Samantha Whitehorne is deputy editor of Associations Now in Washington, DC.
A year after the Arab Spring, emerging democracies in the Middle East and North Africa are reshaping their governments and building new economies. Associations have a historic opportunity to export their model of self-regulation to support freedom and economic growth in the region—while benefitting association communities both here and abroad. (Titled "A Moment for Action" in the print edition.)
After Mohamed Bouazizi's fruit cart was confiscated in the Tunisian city of Sidi Bouzid on December 17, 2010, the young street vendor went to the governor's office to complain. When the office refused to listen to him, he set himself on fire in protest—and sparked the Arab Spring.
Soon after, hundreds of protesters took to streets across the country, calling for an end to high unemployment, rising inflation, and government corruption. The protests in Tunisia gave rise to similar demonstrations in Egypt, Syria, Yemen, Libya, and other countries in the Middle East-North Africa (MENA) region. As of March, governments had been toppled in Tunisia, Egypt, Libya, and Yemen. According to a recent article in the British newspaper The Guardian, the Arab Spring brought democracy to an estimated 280 million people.
These newly democratized MENA states are now forecast to become some of the fastest-growing economies in the world, but they face significant hurdles. These countries must create credible, business-enabling environments with few resources, no experience, and very little time.
That's where U.S. associations come in, says Rick O'Sullivan, principal of Change Management Solutions and an expert in building associations in developing countries. "American associations, with a proven working model and experience in nongovernmental self-regulation, could hold the key to successful transitions and provide competitive advantages for their U.S. members as well," he says. "It truly is a historic opportunity for associations to demonstrate how they can help make a better world."
O'Sullivan has traveled throughout the MENA region helping local organizations adopt transparent and self-sustaining practices. He says the aftermath of the Arab Spring represents a major opportunity for U.S. associations "simply because what these countries need is the ability to manage their economies in an environment where the government is broke and broken. What associations would do for them is provide the infrastructure they need to manage the business environment."
Until recently, global economic growth was primarily driven by developed markets, but the Organisation for Economic Co-operation and Development predicts that over the next 10 years, developing markets will account for half to two-thirds of economic growth worldwide.
"The organizations in these emerging markets don't know what to do first," he says. "They are free from the rules that have been in place for decades and even centuries. As a result, they don't have standard-setting practices in place; this is where American associations can step in. They can help create associations in these emerging markets that are financially independent, self-regulating, and that pay attention to what's happening on the ground and are responsive to their members' and customers' needs."
O'Sullivan says that self-regulation—and the related notion of self-sustaining organizations—are new concepts in the Middle East, where associations traditionally have been heavily subsidized by the government. That model did little to promote the kind of strong advocacy role that U.S. associations play. "It's hard to criticize people who pay the rent," he says. "It's hard to criticize governments who typically account for 60 to 65 percent of an organization's revenue."
A few years ago, while O'Sullivan was working in Ethiopia on a project to privatize the textile industry, a manufacturer told him that companies there didn't design products well. Bemused, he asked, "How could you not pride yourself on design?" The reason was simple: Intellectual property rights didn't exist in the country.
"There was no benefit to be innovative or take risks in design," he says. "What they came up with would be immediately copied in the marketplace."
O'Sullivan credits self-regulation with helping the U.S. association model prosper. "Everyone else is trying to figure out how to develop standards that work in the global environment, and many are turning to [study American self-regulating associations]. While most of the rest of the world considers self-regulation oxymoronic, and they don't know why we do it … they do know it works, so they want it," he says. "We regulate ourselves; the government is the regulator of last resort for us."
The United States has one of the highest levels of self-regulation in the world. Most professions and industries—with the help of associations—regulate quality control, consumer protection, and skills certifications themselves. "Even in a regulated industry like healthcare, regulating agencies rely on industry and professional experts to develop standards and monitor the market with the government's role limited to policing these organizations for antitrust activities and so forth," O'Sullivan says.
While skeptics say that American self-regulating practices are too advanced for these transitional markets, O'Sullivan says the environment that created the American association and nonprofit sector in the 18th and 19th centuries is similar to what MENA countries are currently facing after the Arab Spring.
He says empowering organizations to be less dependent on government support will reduce corruption, foster more transparent business environments, and spur economic growth. "Proper self-regulation makes use of market forces to reward transparency," he says. "If associations in these places are directly involved in regulating the economic environment, they become more responsible and accountable for the end result. These self-regulating organizations become proactive partners with [each other] and their respective governments."
In the past, little collaboration among groups existed in the region. Last April, O'Sullivan spent a week conducting a workshop on self-sustainability in Jordan for the Business Women's Forum (BWF), a Palestinian businesswomen's association. "The organization, like many associations in the U.S. and around the world, suffers from what I have titled the 'monopolist' syndrome," he says. "Because an organization views itself as the only association dedicated to its mission, it rarely realizes that there are others, well beyond the immediate membership, who would benefit from the organization's success."
BWF wanted to ask the government for reduced interest rates and a policy requiring that banks set aside certain amounts of money for women-owned businesses. When O'Sullivan suggested that it work with a local banking association to understand why women-owned businesses were seen as riskier than businesses owned by men and identify ways BWF could work to change that perception, they were surprised. BWF had the perception that the role of associations was one of confrontation and immediate self-interest. Working with bankers, who they saw as the opposition, seemed counter to its goals.
"This is exactly the type of knowledge that U.S.-based associations need to bring to the region. We need to tell these groups to look around and find out who else benefits when they get their way," he says.
O'Sullivan admits this will not be easy. "The idea of [being] self-sustaining is still scary for them," he says. "They've never done it or really seen anyone else do it."
New donors have stepped in to keep BWF going, but the organization now finds itself significantly dependent on them. "The perception is that there is still some trick to [being self-sustaining]," he says. "But really the next step is to … take the leap of faith. That's where association executives who have been there and seen the success can jump in."
As more U.S.-based associations focus on globalization, O'Sullivan cautions against seeing this effort more as a social responsibility initiative than a business imperative. "It is both," he says.
"But you know what it's not? It's definitely not about putting these two questions first: Can we get members there? Can we hold meetings?" he says. "The real value we bring to the global arena is standard-setting practices, and if we take the lead on this, it will definitely help in augmenting members."
Associations already exist to find solutions to global problems. As organizations in the MENA region learn to adopt the U.S. model of self-regulation, they will be able to look beyond government agencies for solutions and leverage market forces to reward positive behaviors and penalize unacceptable ones, O'Sullivan says. These groups will then be able to create a transparent way to address corruption that will cross political boundaries and respond to changing environments.
"The more self-regulation, the more transparent the business environment," he says. "And the more transparent the business environment, the more competitive American business models and professionals will be in the Arab world now emerging."
Samantha Whitehorne is deputy editor of Associations Now. Email: [email protected]
Rick O'Sullivan, principal of Change Management Solutions and an expert in building associations in developing countries, estimates that U.S. associations have about five years to bring their experience with self-regulation to the emerging Middle East-North Africa region—before the opportunity is lost. What happens if U.S. associations don't step up and show these countries how to implement their model? "Someone else will step in and do it, to the competitive detriment of the United States," he says.
If not U.S.-based associations, O'Sullivan guesses organizations from the European Union (EU) might fill the void, meaning the infrastructure would be government-driven and not market-driven. "What happens is that governments will start playing with the rules in order to create barriers to entry and provide domestic businesses and professions with a competitive advantage," O'Sullivan says. "In the trade world, it's called NTBs, nontariff barriers."
O'Sullivan says an NTB was put in place in Belgium years ago when the country was developing standards for reducing auto emissions. "Instead of developing a standard that looked at the output of carbon dioxide, the government wrote into the rules how it would be done," he says. Manufacturers could not meet the requirement using a catalytic converter, and retrofitting every American automobile to comply with the rule added $400 to the sticker price. This gave an advantage to European car manufacturers instead of car buyers.
And while O'Sullivan says EU involvement is by no means the worst-case scenario, he does say that standard-setting "is a natural fit for the United States. And if we don't start playing in this global space, I fear that global markets and their customers will be impacted."