A champion of the private sector

Mohammed al Ansari heads one of the UAE's biggest and best-known exchange houses, which in 30-odd years has grown from a one-shop enterprise to a leading money transfer network. The next stage of its development should result in further success.

Illustration by Christopher Burke
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It is a familiar scene: perspiring under the baking desert sun, labourers wait patiently to send money home to their loved ones far away.

It is an hour until this small branch of Al Ansari Exchange opens for afternoon trade, but the queue of workers already snakes its way towards Abu Dhabi Corniche.

Mohammed al Ansari vividly remembers the moment, as a child, that he realised the huge growth potential of the business, started by his father, Ali.

"It was the early 1970s and the growth was tremendous," recalls Mr al Ansari, now the chairman and managing director of the family company.

Expatriates were pouring into the country from the Indian subcontinent to feed a surging demand for foreign labour amid a construction boom. Oil had recently been discovered and the economy was awash with new-found wealth and foreigners.

As the only breadwinners, those workers were keen to send their income home to support their wives, children and parents. Al Ansari Exchange's first small shop did a roaring trade.

Thirty-odd years later and the business has grown into one of the UAE's biggest and most well known exchange houses . Its headquarters have moved from the Corniche to Liwa Street, a bustling cluster of exchange houses.

Inside, the shop floor is buzzing with activity. Rows of clerks manning the dozens of service desks means the queues of customers have eased. But custom is still brisk as wads of notes destined for all corners of the globe are stuffed under counters.

Up two flights of stairs, back-room staff are busy tapping away on computers. Mr al Ansari's office is also located here, where he works behind a heavy oak desk cluttered with unopened mail. He is a busy man.

Last month, the business opened its 100th branch in the country. The company employs more than 1,500 staff serving more than 1 million customers a month.

When he is not overseeing business, Mr al Ansari is at work as the chairman of the UAE's Foreign Exchange and Remittance Group. It meets six times a year to discuss the latest trends in the industry.

The mood of these meetings has become more upbeat in recent months as money flows regain momentum after a downturn following the financial crisis.

Transfers across the industry swelled 10 per cent to 15 per cent last year compared with 2009 to reach Dh120 billion (US$32.66bn). Al Ansari Exchange's flows increased more than 15 per cent.

Similar growth is forecast this year, driven by robust demand in staple markets such India and the Philippines.

It follows a turbulent time for exchange houses. Mounting redundancies led to a dip in remittance flows in 2009. Many of those laid off were construction labourers who were regular users of the service.

Today's thriving business bears little resemblance to the small shop Ali al Ansari started in 1966.

"It was not that big volume," Mohammed al Ansari reflects. "Sometimes I go through the old files and the transactions were very minimal. The company was part of the trade business then and there was not a separate licence needed for money transfer."

By the time Mohammed joined in 1980, the expansion of the oil industry had boosted performance. It was still small-scale, however, with just two branches run by a staff of 15.

He was an all-rounder, turning his hand at everything from accounts to dealing, and the experience he gained in those formative years stood him in good stead for when he later took control.

"I was young and enthusiastic," he recalls. "It was not a position-type role, I was doing anything and everything. It was a positive thing. I learnt a lot, so when we created different departments later on I knew how it should be run."

Surprisingly perhaps, given the strong family influence within the firm, Mr al Ansari is less anxious for his own children to follow in his footsteps, although three of his brothers work for the company.

Many family businesses in the region have a fluid business model in place for passing stewardship from one generation to the next.

A champion of private enterprise and modern business thinking, Mr al Ansari has a different philosophy. Of more importance to him is having a strong and stable management team in place.

"Our business is much more complicated than when I joined," he says. "You can't just bring in your family and give them a high position. If they're interested, the first day they step into the business they should forget they have relatives here. They should feel like they should be treated like others."

He is keen, however, for his four children, three sons and one daughter, to consider taking jobs in the private sector.

Recently graduated, Mr al Ansari's eldest son has just joined the Dubai operations of a leading US energy company.

As an Emirati working in the private sector, Mr al Ansari is a relatively rare commodity. As a national at the head of a leading private firm, he is rarer still. His experience is highly sought after at the meetings he attends of the committee of nationals in banks and other financial sector firms.

He is well aware of the pressing jobs challenge facing the Federal Government as it tries to coax nationals from the public sector into private industry.

Al Ansari Exchange is doing its bit; it employs about 70 Emiratis, about 5 per cent of its workforce.

"There are not always jobs available in government, so young nationals are becoming more keen to come into the private sector," he says.

"We cannot compete with the packages offered in the government sector but there are other issues [nationals] should consider. Productivity and contributing positively to society are also important, as is interacting with different nationalities."

Mr al Ansari is acutely aware of the changing dimensions of the money transfer industry. The dawn of a new technological age is likely to change the way funds are transacted. In the future, people will be able to send money to their families in an instant with the click of a button on their mobile phone.

When Al Ansari Exchange started, sending funds abroad was a far more laborious and lengthy process. No electronic way of making payments existed. Furthermore, the absence of a telephone network in many parts of India ruled out wiring money by phone.

Instead, the company relied on "hawala", an informal value transfer system used for centuries by Islamic traders and merchants as a method of payment. It worked by transferring money through a huge network of brokers in different cities across continents.

"It was very normal for transactions to take between 15 and 20 days to reach home as usually they weren't sending it electronically or by phone but by mail," Mr al Ansari says.

"It was sending it by mail to the main cities in India and then onwards by post to reach its destination."

Growing demand for transfer services led to the expansion of the industry in 1980s and an influx of competitors.

To stay ahead, Mr al Ansari invested in electronic technology and signed correspondent arrangements with a wider network of banks in the Middle East and Asia. Now the company deals with 25 banks in the Philippines and more than 25 in India.

Today, Mr al Ansari recognises the challenge to Al Ansari Exchange's market share as coming from "non-traditional players" - telecommunications firms and banks.

"Non-traditional players will come in for sure," he says. "We have seen in the past few years telecoms players coming in. As everyone has a mobile it will be easy for everyone to make a money transfer.

"Banks are now showing interest, too, because of the involvement of electronic online payments, which mean there's no queues in their outlets."

The low margins traditionally earned by the industry had previously deterred banks from entering the market.

Al Ansari Exchange makes an average commission of Dh10 to Dh20 per transaction, with that figure rising to Dh30 to Dh40 for transfers to Europe and the US.

"We are keen to grow the volume," he says. "We are also investing in technology so we can do mobile payments. That's the future."