The Start-Up King

Aramex founder, Fadi Ghandour, tells GC why he supports an Arab common market and why Brexit won’t work.

You do not need to know much about Fadi Ghandour to guess where he stands on the UK Brexit debate. The Jordanian, one of the Arab world’s most storied entrepreneurs, made his name as founder of the logistics giant Aramex and now heads Wamda Capital, a prominent regional venture capital firm.

Much of Ghandour’s career has been about either crossing borders – his courier delivery firm has a presence in more than 60 countries – or transcending them, given his recent focus on online start-ups. So it does not come as a particular surprise to hear Ghandour favours Britain voting to remain in the European Union when the country goes to the polls on June 23.

And just as Ghandour does not welcome barriers going back up in Europe, he wants them to come down in the Arab world, both in terms of open trade and on wider issues like encouraging more women into the workplace.

“If you create barriers, you’re in trouble,” he says. “Aramex has a big operation in Europe, particularly in the UK and we have seen the benefits of an open EU market.”

Ghandour founded Aramex in 1982, taking on the likes of DHL and FedEx. Fifteen years later it became the first company from the Arab world to trade on the Nasdaq stock exchange in New York. The logistics firm later went private before embarking on another listing on the Dubai Financial Market.

Ghandour stepped down as chief executive in 2012, although he remains vice chairman of the company. He now devotes much of his time investing in regional start-ups, with Wamda’s current portfolio including stakes in the regional car booking service Careem and online retailer The Luxury Closet. Ghandour has an impressive track record in this field, notably with his early involvement with Maktoob, the Arab web portal acquired by Yahoo for $165 million in 2010.

Ghandour, who is speaking ahead of his appearance at a Young Presidents’ Organisation network event, is certainly enthusiastic about Dubai’s growing status as a hub for innovation.

“Dubai is experiencing an explosion of start-ups,” he says. “I am an investor and the floodgates have opened.”

Ghandour cites the relative political stability of the UAE, a strong infrastructure and geographical location as factors behind the boom in high-tech businesses in Dubai. Wamda Capital – which makes investments of between $5 million and $10 million in businesses – interviewed 260 companies looking for funding last year. Its Dubai office now sees about two companies a day.

“This is not Silicon Valley yet. It is about 10 years behind what the US is doing but I see a trend of acceleration,” says Ghandour.

But the spectre of shiny start-ups launching in glitzy Dubai comes in stark contrast to what is happening in the wider region, something the 57-year-old is only too aware of.

The stats say it all. According to the International Labour Organisation (ILO), the Arab world has the highest rate of youth unemployment globally. In 2013 the rate stood at 27.2 per cent in the Middle East and more than 29 per cent in North Africa—more than twice as high as the global average.

“Forget the politics of the region. In my view the biggest challenge is how you get millions of youth into the job market. That is what the region needs to focus on,” says Ghandour.

The start-up scene does have a role to play in addressing unemployment, he says. But it is the—arguably less headline-grabbing—small and medium-sized business sector that offers the bigger opportunity for growth in employment, he adds.

“Seventy per cent of jobs in the region are in small and medium-sized enterprises [but banks] do not give them loans so there is this massive mismatch,” says Ghandour.

According to the ILO, about 21 per cent of women in the Middle East and North Africa are unemployed, compared to 8.9 per cent of men.

“It is essential we find a way to get 50 per cent of the population much more active,” says Ghandour. “If they do not want to go out in the workforce then let’s bring the work to them at home. I appreciate there might be some cultural issues but there are many skilled women.”

Education is “paramount” to encouraging more people in the Arab world to work—but it has to be the right kind of learning for the modern private sector workplace, warns Ghandour. There should be a focus on basic skills like computing and the possibility of work placements in the real world.

“The private sector wants to employ people who have the character of thinking critically, understanding how to analyse information [and are] multilingual,” he says. “You do not need to be an entrepreneur but you need to have an entrepreneurial mind. I think [that] is a learnable skill. These are critical elements that we need to get our universities and schools to understand.”

The ability for Arab companies to set up shop more easily in other regional countries would also help businesses in the region, says Ghandour. Current foreign ownership rules are a “restriction on growing companies”, he adds.

“If a Jordanian entrepreneur who is growing wants to set up shop in Saudi Arabia, let him,” says Ghandour. “Protectionism does not work, in my view. You are creating barriers that are not of significance while if you remove them, you create a significant change in how people go about business in the region.”

Ghandour also supports the long-mooted Arab common market, which would herald pan-regional customs tariffs on trade with outside countries, allowing for a more free movement of goods—a bit like, of course, the European Union.

“[A common market] would create jobs because when companies grow, they are going to be employing,” says Ghandour. “If Arab policymakers do not realise this issue, they are not addressing the problem in the proper manner. The open market is how you grow.”

Ghandour acknowledges making some of these regional reforms is “easier said than done”. When it comes to international trade—as the UK will find if it does vote to leave the EU—it takes time to both open and close doors.

“You are creating barriers that are not of significance while if you remove them, you create a significant change in how people go about business in the region”