Aiming high

Jordan may have downgraded its earlier ambitious IT
export goals, but October's ICT Investment Forum showed
that its belief in IT's economic potential is undiminished

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By  Massoud Derhally Published  November 5, 2002

|~||~||~|With war looming over Iraq to the east, and the turbulence of the intifada showing no signs of abating to its West, Jordan finds itself in a highly unenviable position. But such has been the case for much of its modern history, and at present the government has signalled its determination to press ahead with its economic agenda as it woed investors, businessmen, and others from the IT community at the second information and communications technology (ICT) forum (Sept 30-Oct 1). The country has at various junctures always managed to muddle through, but an attack on Iraq, its main trading partner and oil supplier, would undoubtedly tighten the noose - and as King Abdullah II says, open 'Pandora's Box.' The kingdom is nevertheless charging ahead with its own agenda.

With the King at its helm, the country is more determined than ever to stimulate its ailing economy, create jobs, attract foreign direct investment and establish itself as a hub for technology in a region fraught by war and uncertainty.

The consensus at the second ICT forum, funded by USAID, is that much hinges at the moment on the country's ability to harness technology and leverage its greatest asset - human resources. The IT sector did not exist until three years ago, but that all changed, many Jordanians say, when King Abdullah ascended the throne and recognised that IT could very well be the engine of growth and subsequently endorsed a five year IT development strategy in 1999, dubbed the REACH initiative.

"ICT is an engine of growth. We are extremely serious about it and despite the regional and global events, ICT will enhance our economy as a whole," King Abdullah told an audience of 1,000 that included Craig Barret, Intel CEO, George Vranderburg, strategic advisor at America Online and John Cage, chief researcher and director of the science office at Sun Microsystems.

The aim of REACH is to nurture young talent, creating an IT industry similar to that of India and Ireland, where offshore software exporting companies earn desperately needed foreign currency. The targets of creating 20,000 IT jobs, US $550 million in annual exports and attracting US $150 million in foreign direct investment (FDI) by 2004, were over ambitious and will be adjusted, admitted Marwan Juma, chairman of Jordan's information and technology association (Intaj). Juma today says that while initial targets have not been met, there are tangible results. Not accounting for 2002, the REACH initiative has, as of the end of 2001, employed 5,000 Jordanians in IT related jobs, generated US $38 million in exports, attracted US $60 million in FDI, and nurtured the local IT market, whose revenue stands today at US $138 million.

The King recognises the limitations of the Kingdom, which has been burdened by the unsettling political climate in Palestine, now in its third year, and what many see as an inevitable war against Iraq. But it is precisely these circumstances that serve to strengthen the King's resolve in his unwavering support for the IT community in Jordan, say some analysts. The King's remarks at the closing ceremony of the ICT forum personify his support and understanding of the necessity of nurturing the IT industry: "If you [Intaj] achieved everything you set out to do two years ago, you would have set the bar too low."

Jordanian companies have not been dwarfed by the limitations of the country's infrastructure or regional instability. If anything they have moved ahead and several have made their mark on the region's IT map. Oneworld Software Solutions, now part of Estarta as a result of a merger with Zeine technologies, was hailed as a prime example of what companies could achieve if they played their cards right in the software exporting market. Maktoob, which started out as a portal and web based e-mail service, has now branched out into providing solutions and consulting, while Menafn.com has found its niche in the banking and finance sector by providing proprietary financial software solutions.

But these are only handful of companies. Jordan needs to do a lot more in terms of encouraging entrepreneurship, innovation and, most important of all, presenting a compelling case for those Jordanians abroad to come home.

The brain drain syndrome is a big headache for the kingdom, with most Jordanians studying abroad thinking twice before deciding to come back. "We have the problem of brain drain in Jordan, and we want to be able to change that into brain gain. We want to be able to give the opportunity to Jordanians all over the world to come back to their country, because we can offer them the opportunity to excel in their own homeland," King Abdullah said in his closing speech at the two day ICT forum. Ennis Rimawi, president and chief executive of Estarta, agrees with the King and says, "Instead of just exporting the bodies let's export some of the core knowledge while keeping the bodies here."
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Some Jordanians, like businessman Zeid Nasser who is a technology commentator for Amman-based daily The Star, say that when junior programmers become senior managers they are no longer focused and lose sight of what they are trying to achieve. "They leave the programming and they start just going out there to acquire business. But they are the brains of their organisations. It's a lot like saying that Bill Gates still does a lot of coding at night because he loves programming," Nasser says.

"Well I am afraid that what we have here is that our best programming talents inside the companies are the ones that become the business managers and that's a bit of a problem. We need more professionals, more human resources people. "Second, we are lacking in business vision. Everbody opens up shop and gets started and closes down soon. We need people to gain what they term as mass; we need companies to come together." Poverty and a large foreign debt remain major problems. The country's adherence to IMF sponsored structural adjustment programs has won it the financial assistance of donors. But that's not enough and real economic growth remains elusive.

The country has been unable to transform economic benefits from its WTO ascension and a free trade agreement with the US into everyday gains for desperate Jordanians. Critics point to the country's unemployment rate, which in the late 1990s stood at 25%, and nearly 50% of those who were employed were on the government payroll.
The government's US $8.4 billion debt, equivalent to 85% of GDP according to World Bank figures, attracts sharp criticism from Jordanians, who on average are on a salary of US $300 a month.
A stronger approach to domestic economic reform and an improved regional trading environment is required to break out of the present malaise.

What the country needs to do, according to some analysts, is create a transparent atmosphere of partnership where technocrats, public servants, academics and businessmen work together and where the private and public sectors engage one another. The King is a proponent of this vision and realises that while the country has limitations there are areas where collaborative efforts can produce synergies.

Success on the IT front will have a trickle down effect, say analysts in the Kingdom, prompting public and private sectors to do more. The government has also recognised the need to invest in infrastructure, education and following through on sweeping reforms in the telecommunications sector. "Communications technology is an enabling technology in that it provides and enables growth," says Jawad Abbassi, president of Arab Advisors, a consulting group. "It enables the economy to be more efficient and grow more. The effect is definite," Abbassi adds.

The track record over the past three years is mixed. The kingdom today points to its initiatives that have succeeded in educating Jordanians and promoting e-literacy in less privileged and remote areas of the kingdom. IT community centres have sprung up across the country and have connected universities and 3,000 public schools. The Kingdom also aims to hit its target ratio of 8 students to a computer by the end of 2003.

The government has started to privatise some of its public establishments. Unlike other countries in the region the kingdom has two mobile operators, and after selling a chunk of its share in the state operator Jordan Telecom it has now set the stage for the flotation of JT in November (see Jordan Telecom story). These developments are consistent with the policies of the Economic Adjustment Program (a program devised by the IMF and the World Bank to help Jordan respond to a decline in regional oil revenues and economic growth in the late 1980's).

"IT has moved on from simply being an industry related initiative to becoming a human resource related programme. We have changed our outlook to make sure now that we look at it as a tool that is going to empower a nation to improve its ability to do health services, tourism services, and its ability to do industry," says Fawaz Zu'bi, Jordan's ICT minister, dubbed the virtual minister at the two day forum.

"This, I think, is the way we ought to look at it, not only in Jordan but also across the Arab world. It is an enabling tool; it is another language where we can really raise the level to the standard that we can create what we all want for ourselves.".
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The privatisation of Jordan's telecommunications sector sheds light on the benefits of foreign direct investment and joint ventures. France Telecom, in its halcyon days, acquired 40% of Jordan Telecom and spurred growth of the telecom sector in the country. The kingdom has been fortunate to attract the attention of corporations who have helped facilitate the growth of the 'e' culture and American technology companies are making either private commercial investments or social investments in Jordan.

Microsoft has invested a reported US $2 million in Estarta; Intel is training 5,000 teachers on the integration of technology in the classroom; Cisco is developing Cisco development academies; and Sun Microsystems computers are present in most Jordanian universities and its centres are teaching Jordanians Java script.

Outside involvement is key and self-confidence means recognising one's limits. Zu'bi says there is still some way to go in terms of education. "We are still in the infant stage of our ICT process in the whole Arab world. I think we need to give it its time. As long as we keep focused that whatever input we give is going to result in a certain output and, as long as we know what we want that output to be, then we need to make sure that we keep doing it progressively and aggressively."

The minister makes no secret of his desire to see an e-revolution taking place, redefining how Jordanians relate to their government. Yet some are sceptical over e-government in Jordan.
"Anything related to collecting money is so well automated in Jordan. Refunding money is still manual; you can pay a parking ticket anywhere, but if you have to change your ID you have to go where your file is in your hometown. E-government is real, when it comes to collecting money," one Jordanian said. But John Cage, chief researcher at Sun Microsystems says, "It took 50 years to build Silicon Valley. The degree of patience it takes is what is now being realised by everyone in Jordan. What we are talking about in Jordan is changing a worldview of a kid in a remote village as to how they link to someone in the rest of the world."

In private, Zu'bi says he would focus on human resources development. "We have only started scratching the surface in terms of how far we can actually push the envelope," says Zu'bi.
"We need now to start thinking about the soft side of things. The hard side in many ways is taking care of itself and it has created its own momentum and is moving. It's the soft side that is going to be a real challenge and the soft side is always more difficult because now we are talking to people and changing people, bringing in the right skills, the right mentality and creating the right culture," adds Zu'bi.

Jordan, like most Arab countries, does not have a culture that encourages entrepreneurship and innovation or provides access to capital that can subsidise ventures. Zu'bi believes these are areas that need to be addressed and that require government engagement.

"Today if a person has a perfect product that I can qualify as a world-class product, I - as a government and society - should hug the person and tell him, 'you are going to be the product that I start to roll out across the nation, and then sell you to the rest of the world.' This culture does not exist," says Zu'bi.

"It's a state of mind, and a paradigm shift in the way we have always looked at how we want to run things. We have extremely capable people but how you bring in this type of mentality where we can really capitalise on what is good in what we produce and make it a success story, this I what really needs to be addressed."||**||

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