The Riyadh Economic Summit has gained momentum amid economic failures in the Arab Spring countries. Financial and administrative corruption in these countries has aroused popular uprisings. Meanwhile, joint Arab work organizations, especially those originating in the Arab Gulf countries, have achieved enormous success.
The Arab Company for Livestock Development (ACOLID) has given one striking example of such success whose projects are spread over 10 Arab countries.
In a wide ranging interview with Ali Bluwi of Arab News, Director General of ACOLID Dr. Abdullah Al-Thenayan dealt with projects and activities of the company. He elaborated on the ACOLID›s investment experience and contribution to Arab food security programs. He said ACOLID has set up strategic projects depending on the latest technologies, which were considered major steps to localize poultry and livestock industry in the Arab countries.
Excerpts from the interview:
What positive impact you expect will emerge from the initiative of Custodian of the Two Holy Mosques King Abdullah at the Arab Economic Summit aimed to support joint Arab funds and companies which, in turn, will contribute to developmental programs and food security?
The Riyadh Economic Summit has gained momentum as it comes following swift and radical changes witnessed by the Arab countries recently in political, economic and social fields, which necessitate more effective mechanisms to boost Arab economic integration. The initiative of Custodian of the Two Holy Mosques King Abdullah signifies his care about joint Arab work and continued efforts to find means for realization of such goals. Additionally, joint Arab funds and firms are considered proper channels and avenues to employ financial and human potentials according to each country’s regulatory, business and development frameworks.
The Riyadh economic summit recommended that capitals of joint Arab funds and firms be increased by at least 50 percent. What do you think is the appropriate mechanism to implement this proposal. Does ACOLID have ready made programs and plans to make use of the proposed capital increases?
The appropriate mechanisms should conform to the documents of the establishment rules and internal guidelines of these firms as they practice their activities on business and commercial basis. This matter also needs approval of the current stockholders of the firms on the proposed idea so as to safeguard rights of those investors.
ACOLID retains a database for all Arab countries on the available investments and potentials. Additionally, ACOLID maintains criteria to select its own projects or to launch joint ventures with public or private sectors that may have attractive benefits. So ACOLID’s strategy to conduct investment activity is based on a three-year plan, the latest is its 11th investment plan (2011-2013) which will be carried out within the approved budget. There are still feasible investment opportunities in the area of agro and animal resources and ACOLID is ready to furnish public and private investors with all data and information that will, hopefully, help them select projects. ACOLID has already undertaken this role through the creation of a unit for promoting Arab food security projects.
The success of ACOLID’s investment experience has been appreciated by investors and observers, what reasons contributed to this success?
ACOLID has achieved success due to its implementation of a series of agro and animal projects that realized profits, which encouraged other investors enter into partnership with it to set up Arab food security programs. Further, its consistency to distribute dividends (profits) over decades has given conviction to shareholders on the correctness of the company’s path and constituted a catalyst for others to enter the field despite the looming risks. On the other hand, the geographical presence of ACOLID, its boost to development programs of the hosting countries and production of intermediate goods for local producers and owners of animal and poultry projects had also given boost to ACOLID. It also substantially contributed to avoid food shortfalls by providing Arab markets with high quality food products in light of its strict compliance to regional and international quality standards. Moreover, ACOLID managed to exploit its consulting unit to carry out feasibility studies on all areas related to agro, animal and poultry projects, in addition to assessment of the ongoing projects in terms of their performance and enhancement of potentials. The unit provides such services at nominal charges to encourage the development of such sectors.
In activating its role in investing its capitals in partnership with governments and private sector, ACOLID opted to set up joint ventures taking into consideration the following: The strategic importance of the project and its correlation to the development plans and objectives of the host country, its contribution to integration with other business sectors, its role in balance of payments and in localizing advanced technologies. A specialized unit was also created within ACOLID to promote for food security projects in the Arab countries. ACOLID opened its projects to work as centers of training and rehabilitation on a variety of productive and service technologies. It also allowed many cadres to acquire technical expertise which has a positive impact on the Arab markets by providing qualified technical manpower capable of developing human and productive resources in the Arab world. Additionally, it cemented scientific and research relations with a number of Arab universities and research institutions to carry out applied researches in the area of animal resources, agro industrialization and rural development that will, overall, boost joint Arab work.
What’s the role and contribution of ACOLID to activate and boost joint Arab work for the realization of food security?
ACOLID has taken positive steps in this context by creating interaction between its capitals and that of Arab funds in both public and private sectors in establishing business entities working in the area of Arab food security based on feasibility studies conducted by ACOLID, particularly in the sense that the projects will achieve profits, a matter that will encourage businessmen and investors enter such projects. The fact that ACOLID has set up 39 investment centers in 10 Arab countries is considered an appreciated effort at the level of joint Arab work and development of business and investment environment, which fall within ACOLID investment strategy.
The reports presented by ACOLID have highlighted its success during its path. How do you comment on that?
The company’s yearly performance and results are subject to assessment and review by one of the biggest auditing firm complying with global standards, which are characterized by high degree of transparency and credibility in a bid to avoid disparity existing in local standards. Additionally, ACOLID has special governance rules conforming to its activity and diversity, notably specifying responsibilities and jurisdictions for all administrative levels and boosting regulatory and supervisory role at the administrative levels starting from the general meeting and board of directors. All internal regulatory and auditing rules are governing ACOLID activities to ensure accuracy and correctness of data and reports prepared for decision-makers. Based on the desire of the company’s stockholders on the assessment of the company’s investment experience and its contribution to socioeconomic development fields, the IRI of the US has been selected from among 21 European and American research and auditing firms to carry out full study on the ACOLID experience. Key reasons for ACOLID success can be attributed to its administrative stability, far-sighted vision of the management in planning projects that are complementary nature in terms of service facilities and acquisition of majority of shares till entry of partner (s) from public or private sectors, and ability to invest funds in profit-generating productive assets. Moreover, ACOLID played a pivotal role in food security programs through the establishment of food producing projects. To highlight the importance of regular assessment of ACOLID’s future plans and programs, a group of experts carried out a study on the company’s assets in terms of value and efficiency in the second half of 2007 and found out that its assets were estimated at $ 800 million distributed in 10 Arab countries.
ACOLID has received a series of appreciation certificates in recognition for its developmental efforts. It also obtained food quality standard certification (HASSAP -ISO 22000) and environmental compliance approvals to demonstrate its compliance to environmental standards and availability of equipment and facilities to meet requirements.
ACOLID has, from the very beginning, followed and introduced the latest technologies to go in line with its activities, what policies are being adopted in this regard?
ACOLID has adopted a farsighted policy in planning projects, which are required to be integrative where all productive and service facilities be readily available in the host countries. ACOLID is keen to transfer and localize new technologies in the area of poultry and animal production as well as training of cadres on how to use these technologies. ACOLID has set up strategic projects depending on the latest technologies, which were considered major steps to localize poultry industry in the Arab countries including, to mention some, a “grandmother and mother poultry project” in Jordan, the first of its kind in the Arab countries, followed by a similar project in the UAE, then steps are currently under way to launch a poultry veins project in Saudi Arabia. ACOLID has been a leader in the introduction of many new technologies in the area of slaughtering, processing and freezing products as well as manufacturing equipment in poultry and livestock industry. It also introduced spray and axial irrigation systems for the plantation of fodder crops which were never known in some areas where ACOLID is operating.
ACOLID has for a period exceeding three decades practiced animal and agro production activity, what key successes the company has achieved?
As earlier mentioned ACOLID has adopted a farsighted policy in planning projects and companies to play an effective role in food production and social development programs despite barriers surrounding some of its projects.
There remain key indicators, which gave confidence to shareholders on the activity of the company including its proper capital investment in productive assets, profit-generating projects and consistency in distributing profit shares. The consolidated financial statements of the company for the year 2011, as checked by an international auditing firm, proved that ACOLID realized accumulative profits of $ 571 million up to 2011 despite conditions surrounding the agricultural activity. Sales of food and intermediary commodities accounted for 91 percent of total revenues. Additionally, ACOLID has, since 1986, regularly distributed dividends to shareholders at the mount of $ 168 million, which accounted for 80 percent of its paid up capital. Despite disparity in performance of ACOLID projects due to variation in the nature of investment activities in the host countries, rates of return on capital (ROC) ranged between 18-20 percent whereas average rates of return on paid up capital and return on equity (ROE) stood at 13 percent and 8 percent respectively, which are excellent indicators as per standards related to agro, animal and poultry activities.
ACOLID has achieved remarkable success in creating positive interaction between its capitals and that of other public and private sectors in the Arab countries which achieved part of planned integration and promotion for Arab investments in setting up joint ventures, would you please explain ACOLID’s policy in this regard?
ACOLID’s investment drive began by acquiring majority of shares of projects of which other capitals (companies) were reluctant to enter. As soon as success was achieved, some of the ACOLID companies shifted to a shared company with the entry of other partners but ACOLID remained strategic shareholder of the project. Striking examples are entry of the Pension Fund - Social Security of Saudi Arabia in the two ACOLID projects (Asiah and Takamul Poultry), Fujairah Government in Fujairah-based Arabian Poultry Company, Sharjah government in the Arabian Poultry Production Company, and Ras Al Khaimah government in the Arabian Livestock Production Company. ACOLID has rich experience to lead livestock sector and other complementary activities, notably:
• Localization of the first automatic slaughter in poultry sector, Asiah Poultry, Qasim, Saudi Arabia.
• Introduction of “grandmother and mother poultry project” in Jordan, the first of its kind in the Arab countries.
• Introduction of the latest poultry production project in the UAE, Farrouj l-Wadi.
• Introduction of a modern livestock production project in Ras Khaimah, UAE.
• Introduction of a mega animal and poultry fodder production plant in Sudan.
• Introduction of the first closed poultry project in Qatar.
• Creation of a poultry and livestock equipment manufacturing project. Success of these projects has attracted a series of investors in both pubic and private sectors to enter as partners.
What policies has ACOLID adopted to absorb differences in systems and standards for its businesses in the 10 Arab countries?
Some impartial studies carried out to assess ACOLID experience have proved that the ACOLID Group enjoys fully integrated and flexible administrative and technical structure. Non-observance of some countries to benefits and exemptions contained in ACOLID’s founding documents was not an obstacle to continue its mission where it undertook that mission with utmost success. The technical and administrative bodies of the company have surpassed the disparity existing in systems of some of the host countries by preparing data (rules) complying with recognized international standards acceptable to all parties, which attach credibility and transparency to such data and rules. ACOLID has specialized technical and legal bodies to monitor changes and differences and put forth proposals to ensure continuity of the company and realize the desired objectives. ACOLID board of directors has stressed the importance of compliance to the local systems in the host countries where ACOLID is operating.