The Reporter

ADDIS ABABA, ETHIOPIA – These past few weeks we have been writing about Sheikh Mohammed Hussein Al-Amoudi’s investment in Ethiopia, with particular emphasis on the large tracts of fenced-off land that have been left undeveloped for a long time and projects that are abandoned/neglected after they are well under way.

Why this emphasis now? Does the issue truly deserve to be a subject of concern? Whether Sheikh Mohammed Hussein Al-Amoudi’s investment is successful or fails, does it have such a meaningful impact on the Ethiopian economy to merit so much fretting and writing?

Yes, it does and as such needs to be emphasized. The Sheikh’s investment is the foremost and biggest non-governmental investment in Ethiopia. He is involved in such investment fields as agriculture, manufacturing, transport, hotel and tourism, finance and trading, education and health, sport and entertainment, mining and energy, construction, etc.
The diversity of the fields, the volume of investment as well as the job opportunities created by his investment are so significant that his role requires particular attention.

Sheikh Mohammed Hussein Al-Amoudi’s decision to invest heavily in his country of origin and create thousands of jobs is quite commendable. Despite this, however, one glaring weakness is apparent in his investment: the absence of a management capable of making the investment successful.

Organizationwise, the appropriate organizational structure required for investment purpose is absent. There is lack of clarity as to where and how his major investment vehicle in Ethiopia – Midroc Ethiopia – and other companies are headed to, operate and are managed.

Some of the persons appointed to positions of management are known to have official portfolios and a sense of duty to serve their country. On the other hand, there are those who, without having an official portfolio, claim to be managers and wield considerable power. Heaven knows how they came to have such power.

Consequently, the incapable and unauthorized “management” is increasingly riding roughshod over and undermining the capable and properly appointed management. The investment, hence, is gradually becoming one which is not run by a legally appointed management but is being pulled about by a bunch of “cell-phone overlords” who have no official portfolio or office.

This state of affairs necessarily creates a potentially alarming situation. If, God forbid, something bad were to happen to Sheikh Mohammed Hussein Al-Amoudi, can his companies operate normally under this condition? As things stand now, the answer must be no. So what would be their fate? They would fold up. Can the government prop them up? No, it can’t. Is there another local investor which can come to their rescue? No. Can anyone bail them out as the US government did its financial institutions? No.

Their failure will entail the loss of countless jobs and “toxic” debts for the banks which lent them money; their incaple managements will cause financial loss through their incompetence. The result is a disastrous chaos.

It’s because we foresee that such an unpleasant scenario will unfold that we believe the situation calls for urgent attention.

Can the situation be ameliorated before it develops into a full-scale crisis?

If the Sheikh is determined to address the problem fundamentally, we believe it can be resolved shortly. It is our wish for the problem to be properly handled and to see both him and the nation benefit from it.

There are a range of measures that can be taken with a view to bring about the desired solution. What are these?

One: To create a capable and strong management

Assess the existing situation critically so as to identify both strong and incapable members of management. Headhunt for competent persons experience at running the investment locally and, if necessary, abroad with the aim of putting in place immediately a capable, strong and forward-thinking management.

Two: Get rid of greedy, incapable and unappointed “shadow managers” and “cell-phone overlords”

We think that the fact that there exists a chronic managerial problem, and it is the major problem, is obvious to everyone. The problem is not attributable to the absence of capable persons willing to work for the Sheikh; rather it can be traced to the proliferation and the ascension to power of individuals who claim to be loyal servants but, in fact, derail his investment for their own selfish interests and who, without having any official portfolio or office, meddle in and hold up things orally through their cell phones. If these individuals are relatives or friends, they can be assisted without being allowed to interfere in work-related matters. But they must be purged from managerial positions within the investment.

Three: Establish the ” Sheikh Mohammed Hussein Al-Amoudi” foundation

It is undebatable that Sheikh Al-Amoudi is entitled to give away his money to whomever he pleases. But he can earn public gratitude when he makes the donation institutionally for a cause which benefits both the public and the nation. This way he gets both spiritual and personal satisfaction.

It should not be doubted that throwing away his money for unworthy causes will not earn him thanks. It will only damage his reputation.

The foundation to be established can support various worthy endeavors in the fields of science, research, sports, arts, etc. Hence, it should be created immediately and commence operation. When it does so, it will have an all-round beneficial effect and put the Sheikh in a good stead with the public.

Four: Focus on dependable investment areas, exit from unviable investments, swallow only what can be chewed

Amassing vast tracts of land and fencing them off without developing them or acquiring pubic enterprises from the government and leaving them idle is not a mark of prudence but an action which seems to be motivated by the desire to stick one’s fingers in every pie. Therefore, the Sheikh’s investments must be focused; he must abandon those activities which have no prospects of earning him a return.

Five: Assess and identify companies in terms of profitability, human resource, organization, technology transfer and societal benefit.

An investment can be deemed to benefit a nation and its people when it creates wealth by becoming profitable; it brings in technological know- how; it engages in the development human resource through education and training; and it provides a service which is of value to the community. Companies need to be assessed from this perspective.

Six: Engage in a healthy competition and cooperate with other investors.

The tendency presently being observed is one of unhealthy opposition, suspicion and creating impediments vis-à-vis other investors and not to act as a role model and benefactor for them. This should be immediately halted and be replaced by a culture of responsible corporate governance which is exemplary and promotes a healthy competition. It is high time for an altitudinal change.

Seven: Provide the necessary governmental support

The government must take it upon itself to closely monitor the investments of Sheikh Al-Amoudi so that it can discuss and work with him in resolving the problems attending them. Overall, the investments are beneficial to the country. This said, however, there are harmful aspects of these investments which must be done away with. In view of this, the government ought take a decisive action in that it must support areas of the Sheikh’s investment which are performing well and have the courage to “amputate” the “gangrenous” ones or administer a panacea to those which can be cured.

These solution measures by no means are exhaustive. The important thing is to abandon a spontaneous brand of management and make the transition to a scientific investment management. If there is a commitment to this goal, it can be accomplished successfully.