Fadi Ghandour's Next Investment: Building a Future for Arab Social Entrepreneurship

by Knowledge @Wharton, September 6, 2012

Fadi Ghandour's name has been synonymous with Arab entrepreneurship. In 1982 he established Aramex as an express operator for the Middle East and South Asia, and it became the first Arab-based company to trade on NASDAQ in 1997. He is also a founding partner of Maktoob, the Arab/English Internet portal that Yahoo! acquired in the fall of 2009 for US$85 million.

Now, Ghandour is stepping away from the CEO seat to take on a new role, joining a growing group of social entrepreneurs attempting new business models in the region that blend profit with social impact.

Having long promoted entrepreneurship in Arab countries, Ghandour spoke with Arabic Knowledge@Wharton about Ruwwad for Development, his first step in social impact efforts, in addition to a broader discussion about what's next for social enterprise in the MENA region.

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: For those who are not familiar with Ruwwad for Development, could you please provide a short description?

Fadi Ghandour: Ruwwad is a private sector led, non-profit community empowerment organization that helps disadvantaged communities through youth activism, civic engagement and education.

We started Ruwwad for Development (which means Entrepreneurs for Development) in Jordan in 2005 by initiating an ongoing dialogue with the community of Jabal Al-Natheef, a severely marginalized urban area of approximately 75,000 residents in the heart of East Amman, Jordan, to identify the needs of the youth, children and the community. We have now expanded to Egypt, Palestine and Lebanon.

Seed funding from Aramex and myself initiated the first project. Then it became an independent organization backed by several private sector entities and entrepreneurs. Ruwwad's model is based on a network of partnerships between the private sector, civil society organizations, target communities and government.

Ruwwad's Mousab Khorma Youth Education & Empowerment Fund (MKYEF) provides students with university scholarships in exchange of volunteering hours every week back into their own community. The volunteering hours are recycled into three main programs targeted at youth, children and the community. It uses a community organizing methodology that supports grassroots leadership development.

Arabic Knowledge@Wharton: How successful has Ruwwad been in achieving social impact? How do you measure the impact?

Ghandour: The impact is measured in different ways. Some of the data is available. But it is also measured in the number of companies and volunteers from the private sector we manage to engage, where the private sector decides to take an active approach to development and invest in their communities. Executives run some programs such as the enrichment program from the private sector, volunteering their time to transfer knowledge and business skills to youth.

Impact is also measured by the employment placement of youth and jobs being created by budding entrepreneurs. One of our students started a company and employs 12 people today. So we also created a micro-venture fund to invest in these new businesses to create employment opportunities rather than just try and place them in jobs.

Our "Six Minutes" reading campaign that aimed to encourage reading beyond school textbooks several minutes a day for pleasure also exemplifies impact. The campaign, led by teachers, youth, and librarians, has created 160 organizers and 23 teams, organized 6,620 public readings and has mobilized 4,463 adults and children who pledged to read alone or collectively.

Arabic Knowledge@Wharton: There's been a lot of talk about social enterprise in India, Africa, and the U.S. But, the MENA region hasn't been as closely associated with social enterprise. Why do feel that is? Are you seeing any changes on that front?

Ghandour: Social entrepreneurs in the Arab World have very much been the story we have been talking about for the past few years, but many choose a different picture when looking at the Arab World.

Anyone who cared to look would have noticed the great social entrepreneurs popping up in the region, from Kamal Mouzawak in Lebanon enabling the small farmers through Souk el Tayeb to Raghda Al-Ebrashi's Alashanek ya Baladi working on employability skills and micro-finance in poverty stricken areas in Egypt, and the social enterprise incubator Nahdet el Mahroossa providing support to the upcoming social entrepreneurs.

In Jordan, we have seen the work of Maher Kaddoura and his great impact on the sharp drop in fatalities and injuries caused by accidents through Hikmat road safety. There's also Rawan Barakat and her audio books for the visually impaired through Raneen Media, Rabee' Zureikat and the cultural tourism and exchange of values with the villagers through Zikra.

We also have Riwaq in Palestine, which engages local communities to preserve Palestinian heritage, and Dalia Association, which creates women empowerment programs and village funds to support projects designed and implemented by the local communities in Palestine. The list is very long.

With the [regional] changes in the past 18 months and with Arab youth requesting change on every front, we will see more social entrepreneurs emerging, taking ownership of their own futures and communities and addressing the challenges they are facing. This could be by creating their own opportunities and jobs or creatively addressing challenges related to health care, education and other services. This trend will continue to grow.

Arabic Knowledge@Wharton: In the U.S., we're hearing more about "Impact Investing," that is, investors taking on more "risky" investments with the belief that it'll have a long-term social and financial return. Do you see this taking place in the Middle East?

Ghandour: In the Arab region, we see a nascent impact investment scene. The ecosystem is starting to form but is still at the very early stages and much more needs to be done. Investors need to take more risks and look for long-term value and results.

We are also seeing several funding mechanisms -- private equity, venture capital, angel investment, microfinance -- that are willing to take more risks, and that is a trend that will continue to grow; but the efforts need to be multiplied for the ecosystem to form.

As I have also mentioned, we have just established the Ruwwad microventure capital fund that aims to be very patient and provide impact investment, in addition to our community investments in education, skills and civic engagement and our angel investing in entrepreneurs.

Arabic Knowledge@Wharton: Much of the discussion around social enterprise is closely tied to the ethics of the business. Do you feel that businesses have the capacity to make money and do good at the same time?

Ghandour: It is an imperative balance. Otherwise the company will not last. Businesses can no longer think short term. The short-term approach is not sustainable. It is not about a theory or looking good. It is about surviving on the long term and striving in a complex, dynamic and competitive economy. Businesses have understood that they cannot divorce their social and environment impact from their financial results and that embedding sustainability in the business model isn't a choice.

In the Arab region, we see more and more companies looking at their triple bottom line and reporting on their efforts through sustainability reports. The key is to embed it in the business model, in the culture, in the processes and operations, in the way you exist and behave as a company and reflect that on all business practices as opposed to having a department that does "charity."

Arabic Knowledge@Wharton: Running a social enterprise is also about running a business at the end of the day. Any advice you can shed from your experience of running Aramex that is also applicable to social enterprise?

Ghandour: Yes. Lots.

Focus on the mission, on your offering and your areas of priorities.

Build the team. Invest in talent, invest in training and education. Empower and include your employees in the decision making process.

Conserve cash, bootstrapping, leverage resources, create strategic alliances, collaborate and build on existing infrastructure.

Engage your stakeholders.

Know your beneficiaries, their needs and challenges; and work with them on creating the solutions.

Nurture innovation and creativity, allow room for mistakes and failure, trials and errors and be flexible and ready to adapt to changes.

Build an attractive, engaging and enabling corporate culture: it is your brand, your reputation and how you choose to conduct yourself.

Arabic Knowledge@Wharton: For the MENA region, there has been great focus on the massive youth population that is underemployed or unemployed. Are you seeing any successful social enterprises that are trying to address this problem in the region?

Ghandour: Entrepreneurship in general is addressing the issue of unemployment by creating new employment opportunities. Youth are creating their own opportunities and are becoming job creators rather than job seekers, and this is the way we should support them.

Many social enterprises and NGOs as well as companies are also addressing these challenges by supporting education, employability skills, entrepreneurship skills, mentorship, incubation, and providing the tools for youth to be able to start their own businesses or look for private sector employment rather than look for job opportunities with the government.

There are ample examples of organizations that provide support: WAMDA, Injaz, Ruwwad, Berytech and Bader, MIT Arab Business Plan Competition, OASIS 500, Endeavor, Sherketna, and others, in addition to businesses and startups, angel investment funds and social enterprises.

Arabic Knowledge@Wharton: What is the field of social enterprise still lacking?

Ghandour: I think many people look at social enterprise as a not-for-profit endeavor, whereas I see profits and social impact rather interdependent. We need to look at new innovative business models that will be economically viable and will enable ecosystems to form to allow social enterprises to grow and be sustainable.

Also, I believe funding for social enterprise has to be much more daring and more patient, so social enterprises can grow and the ecosystem can be formed. This includes awareness of the various roles of stakeholders and discussions on partnerships, impact, funding and much more engagement of the various stakeholders. Unfortunately, the private sector remains until today an untapped and unengaged resource. While this is slowly changing, we need to encourage more engagement and partnerships.

Another issue is our definition of impact, and the way we measure it, which needs to be redefined to include more in depth analysis and long term results that take into account social and economic indicators, but also measure the engagement of the stakeholders and the communities in creating the solutions, the quality of the solutions offered, and the influence created to transform an initiative into a movement.

It is a learning process, but creating a systematic documentation and reporting process and sharing these efforts will allow for more knowledge sharing and learning from failures and shortcomings.

Arabic Knowledge@Wharton: What has your experience with Ruwwad for Development taught you in terms of running an organization devoted to social impact versus a for-profit company? Are some of the skills transferable? Any crossover?

Ghandour: The approach is not different; it is an entrepreneurial approach where we try to leverage our resources. We always focus on the people.

Ruwwad taught us the meaning of partnership and exchange of values and its model is based on it. The scholarships are in return of community service, not service driven but an exchange of value and empowerment driven.

Ruwwad also taught us the definition of marginalization. While Jabal al Natheef in East Amman was a marginalized community, we realized we were equally marginalized as citizens because we were not part of the development process. Ruwwad allowed us to overcome our own marginalization by working with the community to overcome its marginalization.

Most importantly, Ruwwad taught us engagement: How to engage communities and stakeholders to co-create our own solutions.

Published September 04, 2012 in Arabic Knowledge@Wharton