Of olive oil and transmission fluid

Private sector development, of different stripes, has marked a renaissance in Syria

 

Tucked away along the eastern mediterranean coastline, nestled at the crossroads of three continents, Syria has steadily covered ground on its ambitious development journey. Over the last decade or so, economic reforms have begun to pay dividends and the country has demonstrated that it can nurture natural growth, relying less on it’s dwindling oil revenues and more on the actual substance of an economy that was far behind on its own people’s needs.

Economic initiatives were implemented that carved out enclaves of liberalisation and created room for private sector development after decades of central planning and stagnation. In the early stages, there were very few Syrian institutional players and the majority of businesses were more casual operations than structured corporations. For the most part, families created informal structures that performed the functions of whatever business endeavour was at hand and morphed effortlessly depending on the requirements of the economic landscape.

Within such a molten framework, it is quite the challenge to both adapt to a changing legal environment as well as to understand how to best capture the opportunities presented by a country’s liberalisation process. By actively pursuing new ventures as the supporting regulatory foundations are laid, local companies facilitate the very development process such new laws aim to achieve; different sectors and industries begin to evolve and grow as they are targeted by reforms from one end and brought to life by actual brick and mortar businesses from the other.

The Khwanda Group has thrived in this respect, consistently negotiating the changing economic terrain of Syria and seeking voids to fill with investment and creativity. As the name suggests, this family-operated venture has grown to become a group of companies with diverse interests spread over differing levels of the economy.

Despite its agrarian roots of working the lands of the Syrian coast and pressing olive oil in a traditional mule-driven mortar, the Khwanda Group made its name as the exclusive distributors of Mazda automobiles in Syria under the patronage of its founder, Mehran Khwanda.

Once Investment Law number 10 was passed in the early 1990s, the one office operation transformed into a trans-national presence affecting the lives of thousands of Syrian families. The law, allowing foreign co-ownership of companies and providing tremendous tax-breaks, paved the way for the Kadmous Transport company to be formed. Today, this passenger transportation business has evolved into a cargo, freight, and money transfer service that employs over 2,500 staff.

From that critical point of Syria’s economic history, the Khwanda Group ventured into a wide array of activities ranging from agricultural farms to phosphate mining, from private banking to restaurant management, even investing in one of Syria’s first holding companies. Importing everything from air conditions to heavy construction machinery, this company began to complement its import activities with forays into Syria’s emerging private sector. As Syria’s economy began to change, the makeup of the companies that the group managed also began to change. Where the economy and the nation’s reforms allowed the private sector to satisfy a certain demand, Mr Khwanda would oftentimes see possibilities and opportunities to positively affect both the company’s bottom line as well as the relevant stakeholders of Syria’s population.

The fundamental idea was to pursue activities that enable the business community and the people it serves to move hand in hand towards a better standard of living. Often, companies in emerging markets may lead economic growth on a macroeconomic level but do not speed up the process in which an increase in GDP eventually leads to an amelioration of a country’s lower class economic and living situation.

    “Our focus is on businesses that have a development angle to them; we try to target opportunities that benefit and provide a service to the country and hopefully improve the average Syrian’s standard of living,” explains Mr Khwanda’s son, Ahmad. He offers the transportation and money transfer company as an example of this: “The margins are lower but Syria’s large lower economic class benefits. We offer our clients services that they would otherwise not be able to afford.” Kadmous Transport’s services are significantly cheaper and considerably less bureaucratic than the alternatives. Compared to formal financial institutions, transfers are made virtually instantaneously with no account setup necessary and for a fraction of the cost.

By being a low-cost leader while remaining competitive on the products and services offered, Khwanda Group has demonstrated how a company can directly affect positive change in the economy in which it operates.

Providing harvest refrigeration and low-cost automated olive oil pressing services for rural farmers are but two examples that may seem miniscule compared to other investment opportunities but do in fact make a significant difference to the clients whose livelihood is directly hinged to such affordable options.

On a larger scale, the group has made every effort to maintain its own expansion pace at the level at which the Syrian economy is mutating. With banking reforms being implemented, substantial investments in the private financial sector were made alongside investors whose aim was to establish the monetary backbone that would support Syria’s development.

The group’s dedication to development does not stop with the goal of job creation and operating within the Syrian economy. Its support extends to cultural and educational endeavours in the community as well as other charitable causes. As part of its socially responsible ethos, the Khwanda Group has supported local emerging musicians, the Syrian National Children’s Orchestra, as well as an annual Syrian Jazz Festival. The group works closely with the Syrian Trust for Development in identifying and tackling important social and cultural issues that need the support of the local community in order to progress. In the past, the group has provided the financial backing necessary for local schools to stay open in the summer time in an effort to provide additional learning opportunities for rural residents and even implemented a programme that offered the necessary materials and assistance for coastal villagers to dig their own water wells.

As firm proponents of various civil society efforts within the country, the group continuously supports organisations that aim to connect expatriates with their local counterparts. In this capacity, the group is a recurring sponsor of the British Syrian Society’s conferences and activities and has contributed positively to the message the outside world receives about Syria.

The Khwanda Group is a prime example of how one can achieve their own business objectives while extending a hand to others around them as part of an intentional effort for everyone involved to benefit and progress. Its successful participation in multiple sectors of the economy as well as its positive effect on Syria’s social and cultural landscapes are undeniable and demonstrate how local efforts can become catalysts for nationwide development. It is these initiatives that effectively take economic development reforms from regulatory theory to real-world practice and translate them into an actual positive difference in the everyday lives of the average citizen.