SAUDI NON-PROFIT BRIDGES PUBLIC/PRIVATE SECTOR TO

C O N F I D E N T I A L SECTION 01 OF 02 JEDDAH 000250 SIPDIS SIPDIS RIYADH, PLEASE PASS TO DHAHRAN; PARIS FOR ZEYA; LONDON FOR TSOU; DEPARTMENT FOR NEA/ARPI, MEPI AND DRL SIPDIS E.O. 12958: DECL: 03/28/2016 TAGS: EAID ECON EFIN ELAB PGOV SA SOCI KMPI SUBJECT: SAUDI NON-PROFIT BRIDGES PUBLIC/PRIVATE SECTOR TO CREATE JOBS REF: A. JEDDAH 00216 ¶B. JEDDAH 00224 Classified By: Consul General Tatiana C. Gfoeller for reasons 1.4 (b) a nd (d). ¶1. (C) SUMMARY: This is the third in a series of cables profiling community service activities funded within the Kingdom by Saudi corporations. These programs are both indicative of the country's emerging civil society and illustrative of the challenges facing Saudi Arabia, including unemployment, the disenfranchisement of women, and a weak educational infrastructure. This cable focuses on the work of the Centennial Fund (CF),which, unlike programs sponsored by the Abdul Latif Jameel Company and Savola (see reftels), is under the umbrella of a quasi-government agency while receiving its funds from a variety of corporate donors instead of from a single entity. CF provides zero-interest loans for young, under-employed entrepreneurs and works with them to develop sound business plans. Having specifically requested Consulate support for training, the Fund represents an opportunity for the USG to further the nascent evolution of civil society in Saudi Arabia. END SUMMARY SMOOTHING THE PATH FOR OTHERS ¶2. (U) The Centennial Fund began as a pilot program in 2005 with the endorsement of Prince Abdulaziz bin Abdullah bin Abdulaziz Al Saud and under the umbrella of the Saudi Arabian General Investment Authority (SAGIA),a government body established six years ago under the leadership of General Manager Hisham Tashkandi to promote investment in the Kingdom and to facilitate cooperation among various ministries and agencies. The program is managed by Administrative Director Mahmoud Abdulaty, a trained engineer who built a food supply company from the ground up in his native Egypt. In a recent meeting with ConGenoff, Abdulaty explained that it was not until he went to business school after 20 years of keeping his company afloat that he realized how much time had been wasted in trial and error. "I had been doing everything all wrong, even though I was successful" he said, "because I had had no proper training. And I thought, 'Why is there no guidance for this?'" After moving to Saudi Arabia three years ago to work for the Jeddah Chamber of Commerce and Industry, Abdulaty decided to help others to avoid his mistakes and began volunteering for the Centennial Fund. He assumed his present, full-time position with CF late last year, shortly before the program began in earnest. ¶3. (U) The pilot program was given a start-up budget of approximately 5 million Saudi Riyals and aimed to fund an initial 20 projects at up to SR200,000 each. The seed money was the result primarily of Tashkandi's fundraising efforts and was donated by some of the country's largest companies, including SABIC, the National Commercial Bank, and E. A. Juffali Brothers. In response to a series of newspaper advertisements soliciting applications from aspiring entrepreneurs ranging in age from 18 to 35, four thousand applications were received. CF narrowed these down to 100 semi-finalists, who were then interviewed and given guidance on how to conduct a feasibility study of their proposals. This included assessments of fixed costs, variable costs, potential revenues, and profit margins. ¶4. (U) Though only 20 young entrepreneurs were ultimately selected (nearly 30 percent of whom were women),Abdulaty claimed that the experience of the feasibility studies still left the other applicants with a tangible skill. "I looked for passion (in making the selections)," said Abdulaty, "and we chose people who had no other means of realizing their goals." The focus was on working with entrepreneurs outside of the country's three main cities; five-year, zero-interest loans were given to participants in the Eastern Province, Abha, Medina, Najran, and Jizan, in addition to Riyadh. INNOVATION LEADS TO MARKED SUCCESS ¶5. (U) Following the selection process, CF organized a series of orientation programs to help the entrepreneurs flesh out their ideas and develop concrete business plans. Abdulaty explained that CF's strength above other micro-financing programs is its ability to use SAGIA resources to facilitate licensing. He called SAGIA a "one-stop shop," with its office in Jeddah housing representatives from 12 different ministries. Specific cases JEDDAH 00000250 002 OF 002 highlight CF's successes. One SR180,000 loan was given to a luggage porter in Medina, who constructed metal bins that could carry several bags via forklift to and from visiting buses instead of hand-carrying them. By charging a mere SR2.5 per pilgrim, the porter earned over SR500,000 during the one-month Hajj pilgrimage, taking him from a subsistence laborer earning a few thousand riyals a month to a well-off businessman. His idea to provide more efficient service and to increase dramatically the number of bags he can transport in a day has apparently caught on, and numerous other porters in the area are now seeking funding to start similar businesses. ¶6. (U) An equally innovative approach was taken by a loan recipient in the Eastern Province, who has started the first women-run telemarketing firm in the country. With very little overhead, she garnered enough contracts from area businesses in her first four months that she has been able to hire eight other female employees to place marketing calls. Abdulaty used this as an example of the multiplier effect that successful businesses can have on the economy, creating employment not just for CF's "clients" but for others. Additional Fund projects include a facility for recycling used oil from mechanics shops, a fishing company, and a variety of retail stores. Despite the fact that each entrepreneur is assigned a mentor and that Abdulaty visits the small businesses regularly, he admits that a couple of the projects have needed more attention and assistance than others. Always positive, however, he plans to use these as case studies for the next group. ¶7. (C) COMMENT: Though the Centennial Fund was created under the auspices of a government body, it represents a successful public/private partnership such as those now in vogue in the US. Abdulaty insists that it maintains its complete independence, and there is no evidence to suggest that the government connection does anything but help the entrepreneurs to meet regulatory requirements quickly. CF received some initial guidance from Youth Business International, a program of the Prince of Wales International Business Leaders Forum, and is thus clearly open to international cooperation. According to Abdulaty, CF aims to fund a total of 100 small business loans in 2006 and would welcome USG assistance in training the young entrepreneurs and refining the program's structure, particularly the mentor component. END COMMENT Gfoeller