The revolutions in Egypt and Tunisia have opened a new chapter in Arab history. As people in the region and around the world wait for stability, business leaders are optimistic about the future. Ana Gyorkos investigates the recent events as seen through the eyes of accountants.
The journey from Cairo airport to the city centre used to take more than 45 minutes. Today, in post-revolution Egypt, it only takes 10.
A lot has changed since the revolution erupted at the end of January, when people of all ages swarmed the streets of Egypt demanding the resignation of President Hosni Mubarak. Today, people are mainly staying at home as even tougher economic conditions and security concerns hit the country.
The bravery of the Egyptian people throughout the 18-day revolution took the world by surprise. Despite scenes that sometimes resembled a war zone, protesters were adamant to fight for a brighter and more prosperous future for themselves and their children.
People talk of dead bodies on the streets of Cairo and complete chaos during the revolution, but despite concerns over personal security masses of people pushed on until Mubarak was forced to flee.
Egyptians were considered heroes to the rest of the Arab world and the unrest quickly spread throughout the region as people felt empowered by the events in Egypt and Tunisia.
Although the atmosphere in Egypt has changed and living conditions are still tough, local accountancy leaders are optimistic about the future.
There has been some disruption to business as trading conditions have been more challenging during the uprisings, but staff security and retention have been of paramount concern.
Accountancy leaders dream of a region where they can compete for clients in a free market with no corruption.
This may sound like a pipe dream but already there has been marked improvements in countries were corruption was endemic.
Firm leaders are convinced the Middle East and North Africa, where 65% of the population is under the age of 30 years, can move mountains and significantly affect the global economy going forward.
Talal Abu-Ghazaleh is the chairman of the Arab Society of Certified Accountants as well as the chairman and founder of one of the largest professional services firms in the Middle East, Talal Abu-Ghazaleh International (TAGI).
When asked about his thoughts on the ‘Arab Spring’, the former vice-president of the UN Global Compact quips: “I wouldn’t refer to it as Spring, [it’s] more like a renaissance.
“Everything that was happening in this region was leading up to a renaissance. It is just like it happened in Europe and it was only a matter of time before the world will have to deal with another Europe. I always say that what I expect out of this is a Europe-like Arab world.”
Abu-Ghazaleh believes the uprisings were inevitable due to the need for political and economic change. He says the uprisings were led by youth who mobilised efforts with the help of modern IT tools, such as Facebook and Twitter websites. Although dictators have fallen on their swords relatively quickly, real social and economic change will take time and come at a cost.
“It will take years to get things moving. All countries have their own particularities and solutions and there is no one-size-fits all solution,” Abu-Ghazaleh says.
The cost of the uprising The human cost of the Arab renaissance has been high with thousands of lives lost while the economic cost has been a slow down in business.
Dictators, such as Mubarak and Gaddafi, have used excessive force in order to cling onto power and extinguish civil unrest.
“We are concerned by the bloodshed and economic suffering, but in the end was it better to stay as we were under a regime like in Libya where we don’t have a state?” Abu-Ghazaleh says.
“In order to establish a state there has to be a price paid but thems of people who are going to live in that state for the next decades will have the opportunity to live in a state.”
Firm leaders and their staff have been personally affected by the human suffering, however none of the leaders speaking with The Accountant and its sister publication International Accounting Bulletin have lost any staff in the protests. Most firms allowed employees to work from home when the violence posed a threat to their wellbeing.
Institute of Chartered Accountants for England and Wales (ICAEW) Middle East regional director Amanda Line says the institutes 900 members based in the region were not severely affected as most are based in countries that haven’t seen large protests.
“There are ICAEW chartered accountants in Bahrain and while there was some disruption to business there earlier in the year, business activity resumed quickly,” Line says.
“Members and students have indicated that throughout this period it was possible to continue working, helped by current technology.”
Abu-Ghazaleh has a similar experience and says that business across the region hasn’t been too seriously impacted.
“Even in Egypt we had few disruptions as our office is based outside of central Cairo,” he says.
“In other countries in the days where it was reaching its climax we told our employees to work from home, which was made a lot easier because of the internet.”
The accountancy profession
Line tells The Accountant the profession within the Arab world is still seen by many as primarily a bookkeeping role.
“With the majority of graduates looking to gain employment within the public sector, the private sector has some way to go in order to attract graduates,” she says.
The development of the private sector is perceived to be one of the most important chapters in the new Arab world.
A BDO Middle East senior partner, who wished to remain unnamed, says the region’s private sector is very dependent on the government.
“In many of these economies we never used to have a real private sector,” he explains.
“We had a private sector that served government projects rather than a private sector that would stimulate economic growth. So we are going from a private sector that is absent to a private sector that has to take the lead.”
Line says the ICEAW has identified a need for qualified and highly-skilled finance professionals throughout the Middle East and this is vital to the development and growth of their economies.
“The majority of countries are implementing strategies in order to deal with this,” Line adds.
“The biggest challenge in every Middle Eastern country is attracting good quality graduate nationals to the profession. To reduce their reliance on expats, continue to grow and stay attractive to investors, there is a need for more transparency and higher quality financial reporting.”
Line says there are several graduate positions available across the region and the market has significantly developed in past decade.
“From our contact with firms, there are a number of graduate vacancies throughout the region, particularly in Abu Dhabi,” she explains.
The Arab Spring has alerted the region’s leaders to the fact that people have had enough of crooked regimes and that corruption needs to be contained in order to enable a free market.
Corruption is widespread across the region and accountancy professionals have very different opinions on how quickly things will improve. As different oppressive regimes fall there is plenty of hope that things are going to improve, but with corruption deeply rooted it might take a generation before mindsets are changed.
Abu-Ghazaleh says the level of corruption will be brought down and there are early signs this is already happening.
“The level of corruption in the entire region is already down by about 50%,” he says. “Corruption is everywhere in the world but we need to decrease it and bring it to a tolerable level in the Arab world.”
Line believes accountants have an important role to play in the fight against corruption.
“Accountants have key roles to play in enhancing transparency and improving the quality of financial information across the Middle East,” Line says.
“Whether they work in business and prepare financial reports, work as auditors or offer advice to businesses, they can actively contribute to raising the quality bar and increasing transparency. Both are fundamental ingredients for inward investment, which in turn is the key to growth and prosperity.”
Line also thinks it is increasingly important to have more highly-qualified finance professionals in the region with experience of international standards.
The BDO Middle East senior partner says that after uprisings have settled, the accounting profession will attract more attention than any other profession.
“The accountancy profession will become the moral watch dog of society,” he says.
“It will not be a profession that just signs opinions and give the report to any corrupt structure available.
“I think the profession will go through changes and see more prudence, corporate governance and no compromises.”
As the rest of the world waits for calm, firm leaders believe some changes are still to filter through. However, they are all eagerly awaiting the stability that will enable them to lead their businesses into the new Arab world.
The accounting profession has not suffered as much as other sectors during the uprising and when the region begins to mend and iron out corruption the challenge for professional bodies and firms alike will be to encourage the youth to join it.
The International Monetary Fund is forecasting encouraging growth for some of the countries as soon as 2012. The BDO Middle East senior partner expects all economies across the Middle East to experience economic growth from anywhere between 2.5% up to 5%.
In line with economic challenges there are social and political challenges that the region will have to address.
“I think the biggest challenge is stability,” the BDO Middle East senior partner says.
“Stability is key and it will bring with it foreign investment. Stability will encourage the private sector to invest. Stability will give incentives to the young and make them feel that they will be looked after in the future and that their future is not gloomy.”
The younger elements of the population were responsible for initiating the Arab Spring and responsibility for a lot of the future developments will also rest on their shoulders.
One problem, Abu-Ghazaleh warns, is that the youth are “impatient”.
Change can take time and the youth that have pushed for the changes in the region so far will have to be patient similarly to those in countries like Egypt where things will probably get worse before they get better.
But if the European renaissance is anything to go by, the recent changes and social-political developments, led by the youth, will transform the region and bring about a new Arab era.