Progress without change has a certain attraction as a philosophy and it gained currency in much of the Middle East throughout the 1980s and 1990s.

The notion was that we in the Arab world could adopt many of the trappings of the modern west and in some senses modernize, but not really change. We would preserve our uniqueness and remain somewhat separate and distinct.

That philosophy may grow out of a very basic human fear of change. Change can take away the familiar, change can challenge us and change can force us to re-examine long-held beliefs and ways of conducting our lives. Yet, without real change there can be no real progress.

So, if we in the Middle East want to progress, we have no choice but to embrace change. Not wholesale change or superficial change simply for the sake of change.

The real value is in the changes that will strengthen us and make us more competitive so that we can overcome all the challenges that face us in the Arab world. Those changes can be embraced in a way that preserves our core values and related traditions, but we need to come to grips with the underlying challenges and at the same time leverage the advantages that we have.

A good example is our phenomenal population growth, giving us the youngest and fastest growing population in the world. This could evolve into a very serious problem. But, if we tackle it now – and do it correctly – it could be a real asset.

At a time when countries in Europe and elsewhere have an ageing population and a declining or negative birth rate, our youthful population represents an enormous potential.

The issue is how we harness that potential in a region hampered by a development gap with the rest of the world and two decades of declining real per capita income in most countries – recognizing that if we do not handle it correctly we face massive unemployment and the social ills that would go with it.

It is important to bear in mind that the Arab world is a diverse region. There are 22 countries with various levels of economic strength, education and development, differing legal and regulatory systems and various levels of privatization.

The facts and the tasks facing us have been very clearly highlighted in the 2002 and 2003 reports on Arab Human Development and the World Economic Forum’s Arab World Competitiveness Report 2002-2003.

To jump-start this change there has to be cooperation and coordination between the government and the private sector. Until recently, the governments of the Arab world had always been the dynamos of the economy.

However, as they have tried to develop a framework for identifying and then dealing with the challenges that we now face, many of the governments have reached out to the private sector.

In recognition of this trend and the benefits of engaging the private sector, some of the business people in the Arab world and the World Economic Forum have taken the initiative of forming the Arab Business Council (ABC). It was launched last year under the auspices of the World Economic Forum and will attract 100 leading individuals from the private sector.

Seven challenges

It is hoped that this council can serve as a catalyst for change. The ABC should strive to focus the attention of the private sector and the governments in the Arab world on addressing seven core challenges and effecting the necessary changes.

The first challenge is creating an environment and mindset of respect and tolerance. We must accept that we are who we are and that we have our culture and traditions.

Some of them make us distinct, but we are also part of a very diverse global society and marketplace. We therefore have to become more tolerant of other cultures and other traditions.

Education, open debate and dialogue, participation in global forums and debates and cultural exchanges will all help others to understand us better and enable us to better understand others.

Within our own societies we have to accept differences and encourage an environment of tolerance, where each member feels a sense of common purpose and an obligation to contribute to the common good.

The second challenge revolves around human resources and the labour market. We must create an environment in which each individual can achieve his or her full potential and find gainful employment in an appropriate position at the right level.

To create such an environment we need to address three major issues. First, we need to reform restrictive labour laws that all too often favour unproductive employees.

Second, we must adopt and consistently apply a system of meritocracy. This means appointing a person to a position because he or she is the most talented, not because he or she is from the same family or the same village or because a favour is owed. We must hire the best and brightest regardless of family background or connections.

Third, we must open more jobs and career opportunities for women. A society cannot operate efficiently or competitively unless all members are active participants in the economy.

This brings me to our third challenge – education and training. We must be able to produce graduates who can contribute positively to society. Business has an important role to play in this area, both through intelligent hiring and by providing on-the-job training and other meaningful pathways to career development.

However, we must do even more. We need to work hand in hand with government to help define the ideal academic background and the practical skills that would bring the curriculum in line with the real demands of the 21st-century workplace.

Equal focus must be put on technical, professional and other forms of training related to a wide range of occupations. This is not easy in any society. But it is now an imperative in the Arab world, where unemployment is approaching alarming levels.

The fourth challenge is streamlining bureaucracy. Of course, this cannot be done overnight, but we can lobby long and hard to cut down on red tape and, in the process, increase transparency, accountability and responsiveness.

Not all of the regulatory frameworks need to be changed or abandoned. Many simply need some readjustment; in many cases reform may just entail some retraining and a shift in attitude. Regulators and ministry officials need to see themselves as facilitators of business and innovation and all that is not expressly proscribed.

Our fifth challenge is legal reform. Most of the countries in the Middle East have legal systems that are fundamentally sound. But we must accept that healthy competition can only occur and investors are only attracted when there are clear and consistent ground rules – applied equally to all, honoured by everyone, and enforced by neutral regulators.

We also need to ensure that there are clear processes of dispute resolution. Just as the legal and regulatory systems must evolve to keep pace with modern commerce, the judges, arbitrators and lawyers who are the key participants in these systems must be properly trained and, from time to time, retrained.

The sixth challenge, infrastructure, is fundamental to business – from the corner grocer to a heavy industrial plant. We simply must find ways to meet, reliably and affordably, the soaring demand for electricity, fuel, water and telecommunications.

We need adequate and efficient ports, railroads, airports and highways. The revolution in telecommunications, particularly cellular phone technology, has in some ways allowed our societies to leapfrog forward. But still the internet access rate across our collective populations is among the lowest in the world, according to the latest Arab Human Development Report.

The seventh and final challenge is the development and expansion of our capital markets. This includes applying international standards of transparency and accountability – in a manner that allows commercial and investment banks to offer the full range of products and services.

Beyond this, we also need to attract an indigenous group of financial advisers and auditors trained to the highest standards of professionalism and ethics, with unquestionable integrity.

If we are to take up these challenges, we cannot afford to sit back and wait, blaming our difficulties on external factors. In order for Arab corporations and countries to become competitive, we in business must become catalysts for change.

We must lead by example and practice what we preach daily, in every hiring decision, every investment choice, every commercial transaction and every report to our boards.

In summary, we in the Arab world must accelerate our investment in education and training. We must lead by example. We must become good corporate citizens with a keen awareness of social responsibility.

Whether regulations are in place or not, we must hold ourselves accountable to the highest business and ethical standards.

Above all, we must take responsibility for our behaviour and actions, for our failures as well as our successes, and for taking up the great challenges and tasks that lie ahead of us.

Lubna Olayan
Lubna S Olayan is the chief executive officer of the Olayan Financing Company, the holding entity for the Olayan Group’s operations in the Kingdom of Saudi Arabia. She is a member of the board of Olayan Investment Company Establishment, the parent company of The Olayan Group, and the president of the Sulaiman S Olayan Foundation, the philanthropic arm of the Olayan Group. She is a member of INSEAD’s International Council and is also a member of the Arab Business Council Executive Committee and a member of the Women Leaders’ Initiative, both of which are initiatives of the World Economic Forum. She is a member of the board of trustees of the Arab Thought Foundation.