Saudi initiative brews business success

RIYADH — Lateefa Al Waalan just wanted to make Arabic coffee simple: no more labourious mixing of ingredients and careful attention to boiling.

Supported by a Saudi programme to foster, or "incubate", technology-based businesses with high growth potential, she developed a machine to produce Arabic coffee at the push of a button — the first of its kind.

In the process, Waalan and her Yatooq company became emblematic of efforts to diversify the oil-dependent kingdom's economy and employ more Saudis, particularly women.

Yatooq is one success story from the business incubation programme, known as Badir [meaning "to initiate"], but it's not the only one.

After hitting the market in 2013, Yatooq has grown to employ 15 people with another 75 on contract.

"The factory is completely run by women," Waalan said at the Riyadh plant where she directs operations from her laptop and telephone in a spartan office.

Women covered from head-to-toe in black, as is the custom in Saudi Arabia, handle administrative tasks in an adjoining office while the coffee is roasted and ground on large machines in another room.

Her business was driven by one idea: "I love coffee but it's very complicated. I want to make it simple."

John Mercer, an Australian consultant to Badir, calls Waalan's success story "quite stunning”.

Badir helped Walaan create a prototype in its industrial lab and provided legal, accounting and other advice as well as valuable connections.

Traditional Arabic coffee blends the ground beans with cardamom and saffron, giving the liquid a yellowish hue.

It takes about 30 minutes to brew in a home kitchen before it can be savoured, typically accompanied by dates.

Yatooq's innovation was a type of electric kettle that uses patented computerised technology to brew with consistent quality a ready-made blend of ingredients.

"We wanted to make a machine that you can press a button and then make the coffee without you needing kitchen equipment and so on," said Waalan, 30, who comes from a computer science and information technology background.

She declined to discuss revenues but indicated that the machine is now available in about 80 per cent of electronic retailers, is moving onto the shelves of more supermarkets and exported to neighbouring Gulf countries as well as the United States. 

'Massive impact'  

Badir is also proud of Ahmed Khalaf and his Stability Laboratory, which last August became the first private lab accredited by Saudi Arabia's Food and Drug Authority to test pharmaceuticals, along with other products.

His licence is posted proudly on the door of his lab at Badir's biotech incubator on the sixth floor at King Fahed Medical City in Riyadh.

British-educated Khalaf said Badir gave him "full support in many, many things" including idea-development and problem solving.

The Stability Laboratory already employs four staff with masters degrees and is turning a profit.

It is among 82 businesses at various stages of incubation with Badir, from start-up to revenue-producing.

Several others including Yatooq have "graduated" and are operating on their own, Mercer said.

Incubation also includes help for budding enterprises to develop their business models, install the right management teams and get funding.

Badir offers free laboratories, office space and even support for prototype development from its own workshop with three-dimensional printers and more traditional tools like a lathe.

With four incubators throughout the kingdom now, Badir plans to expand and broaden its focus from the current sectors of advanced manufacturing, biotechnology and information technology.

Its economic role in the world's biggest oil exporter is, for the moment, tiny but Badir is focused on longer-term impact, said Mercer.

"It's only a small part but it has a massive impact over time," he added. "Because what you've done in incubation is set a foundation for that company to grow".

The fall by roughly 50 per cent in global oil prices last year has left Saudi Arabia projecting its first budget deficit since 2011.

This has emphasised the need for economic alternatives, and the diversification effort is expected to continue under new King Salman who acceded to the throne in January.

'Things are changing' 

Badir "is probably the best example" of a local effort to tap the dynamism of dedicated and talented Saudis, belying stereotypes which labelled them as lazy or only want to work for government, a diplomatic source said.

The programme was set up five years ago by King Abdulaziz City for Science and Technology, the national science agency.

The government has since intensified efforts to bring into the workforce more Saudis, including women who have traditionally faced cultural barriers to employment in a conservative Islamic country where the sexes are strictly segregated and women are not allowed to drive.

Millions of foreigners in Saudi Arabia still do everything from management to construction.

Analysts say government efforts have boosted the employment of locals.

But Saudi Gazette columnist Khaled Almaena has blamed rampant "bureaucracy, red tape and complacency" for limiting the role that small and medium-sized businesses can play.

"In most countries these businesses constitute 80 to 85 per cent of the economy," though not in Saudi Arabia, he wrote.

But some things are changing, said Waalan, who sees in the kingdom a growing recognition of business people.

"Now more than ever, it's very cool to be an entrepreneur", she added.