Rated as the eighth best place to work in the country, the Saudi Economic and Development Company (SEDCO) is a diversified global conglomerate that is lauded for its CSR efforts and is pioneering initiatives to enable financial literacy and sensibility from an early age and making Shariah-compliant investment as easy and accessible as possible. Anees Ahmed Moumina, CEO of SEDCO Holding Group, explains what is behind the company’s success.
In its National Industrial Strategy 2020, the Ministry of Commerce and Industry recognizes that the country has reached a crossroads. It faces a choice of either accepting its role as a wealthy oil-based nation, or embracing the challenge of becoming a globally competitive and diversified economy. How would you evaluate the importance of an industrialized and diversified economy for Saudi’s future growth?
In the country, there have been a number of five-year plans. These five-year plans have the aim to diversify Saudi from an oil-based economy into different venues. That has been progressing positively, but we need to progress faster, especially with the volatile oil prices we find today. A diversified economy will also help job creation. In terms of diversification, the founders of SEDCO have implemented a clear plan. It’s a journey we started several years ago by diversifying our source of income and investing into different industries and sectors. We could divide our strategy into three main pillars.
One is direct investment in operating companies in different sectors. The second is financial investments in Saudi Arabia and abroad. The third one is real estate. These pillars summarize our group’s activities, all of them being Shariah compliant.
I believe we are a truly diversified global group, ranging from producing ammonium nitrate in Egypt to cultivating chicken eggs in Saudi Arabia. Through our diversified activities, we encourage and attract foreign direct investment (FDI) into the kingdom, which is very important especially in these challenging times.
In terms of job creation, we are among the leaders. The industries that we are focusing on right now such as hospitality and medical are quite heavy in job creation. We believe that investing in the country is the best way to support job creation.
What about the skills needed for the workplace? How challenging is finding the people with the right skills to run your operations?
Job creation by itself is not enough, you have to enable people and to train them. In our opinion that’s one of the most important challenges for Saudis and there is still room for improvement. We need to change the mind set; some of the Saudis would not want to take some jobs because of the nature of the business. For example in the banking industry, some time ago most of the cash tellers were not Saudis, but that is changing now, with most of them being nationals with college degrees. Also we can see the change in the hospitality sector, where you find Saudis at the reception of the hotels and serving food in restaurants. In order to achieve these and better results, education and the right training should be a national priority. At SEDCO we believe firmly in these principles and that’s exactly what we promote through our CSR initiatives, and in particular with our financial literacy program, Riyali.
This program enables and teaches people how to save and better utilize their money. We started at the university level with college graduates. We found out that a large percentage of college graduates study the theories, but in practice they do not really know how to save money and to invest it wisely. Then we decided to take this program to a second stage and targeted high school students. At a third stage we will implement the program in elementary schools, from fourth to sixth grade, because the concept of saving should be learnt at an early age to achieve better results. It’s interesting and challenging to teach little kids, but we utilize different tools such as books and online platforms. When we talk to them and they tell us “in the future I would like to be a doctor or an astronaut” then we tell them “great, how are you going to save the money for that?” We have even distributed “piggy banks” for them to start saving their first coins. But we want to go further, we teach them not only to save but also gratitude and solidarity by giving money to the needy. Starting with these principles at an early age is fantastic and we believe it will make a difference in our society. Riyali is an initiative purely implemented by SEDCO but a big number of financial institutions want to jump on board. We started with just a few thousand but now we have plans to reach 2.5 million people by 2020. We are using the internet to increase the reach and now the program is web based. We are very proud of it, we have spent a lot of money on it; it is well worth money.
Our corporate social responsibility (CSR) initiatives do not end here. We want all of our employees to be engaged with the community. Last year we made it mandatory for all of them to be enrolled in two service programs for society. Mandatory for every employee. It’s in their KPIs. In my opinion this is a very effective and good way to make an impact on society as well.
In 2014 SEDCO was ranked among the Best 15 Places to Work, and in 2015 SEDCO has achieved the 8th Best Place To Work in the Kingdom of Saudi Arabia by ‘Great Place To Work’. What is it that makes SEDCO an employer of choice and what development initiatives do you provide for your employees?
For us, there is work and there is what we call pleasure. There’s a line in between them but when these two come together, work becomes pleasure. We created a nice working environment so that people have the desire to come to work. A nice working environment enables people to be creative, as well as to think out of the box and this is important because their suggestions and ideas matter to us. We also emphasize accountability; if you do well you’ll be rewarded and if not we will work together to do things better. We encourage people to think of new ideas. We enjoy trying new things in the working environment and we have implemented a lot of them.
Which would be some of your favorite ones?
We have many favorites. Health for the employees for example. Some people complained about the waiting time for elevators. Our response was “take the stairs instead”. We fixed the stairs and made them look like an outside scene, simulating that you are actually climbing a mountain and making them appealing for our workers. We also developed an app that tells you how many steps you’ve climbed and how many calories you burnt. We encourage our employees to join our sports clubs; during Ramadan we have a competition to see who loses the most weight and we give symbolic prices to the winners such as an iPad.
We believe in balancing work and life and we have created an employee lounge with massage chairs, a pool table, free coffee and drinks, and video games. The idea is to sync all of our different companies there. We want our employees to sit down together and synergize from our various companies and share ideas. We organize team-building exercises among the different companies that we have. We do it at C-level, with all the CEOs and COOs and also per business unit, bringing together all of the marketing or finance people under one roof.
We value our employees’ ideas and that’s why we developed further the idea of suggestion boxes into an online system, where if you have a suggestion, everyone else can see it and build on it by adding additional comments.
Another initiative that I enjoy very much is the so-called lunch with the CEO. Every month I have lunch with a group of different people from different companies, usually at the entry level because that’s where you get a lot of fresh ideas. I get exposed to 15+ people that recently joined the company; you learn what they used to do before and what are their expectations and ideas. Same thing with the more experienced employees, their point of view is something I take into account as well.
Every quarter we have town-hall meetings open to all sorts of questions. What we mean is that our doors are open, with easy access to all senior executives. You have of course to respect the command chain but if no solutions were provided, I would always be willing to discuss any issue face to face.
We reward achievers. We have also the well-known “employee of the month” award. But we use it to reward people behind the scenes as well. We included the service/cleaning staff; they play an important role maintaining our environment clean, and together with our chairman we gave them economic prizes and took pictures with every single one of them. I want every single employee to feel important and to recognize their contribution to our success.
Saudi Arabia is Britain’s primary trade partner in the Middle East with over 200 joint ventures worth $17.5bn (£11.5bn), a view that is shared by government officials, as stated in the continuous high-level exchanges that the countries have historically maintained. SEDCO plays an important role in attracting foreign investment into the country, what are the most attractive sectors of investment for UK investors in the kingdom?
The important sectors needed to be promoted and that will help the economy are those that will create jobs. The government is focusing on education, medical, religious tourism, and manufacturing. These are the top sectors where an international investor could tap in and achieve good profits.
The medical sector is very important for the country. Hospital management is an area in expansion continuously, as well as the pharmaceutical industry. If we talk about hospitality, including tourism, hotels, restaurants, that’s another area offering great growth opportunities. This month we are opening a new chain of South African restaurants called Ocean Basket. We also introduced brands like Applebee’s, Macaroni Grill and China Gate. We have more than 25 restaurants and we plan to expand the number further.
The Saudi economy is strong, but we have a challenging environment. If you’re a foreign investor and you want to come and open a business you will wonder if this is the right place to invest. That’s why the private sector needs to work with the government to promote FDI. There are some laws which are being implemented to improve the transition of family-owned businesses to established companies.
Is SEDCO looking for foreign partners to enter into JVs? What added value can SEDCO offer to them?
We think that if you are a foreign investor, you would like to come in with a company that’s well established and has a strong corporate governance. What we mean by strong corporate governance is the separation of ownership from management. One person alone does not take the decisions, but a group with wide experience and high reputation. Our board of directors has eight members and out of them only three are family members; each has one equal vote. SEDCO management has the authority, the metrics and a clear roadmap.
I’ve been working all of my life in publicly held international companies like Procter & Gamble and Samba. When I moved to SEDCO, I found a great and healthy environment with a clear separation of powers and I believe that’s key for success
There are a lot of international franchises that we want to introduce into the kingdom. We have received the Golden Peacock Global Award for excellence in our corporate governance and that’s a good recognization for the way we operate. Plus it’s important for investors to know that there are synergies among our companies, and that behind an individual company there’s a big group. For example, when Tarfeeh Co. (restaurant business) needs to find new location for restaurants, it uses Intimaa Co., which is a real estate company owned by SEDCO Group to find the best restaurant locations for future expansion.
We also own a company that provides manpower to SEDCO and other companies outside the group. Finding the right skills can be challenging in Saudi Arabia and Saudization targets have to be met. Thanks to that we have wonderful Saudization rates.
Our chain of hotels Elaf is another great example of synergy and diversification within the group. The Elaf Jeddah Hotel is directly connected to Red Sea Mall (partly owned by SEDCO Group) with a wide variety of restaurants and a diverse shopping experience.. Through Elaf, we will open in the third quarter of 2016 one of the largest hotels in Jeddah, located in Tahlia Street.
SEDCO is very present in the UK through real estate investments and different international partnerships. How would you evaluate the attractiveness of the UK market?
In the UK, we’ve invested in real estate and in private and public equities. In real estate, we have a number of investments with focus on income generating buildings such as student housing, elderly homes, warehouses, and offices… London is a dear place for us and we plan to keep increasing our operations and investments there. We have also established a platform called the Luxembourg platform through SEDCO Capital. SEDCO Capital, which is 100% owned by SEDCO Holding Group, offers Shariah-compliant investment opportunities. We make Shariah-compliant investments comprehensive and easy to access to all international investors.
How do you think your role as CEO has impacted SEDCO and what is your personal vision and strategy for the company in the years to come?
First, our goal is for our companies to be leaders in their business segment; this means number one, number two or number three. When we have our budget meetings we always discuss how to gain market share from competitors. To do this, you need to keep innovating and conduct business in a more efficient way to gain the extra 1% from your competitor.
Secondly, we will become the employer of choice in Saudi. We want to have the best talent, attract them and retain them. We want to be the number one within the best places to work in the Kingdom of Saudi Arabia and the region as well. To achieve that we will keep investing in CSR and other training programs such as Riyali. We will make our community a better place.
And thirdly, SEDCO will consider new fields of expansion; let’s see where else can we be present, let’s do something different. Of course we will generate profits to all of our shareholders and in order to do that, we need the best people… It’s a circle: if you get the best people, good things will follow.