Sunday, May 07, 2006

Arab Mentality

Arab investments abroad (in non-Arab states) amount to 700 to 800 million dollars, while foreign direct investments in the Arab states do not exceed 10 million dollars, revealed Friday representative of the African Development Bank (ADB) in Cairo, Mohammed Hmidouche.

Speaking at the international conference on "Investment, Cultures and civilizations: Links and Impacts" held December 11-12, Hmidouche said Arab investments abroad are usually conducted in stock market, real estate and fixed term deposits.

Arab capital-holders usually entrust their money to brokerage companies in London, Geneva or New York, he explained, adding that the Arab mentality is a merchant's mentality, not one of entrepreneurs.

The ADB representative linked the meagerness of inter-Arab direct investments to "market narrowness, political risks and insecurity, deploring the "alarming situation" of the Arab private sector, which he said represses creativity and modernization, opting for imitation and foreign labels franchising.

According to Hmidouche, the situation in the Arab private sector is also due to its "traditional relations" with the administration, the absence of vision and of strategies to develop the private sector, lack of competition, monopolies, predominance of conservative family enterprises and management focused on short-term benefit.

The executive cited numerous other causes such as the absence of research and development (R&D) activities, massive recourse to bank loans instead of using one's own capital, systematic seeking of duties exemption and fiscal fraud.

He also deplored the prevailing nepotism in the private sector like in administration, the lack of reliable statistics, saying that major financial data and economic indicators vary from a financial institution to another (central banks, World Bank, IMF, UNDP√Č) and intellectual property is not respected despite adherence to international specialized organizations.

arabicnews.com

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