a green economy is the way forward for Saudi Arabia. It is already happening but in slow motion. The kingdom has been putting in huge efforts into solar power technology,” she says.

Saudi Arabia may have one of the largest carbon footprints globally but if more like Taher stand up and be counted, the kingdom’s future will certainly be assured.

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