Hussain Al-Maswari:”The banking industry accretes with other commercial industries” [Archives:2006/985/Business & Economy]

Interviewed by: Yasser Al-Mayasi
The Last decade has witnessed several economic transformations in Yemen. an industry that has changed to keep with the time in Yemen has been banking. Yemen & Kuwait bank is the oldest private sector bank in Yemen and continues to grow and expand its operations; in the first half of this year the the bank has achieved an increase in profits of 38% compared to last year while it continues to grow its paid-up capital by 950 million Riyals to each the 6 billion Riyals quota specified by the Central Bank of Yemen by 2009. YemenTimes met Hussian Al-Maswari, Chairman of the bank.

Can you brief us on the bank and its establishment?

The Yemen & Kuwait bank started its operation in 1979, and it was the first private sector bank in Yemen with a paid-up capital of YR 100 million. The bank's prime operations include regular banking activities as well as taking part in investing through the establishment of partnership companies and joint ventures with other parties in line with the bank's mandate. The bank also focuses on gaining the trust of our clients through excellent customer service and facilitating banking operations to ensure customer satisfaction. We also emphasize on the importance of introducing state-of-the-art systems and technologies and keep up with the development of the banking sector in the Arab world as well as meeting international banking standards.

From your experience, how do you evaluate the banking industry in Yemen?

The government of Yemen represented by the Central Bank should give more attention to developing the industry as well as undertake the annual audit with all banks and make recommendations for all the banks to adhere. For example, should an error take place in one of the banks then the central bank should take action against that bank in accordance to the law, considering that the non-adherence of the central bank's report is a violation of bank and company law.

I would also like to stress that the success of the banking centers is subjective to a number of factors such as the business environment as well as the success of the bank in delivering excellent financial services to their client in a very short time, also the understanding of the client's needs and demands is integral for the success of any service-oriented enterprise. And let's not forget that the central bank of Yemen aims at regulating the banking industry through its follow up mechanism and coordination between various banks and financial institutions to provide solid grounds for the growth and development of the current banking practices in a scientific manner. Local banks should increase their capital in order to be able to compete with regional and international players following Yemen's opening to global product and service markets.

Is Yemen ready for a stock exchange?

A stock exchange requires the involvement of the community as a whole in the economy, as the stock exchange is a mechanism which the market can deal with banks or other corporations through the purchase of stock and shares. The main factor critical for success for a stock market in Yemen is to have a strong and supportive legal framework which can protect both small and large investors in order to allow smooth transactions to take place through the stock market in terms of purchase of shares, then you will have the indicators that reflect the success of the stock market.

Are there companies in Yemen which can be listed? What is your view with regards to establishing a stock market in Yemen in the meantime?

The most important factor for any stock market is the existence of laws and regulations that regulate the operations of a stock market, only then will companies start to deal with the stock market and there will be new companies established through the stock market. Yemen & Kuwait bank have a vision to expand our operations into the stock market through our subsidiary company Aman Insurance which we plan to list in the stock market. Therefore you can conclude that I am with the establishment of a stock market in Yemen in spite of our limited capabilities as corporations or as citizens.

Wouldn't the limited capabilities limit the success of the stock market?

There are many countries in the world which have well-established stock markets; however, I am optimistic that we can grow out capabilities; the law proposal of the Ministry of Finance which Prof. Saif Al-Asali has brought forward to the cabinet to establish and regulate the stock market is the reason behind my optimism.

How are the growth prospects of the banking industry in Yemen?

The banking industry accretes with other commercial industries when it comes to growth. In general, banking services are still shy in their growth, it is true that we achieve considerable growth rate but those rates are in the Yemeni Riyal, plus any growth in the banking sectors is correlated with other sectors such as manufacturing, commerce and even tourism, all those industries are inter-related and growth in any industry affects the others in a similar manner.

How can the banking industry boost the growth of other industries?

Specialized banks ought to focus on developing large scale industry compared to smaller ones because large scale trade and industry have a bigger pool of knowledge and in turn its profitability is higher compared to small scale industries, for example, if you study feasibility of cotton production in Yemen you would find that masses of tiny enterprises generate a lot of employment, however we can't rely on those ting enterprises due to the limited knowledge and growth prospects. Nonetheless banks such as the Agricultural Credit Bank can play a major role in providing micro financing for cotton producers and create a local cotton producing industry which can be very profitable after exports with a yield of up to 50 percent and provide employment for thousands especially in locations such as Hodieda and Abyan. Only once the local industry has been created then we can step in to boost their growth.

Similarly, in manufacturing and other industries which are dependent on local raw materials such as cement factories, as the raw materials for this industry is widely available in several governorates, therefore if we can crack down on price hikes of raw materials then I think any loan or investment in this field is a guaranteed success.

With new banks seeking a threshold in Yemen, how would that change the banking industry?

We have to understand the entry of foreign currency into Yemen is an important factor when it comes to economic development was it in the banking industry or in any other industry. However, we do not want big multinational investors to come to Yemen and announce huge investments and projects, then try to secure local means of financing these projects. What we want is to attract investors with good financial standing who can bring foreign currency into the country and establish investments or joint ventures with local businessmen. But the sort of businessmen who come to Yemen in search of loans to establish businesses do not help the economy in fact they compete with local businesses in need of loans to grow.

How do you react to the Central Bank demands of increasing the capital?

I assure you that the Central bank is following a wise policy as the future demands that we grow out capital and operations in order to have the confidence and the ability to compete with the new entrants into the market especially those with huge financial capabilities. Yemen & Kuwait bank have increased our capital following the Central Bank regulations and we have a plan to further to YR 6 billion by 2009.

The collapse of one of the national banks, how did that affect the industry and how did you overcome the negative impact?

What happened to the bank was unfortunate and we believe the situation could've been handled in a better manner, as the Central Bank should have taken action earlier to avoid the collapse and in turn avoid the negative publicity that might affect other banks and the industry as a whole as well. I would not deny this incident has left a bad legacy on the banking industry, however, we have overcome this legacy through strengthening our ties with our clients and the mutual relationships we enjoy with our partners.

You are one of the few who worked in both business and politics. Explain the experience.

I am proud to have participated in the political life of Yemen, starting from defending the revolution of Yemen and taking part in a number of official posts in several ministries, the most recent of which is my work in the Shoura Council's economic committee. I don't think my work with the government conflicts with work in the private sector as long as we keep abiding by the law, adding my experience in the private sector proved very beneficial in my government work and most recently as a policy maker in the Shoura Council. The Shoura Council continue to provide visions and make studies that aim at enhancing economic development in Yemen.
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