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The Abdul Latif Jameel Community Initiatives

January - March 2012

A family business setting standards in job creation
Abdul Latif Jameel Group is known for many things - It is known for its founder, Sheikh Abdul Latif Jameel and his entrepreneurial spirit. It is known for Toyota, the car brand it has represented for half a century in Saudi Arabia. But the Jameel family is also known for its exemplary approach to realising its social responsibility: from poverty alleviation to culture and art programs, Abdul Latif Jameel Community Initiatives (ALJCI), the CSR organisation set up by the Jameel family, covers a large spectrum of community needs. Its greatest emphasis has, however, remained on providing people with the skills to pursue their chosen profession and the financial support of small businesses and entrepreneurs. Today, the family invariably replicates its successful job creation and small business support programs wherever it expands its business activities to. In 2011 the ALJCI has created over 50'000 job opportunities.

The Idea and the History...

The Abdul Latif Jameel Group has always supported its community through philanthropic activities and charity. Founded in 1945 by the late Sheikh Abdul Latif Jameel , the group became the sole distributor of Toyota ten years after its inception. Over the years, the family business has maintained and expanded its presence in the automobile sector while adding real estate, consumer finance, and general trading activities to its portfolio.

Mohamed Abdul Latif Jameel , President of the Abdul Latif Jameel Group and eldest son of the late founder, has always been an ardent agent of social responsibility and especially of job creation. To integrate his vision of a more sustainable community into his family's business model, he started out with a small project: Instead of just selling cars, the company would place cars at the disposal of members of the community, allowing them to put the vehicles to use and set up their own businesses, for instance as taxi drivers. They could then pay back the company for the car without interest. The first ten jobs were created in this way and Mohamed Abdul Latif Jameel understood that he had found a successful model. The next step was to increase the number of jobs created: 100 jobs was the new target in 2003. But the family ended up exceeding its goal by far.

Soon the Jameel group found that there was just as much need to provide people with the right skills to pursue their chosen profession as there was of providing them with equipment. A fund for vocational training was established. The initiatives for job creation did not stop there; in 2004, recognising another way to create employment, the family business established a fund that was aimed at providing entrepreneurs and small businesses with interest-free loans.

Together with its other initiatives, such as a program to support orphans, the building of hospitals, and road safety programs, the Jameel Group now had a considerable portfolio of social responsibility activities. In 2004 the family officially established Abdul Latif Jameel Community Initiatives (ALJCI), which was to serve as a hub to all its community engagement activities. In 2007 a separate brand was created under ALJCI, which was to be dedicated entirely to the job creation programs. It was called Bab Rizq Jameel (BRJ), named after its purpose as the 'beautiful gate to prosperity'.

In BRJ the job creation programs expanded to include training programs ending in employment. Collaborations with many educational institutions were established that now provide people with training and diplomas. Other activities such as SME support, productive families' program (GRAMEEN program-by Dr. Muhammad Yunus, Nobel Prize winner) were added. The BRJ model is aimed at covering multiple ways of bringing people into the labour market successfully. The efforts are directed to men and women equally. In fact, BRJ has recently set up the Jameel Bazar, which is a commercial incubator space that allows female entrepreneurs to open their small shops and offices.

Today...

Today, BRJ gives loans from 10'000 up to 150'000 Riyals for small businesses and allows four to five years to collect the sums back. In order to obtain such a loan, entrepreneurs and small businesses have to submit their business plans and feasibility studies to a committee within BRJ. The committee reviews the business idea and judges its potential, awarding it with a loan if deemed realistic. But BRJ's involvement does not stop at mere financing for entrepreneurs and small businesses. Follow-up systems are in place that allow monitoring of an entrepreneur's progress after receiving a loan. This way loans can sometimes be increased according to individual needs.

Until now the payback rate is at 97% for loans issued to small businesses and at 99% for the Productive Family Program. The success can be attributed to the fact that the Jameel family here has leveraged on its 35 years of experience in financial services and has clearly applied a feasible and realistic payment plan.

Another measure of success is the fact that based on a study in 2009, 83% of the 17,000 small businesses that BRJ supported are still operating. BRJ has, however, also seen entrepreneurs go out of business: For some competition gets to steep and they quit, others find governmental jobs with higher job security. Again others stop because they do not have the required management skills to grow the business. Finally, there are those that cannot continue because the licenses for their business are too difficult to acquire. Here BRJ's follow up system and accompaniment is essential for the sustainability of the business creation process.

Only in Saudi Arabia, BRJ includes over 26 job creation centers with more than 500 employees. The Jameel family business found its community involvement under ALJCI and BRJ to flourish and consequently replicates the model wherever its business expanded to. For instance, when the family bought the Toyota brand in Istanbul it was part of its strategy to have a community initiative alongside it. Next to being implemented in Turkey, the model has also been applied in Egypt, Syria, Morocco and is currently being set up in Algeria. For the successful internationalisation of the job creation programs and other community projects, in each country ALJCI appoints local members of the community in order to make sure that the necessary adaptations to national contexts are made. In 2011 ALJCI's BRJ created over 50'000 job opportunities.

The Future...

Despite the impressive success till date, job creation remains a daunting task in the Arab world and ALJCI is thinking ahead: Until now their support was lent to the more traditional sectors of the economy. The next step for BRJ is to expand its support to more complex sectors by increasing their loans to up to 300'000 Riyals for small businesses. The organisation is also starting to consider entering into joint ventures with some of the more interesting entrepreneurs as a new model to support their sustainability.

To encourage the submission of ideas and to promote the cause of job creation ALJCI has also created a competition for small businesses in Saudi Arabia and on a larger scale has partnered with MIT for the MIT Enterprise Forum Arab Business Plan Competition. The winners receive loans to support the realisation of their dreams.

The innovative and future-oriented programs and schemes set up by the Jameel family has not only created opportunities for thousands of people, it has also propelled the Jameel family onto the forefront of CSR proponents in the Middle East. It has set an example, which shows that family businesses can find successful models to contribute to their communities while remaining perfectly aligned with their own business interests. The family's continuous personal involvement with its community initiatives and its dedication to fight unemployment has further improved its reputation with its stakeholders, and has inspired others to imitate them.

© Tharawat Magazine 2012