The Baksheesh Factor

Baksheesh is a popular term used through out the Middle East, of persian origin it means "lavish remuneration and bribes". Despite the fact that corruption is widespread in many countries of the Middle East and in North Africa, it is still a very sensitive issue and it is very difficult for individuals and companies to discuss it in a frank and open manner. Yet one of the main issues that arab spring revolutionaries have been decrying over and over again has been about the wide spread corruption in their countries. Indeed corruption has stifled the economic welfare and growth of many developing countries. The general population is nearly always confronted with additional "tips" that public servants require of them to get any bureaucratic job done. But beyond individuals, practically all corporations are victims or are complicit in the Baksheesh dilemma.

In some developing countries, several key public and administrative positions, which have a high economic value are highly sought after. Sometimes these positions are often bid over or bought. An example of such positions would be customs duty officers or at a higher level those dealing with public tenders. Corruption can be highly organized, they are often built up as complex parallel hierarchical structures.
For many non-local corporations and individuals this Baksheesh culture is initially not easily visible. Often those involved in it would out of shame and some sense of honor not openly make a display of such "lavish remuneration". But corporations often need to take account of the Baksheesh factor. Companies that stoically try to resist paying the Baksheesh are often penalized and often have difficulty in being competitive in the "open" market. This is an important moral and ethical dilemma for many. Unfortunately it is an additional cost that needs to be taken account of, whether as a direct cost, such as "additional" custom duties or as an indirect cost, such as "gifts" or as "marketing & sales cost". The problem is that the Baksheesh factor knows no limit, an unscrupulous corporation with deep enough pockets can buy its way to a monopolistic situation.
There is also an important cultural aspect to Baksheesh or the general idea of remuneration. The concept of providing assistance and providing generous gift is an important social aspect of Islamic culture. Furthermore, business negotiations is very much an issue of deepening one's trust of one another and of building relationships, this is especially true in the Middle East and North Africa. The concept that "if you scratch my back and I scratch yours" is expected. But unfortunately, this usually beneficial aspect of Islamic business ethics can become morally blurred when it starts having a negative impact on the broader society and the economy.
Nonetheless, the situation is not as bleak as it seems. Many countries in the Middle East and North Africa are on a real "Crusade" or rather on a real "Jihad" against corruption. There has been a lot of progress, especially in GCC countries, where Qatar leads the pack as the 14th least corrupt nation in the world. But on the other end of the scale, Iraq is considered to be the world's 3rd most corrupt country. The fight against corruption has also found new strength as a key demand in many recent popular uprisings and protests of the region.

Useful references:

• Website: Transparency International (Corruption perception Index 2010 results)
• Book: Economic Performance in the Middle East and North Africa: Institutions, Corruption and Reform (Routledge Political Economy of the Middle East and North Africa)

Is There Such a Thing as a Coherent MENA Market?

When you travel from country to country throughout the MENA region you don't fail to notice the great diversity and contrast between them. Morocco for example has a quite different cultural, economical and social structure than let's say Saudi Arabia. This is true of most MENA countries.
You might say that they share a common language: Arabic. Yet this is not exactly true. It is true that classical Arabic is common to all these countries as far as a written and as an official communication language is concerned. But the language that people use for dealing with one another orally has strong differentiated dialects from country to country. This is especially audible when comparing Moroccan dialect to that of let's say Oman. So can we really talk of a common MENA market?
In a way I think you can. In fact this common market is actually in the development process, especially within the last 20 or some odd years. The main driving forces for this are political and economical. There has been stronger economic ties between countries of the region. In fact many countries have seen an important shift in trade relationship from country to country. This is today mainly driven by GCC countries potential for investment. Today two-thirds of GCC's investment outside of their common market takes place within the MENA region. Many local companies and brands are now spreading throughout the region.
Furthermore, the current political changes taking place throughout the region due to the "Arab Spring" is a challenge mainly to the old nationalist regimes. The fire of revolution (or evolution) is been inspired across the border within the region, a sign of common aspirations and values. As many countries become more democratic, barriers between them will come down even further and trade exchange will increase as well.
So you can say that a strong common MENA market is in the making.