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LOGO
7th GCCs Nationalization
Summit
2011, 20 September
Doha
Dr. Hend Al Muftah
Qatar University
Nationalization Strategy
in the Qatari Private
Sector
LOGO
1. The objectives of the nationalization plan
in the private sector
2. Revealing progress on existing
strategies: what works and what
doesn’t?
3. How the public sector can help the
private sector with nationalization
Agenda
LOGO
…
Each of the GCCs has its own set of problems
within Nationalization & Expats
Each came up with different types of solutions
Some announced incentives for the jobless;
Some created new jobs in the public sector;
Some encouraged private companies to
hire more Nationals
But did any work?
Brief Background
LOGO
Nationalization is not yet well defined in term of:
Level: Macro or micro!
Sector: Government, public or private!
Measurement: quantity or quality!
Jobs: administrative or technical!
Time frame: short or long term!
Objective: government obligation, nationals’ capacity building, or reducing depending on expats!
Definition problem (1)?
LOGO
UNEMPLOYED
NATIONAL
LOGO
is NOT more than
RECRUTING!!!
Vague & fake!!!
NATIONALIZATION
LOGO
Private Sector (PS) is not yet well defined on
terms of ownership:
Individual/Family businesses (15% of the
GDP)
Public organizations owned by the
government (49%)….OR!!
Definition problem (2)?
LOGO
Oil & Gas companies
The banks & investment companies
Diar, Barwa, etc.
Supermarkets
Qatari youth Define the PS….
LOGO
• Owned companies by
Government
•The main employer in the
Qatari labor market-Qatari & foreign
investors- joint ventures
•79% of expats works in
the private sector Results of Census of population,
housing & establishments, 2010
Who is the private Sector
(PS)?
LOGO
75% of all jobs ARE in the PS
The PS grew in jobs by 356% & 125% in the
government sector
Qataris in the PS grew in numbers by 215% &
representing 8% in 2010
• Qatari females grew in numbers in the
private sector by 620%, representing 7%
96% not offered job within PS, 49% accept PS
jobs
Results of Census of population,
housing & establishments, 2010
ATTENTION…
LOGO
2- Revealing progress on existing
strategies: what works and
what doesn’t?
3- How the public sector can help
the private sector with
nationalization
Agenda
1- The objectives of the
nationalization in the private
sector
LOGO
Economic: cost-effective labor, reducing unemployment & outflow, dependence on expats and wealth distribution
Social: part of nationals’ human development and national identity
Political: security reason, some key positions must be occupied by nationals to control decision making, its part of their strategic plans
Nationalization Objective within
Gov. & Public sectors
LOGO
Old days …
It depends on the viewpoints of the owners/stakeholders….
varies or conflict between them! Agree/disagree!!
Nationalization Objective within
Private sectors
LOGO
Economic: maximize
resources utilization,
utilize nationals for
some jobs as tourism
Social: more
obligations, part of
their CSR
Political: Support
government policies
NATIONALIZATION
New Trend…
LOGO
Today, Private Sector
cannot afford to ignore
nationals’ talent
management,
If they wish to stay in
their business
tomorrow!!!
Nationals Talent Management
LOGO
1- Establishing the objectives of
the nationalization in the
private sector
3- Understanding how the public
sector can help the private sector
with nationalization
Agenda
2- Revealing progress on
existing strategies: what works
and what doesn’t?
LOGO
- Meeting quotas
- Recruiting (easy roles doesn’t need
T&D)
- Career fairs
- Targeting graduates
(turnover)
Existing strategies: What didn’t
work?
LOGO
- Meeting quotas
- Recruiting (easy roles
doesn’t need T&D)
- Career fairs
- Targeting graduates
Existing strategies: What didn’t
work?“Career fairs are just waist of money for
the sake of our PR & have nothing to do with nationalization” (non-national CEO)
“Targeting fresh graduates cost more than retaining poor-performance nationals” (Qatari Director)
LOGO
A Respond to government
regulations
A Short-term solutions
Well done! We’ve cut staff
turnover from 16% per year
to only 10%!
… We’ve kept 12% more of
our worst people and lost
6% more of our best people!
Oxford Consulting Company
Why it didn’t work?
LOGO
And…the RESULT…
LOGO
Resulted in high turnover
(voluntary/involuntary) within the 1st
year:
Poor supervision
Poor management
Poor career development
Poor working environment
Salary
And…the RESULT…
LOGO
It would not be enough to set a budget & recruit a large
number of nationals, but we also need to give them
suitable training, a clear purpose in the organization &
a reason to stay with us, but nobody seems to care, not
even my own people (Qatari Operational manager)
We attract talented nationals, leave them to find their ways
in the Bank without any clear roadmap, then we wonder
why do they leave us although we pay them more than
the others! (Non-national Branch Manager)
And…the RESULT…
LOGO
1. Maximizing strategic value of
nationals
2. Developing strategic value of
nationals
TALANT MANAGEMENT
Existing strategies:
what worked?
LOGO
•VIA: Recruit & Train
•AS: Call centers jobs … BANKS
: Not 4 leader positions &
targeting lower skills…
•BUT it worked vey well in terms
of ROI & retention
Maximizing strategic values of
nationals...
LOGO
VIA: Clear “road map”…Recruit,
train, develop & empower
AS: key professional & leadership
positions
promoting the company &
retaining the national talents
Developing strategic values of
nationals...
LOGO
Don’t employ large No. of nationals just to meet quotas
Identify strategic capabilities & plan
Recruit nationals with clear career plan
Adapt/adopt some of the HR polices/procedures to
attract & retain nationals, specially females
Target less qualified, women, & older nationals
Nationalization is significant part of their talent
management, NOT meeting govt. quotas…
Nationalization is integral part of their strategic plans
Current Best Practices
LOGO
Mohamed Create talent Plan
Role: critical
Potential: C+
Readiness: 24 months
Successor: Essam Maximum attention
required
Aisha View talent plan
Role: critical
Potential: B+
Readiness: 14months
Successor: John Medium Attention
required
Abdulla View talent Plan
Role: very critical
Potential: A
Readiness: Now
Successor: Mary Maximum Attention
required
Talent Name Status
LOGO
1- Establishing the objectives
of the nationalization in the
private sector
2- Revealing progress on
existing strategies: what
works and what doesn’t?
Agenda
3-How the public sector can
help the private sector with
nationalization
LOGO
Human Capital: Capabilities, Know-how, Labor, Education, Health2
Technology & Innovation: Knowledge, R&D & Intellectual Property, FDI &
Technology transfer
3
Economic Infrastructure: Transport, Utilities, ICT4
Market access: Foreign trade, Competition structure, Input Availability5
Business Environment & Institutions: Property rights, Foreign Ownership,
Government Efficiency6
Govt. promotion of private sector: Government investments, procurement,
subsidies
7
Finance and Investment : Domestic & Foreign Funding, Credit, Public & Private
Equity1
Macroeconomic Stability: Monetary policy, Fiscal policy8
Key enablers for private sector development
NDS - Eight enablers for PS development
LOGO
Focus Areas
Source: GSDP-BCG analysis
Build innovation
and discovery
capabilities
Stimulate enterprise
& private sector
development
Improve
productivity
Key Objectives
Policy & regulation (Competition, PPP)
Discovery
SMEs & entrepreneurship
Government investments
Innovation & R&D
Immigration & labor market policy
Non-traded business services
Technology & skills
Trade & investment policies (FDI, Exports)
Infrastructure and land
2
3
1
Deepen global
and regional
integration
4
Institutions
Infrastructure (Cross-border, networks & grids)
Interventions & activities
Input from the Task Team
integrated
GSDP National Development Strategy - Economic Diversification and Private Sector Development
Micro Strategic Directions & Interventions (Capabilities, inputs, incentives)
Strategic directions Ongoing initiatives Potential new interventions Owner
Government support for SME financing (credit guarantees, equity funds etc)
Set up local VC firms to incubate start-up firms
Increase transparency & provision of information (banks and SMEs)
Setup seed capital programs
Reform and harmonization of industrial land regulation
Improve industrial land infrastructure and services provided
Enforce appropriate zoning concept (e.g. parks to promote partnerships along value
chain)
Create incentive to transfer technology along with FDI (e.g. tax incentives, subsidies)
Require foreign companies to transfer technology as pre-requisite for contract approval
with state companies.
Skill transfer programs (e.g. internships abroad, coaching by foreign companies)
Establish a technology transfer office to acquire foreign technologies
Provide incentives for performance related to skill and technology transfer
Setup targeted R&D institutes (gas production, LNG, renewables, desalination, ...)
Require foreign contractors to conduct local R&D (key criteria for bid evaluation)
Reduce cost of ICT adoption for SMEs (e.g. lower cost broadband access)
Provide advisory services to increase technology adoption in businesses (e.g. online
marketing, order generation, etc.)
Enforce e-government and e-regulation
Provide access to precise Qatar statistics via QSA
Setup a local market research agency
Qatar Chamber of
Commerce and Industry
(QCCI)
ictQatar
New agency required and
committee for innovation
incorporateing QF, QU,
private sector and other
stakeholders
Based on joint discussions with Task team members on 16 June 2010
Ministry of Energy and
Industry,
Zones authority
Enterprise Qatar, Banks
Ministry of Business & Trade
(MBT)
Enhanced access to finance
Enhanced access to industrial
land
- Enterprise Qatar, QDB (credit guarantee programs)
- Creation of Credit Bureau
- Advisory center by QDB to support SMEs in
developing business plans
- Various products being provided, e.g. Letters of credit
Qatari Diar: Creating three specialized zones, logistics,
downstream metals/petrochemicals, light
manufacturing
QSTP: Creating environment to support development
of knowledge based businesses
KBB by QSTP: Developing knowledge based
businesses in Qatar; Qatar National Research Funds:
Funding for academia and industry; ictQatar: Providing
investment/incubation services for innovations/IPs
Transfer skills & technology from
FDI
Targeted R&D and investment in
strategic IPs
Support of ICT uptake ictQatar: Increasing ICT uptake through training and
support services
Provision of market information
10264412-01 EDP TT 5 Workshop-08Jun2010.ppt
Draft as of June 22, 2010– For discussion only
Stimulate Enterprise and Private Sector DevelopmentFrom key objectives to interventions
Key
objectiveStimulate Enterprise and Private Sector Development
• Active and profitable private sector base
• Growth of SMEs
• Successful public private partnerships
Source: BCG analysis
Outcome
Focus Areas
SMEs and Entrepreneurship
• Easy credit financing
• Business opportunities for private sectors
(procurement opportunities w. state owned companies)
Policy and regulation
• Fair and open competition
• Active public private partnerships
Government investments
• Anchor projects to catalyze downstream industry
• Coordinated investments across the state (integration,
alignment)
Macro level:
• Review and implement existing competition and anti-trust laws
• Develop PPP & Privatization policies
Structural level:
• Activate PPP department and develop PIP & Privatization
Programs
• Set up regulations & independent regulators for privatized
industries or industries with private sector involvement
• Align key SME initiatives and develop SME strategic program
Micro level:
• Implement coordinated program to enhance SME access to
finance
• Implement state procurement & outsourcing program
• Develop harmonized government investments program to align
sector development efforts and encourage private sector
Interventions
1
Output
&
KPIs
• Number of SMEs• GDP contribution of
private sector• Size of PPP
investments• ...
1
1.1
1.2
1.3
1.4
1.7
1.8
1.6
1.5
11264412-01 EDP TT 5 Workshop-08Jun2010.ppt
Draft as of June 22, 2010– For discussion only
Implement coordinated program to enhance SME access
to finance
Limited access to credit
• SMEs do not have sufficient access to bank finance
• Qatar SMEs use internal funding due to strict lending
conditions
• Banks have limited SME product offering
Limited access to equity
• Inactive VC funds and little seed capital support
Activities &
sequencing
1. Create coordination committee involving all public sector stakeholders (EQ, QDB, MBT, QCCI etc) and private sector representatives
of financial sector (top banks)
2. Gather and consolidate existing plans and activities of SME-support entities (EQ, QDB)
3. Develop coordinated strategy for support of SME financing, including credit guarantees, seed capital and VC funds
4. Develop program of initiatives to increase transparency & provision of information, including activation of credit bureau, enhancing
standards for financial reporting, educating SMEs about financing options etc
5. Allocate roles and ensure institutional set up to implement the strategy
6. Develop high level annual plans for all stakeholders
7. Conduct monthly meetings with key stakeholders to identify progress as per plan
8. Conduct quarterly or bi-annual meetings with Cabinet to inform on progress for R&D and innovation in Qatar
9. Regularly communicate progress to wider audience, i.e. government and private sector via newsletters, press releases, etc.
1.6
Rationale
• Ministry of Business & Trade: strategy, coordination
and management
• Enterprise Qatar and Qatar Development Bank:
implementation
Stakeholders &
roles
Timeline Launch by Q1 2011
Key
requirements
• Alignment of all stakeholders
• Active dialog with private sector and banks
• Clear planning and responsibilities
• Transparency in sharing current efforts and results
Risks
• Unable to reach alignment between stakeholders
• Delay in consensus building (limited authority to
enforce agency decisions)
• Lack of focus towards private sector
Readiness assessment
• EQ, QDB already developing support programs –
good base to build upon
Risk and
readiness
assessment
Budget TBD
How can it work- NDS
LOGO
Quota system!
Increase the 20% ceiling!
Set more restrictions/limitations for
non-nationals employment!
Set more penalties on companies not
meeting quotas/ceiling!
Qatarization law!
Or what do you suggest???
How can it work?
LOGO
•Qatarization focuses on quantity so far not on skills &
training
•"Entrepreneurship" mindset lacking among Qataris
•Lack of business skills & practical knowledge among
Qataris
•Most expat labor force is unskilled
•Expats do not have a long-term stake in Qatar
•Government and Q-Companies salaries are much higher
than private sector
•Capabilities are not matching demand from employers in
private sector
Constraints for private sector
NDS, meeting 31 march 2010
LOGO
How can Public Sector help the
Private sector
Recent % in the Qataris salaries threaten the PS nationalization efforts!!
Similar % at the PS compensation is the solution!
LOGO
Our country will remain in need for
non-nationals (skilled & unskilled) for
the coming few decades..
Private sector is not an NGO or
charitable organization!
PS needs some help…
NOTHING WRONG WITH TWO
FACTS…
LOGO
Economic solutions
Minimum wages
Wages subsidies (e.g. social allowance,
etc.)
Merit & bonus system for A companies
(e.g. tax exemption, free-interest loan,
public recognition..)
How can Public Sector help the
Private sector
LOGO
When it comes to the future, there
are three kinds of people:
- those who let it happen,
- those who make it happen, and
- those who wonder what
happened
The Future…
