How African businesses survived the Ramadan fast

As the sun starts to lower over Djibouti at the end of a hard day’s work – even harder, hotter and thirstier than usual due to it being the first day of Ramadan – dockside workers gather outside the entrance to the city’s old port to catch buses returning them to their accommodation. Once the sun has finally set they will have their first drink and meal since sunrise.

The commencement of Ramadan on 6^th June, following the announcement from officials in Saudi Arabia that the new crescent moon had been sighted – the prerequisite for the beginning of a month of fasting and religious contemplation for Muslims – is a challenge for businesses and employees the world over.

But work has to continue, especially in a place such as Djibouti, next to the southern gateway to the Red Sea – one of the world’s busiest shipping lanes – and the main trade hub in east Africa, with demand from the likes of landlocked Ethiopia’s strengthening economy never ceasing.

“Ramadan doesn’t actually affect the port,” says Aboubaker Omar, chairman and CEO of Djibouti Ports and Free Zones Authority (DPFZA). “We operate 24 hours a day with three eight-hour shifts, which reduces the pressure on those fasting who are working in the heat. Also all our vehicles and heavy machinery are air-conditioned, and don’t forget that for the last 3,000 years our people survived on one meal a day. Going without food during Ramadan isn’t new. It’s genetic, we’re used to it.”

Reduced hours, reduced performance

In Djibouti, as in many Muslim countries, offices are required by law to reduce working hours by two hours for the duration of Ramadan. Hence, at the Djibouti offices of the Maersk container shipping company, its usual work hours of 8am to 5pm, with a one-hour break for lunch, change to 8am to 2pm. Opinion on how much performance is impacted by fasting varies – some Muslim office workers even say that free of distracting thoughts about food and mealtimes, concentration on work actually improves. Others are not so sure.

“You probably lose about 25% of normal productivity through the reduction in hours, while there’s another 15% lost through the reduced capacity of employees,” says Mohammed Ben Brahem, managing director for Maersk in Djibouti and Somaliland. “But that’s very normal if you are fasting and not getting the usual nutrients. And at least we have air conditioning. It’s even harder for those working under the sun.”

However, since the drop in productivity applies to all businesses in Djibouti, it doesn’t lead to problems for the office: “The agents who put in orders for containers don’t come as frequently, which means our flow is reduced and so there’s a levelling out between demand and productivity.”

Mohammed comes from Tunisia, where he thinks the policy of working from 8am to 2pm throughout the summer has a far more negative impact than Ramadan.

Boosts for business

Djibouti can afford reduced office hours, whether during Ramadan or outside of it, because the ports – which are its main economic driver – keep going at full throttle round the clock.

“Ramadan doesn’t impact GDP here. If Ramadan lasted six months then maybe it would, but it’s only a month,” says Samir Aden, advisor to the minister for the Djibouti Ministry of Economy, Finance and Industry.

Furthermore, Ramadan provides certain boosts for local business. The fast-breaking meal of iftar is a social occasion, with evenings during Ramadan in Muslim countries often accompanied by a festive mood. In a pattern similar to December and Christmas in regions such as Western Europe, people tend to consume more and purchase more than they actually need during the month.

“If you go into the city at night, you will see a whole load of activity,” Samir says. “After sunset we eat a lot and we work a lot.”

Beyond word of mouth, however, it is hard to get a proper idea about the economic impact of Ramadan. Perhaps because of sensitivities around dealing with a religious institution, international organisations such as the World Bank, International Monetary Fund and United Nations Development Programme have not conducted research on the precise economic impact of the custom.

But there is general consensus that during Ramadan many people stay up late after breaking their fast while eating, working and socialising, and then get up in the early morning hours so they can eat before daybreak; and this results in shorter sleeping hours which can cause people to become even more lethargic later on in the day.

And at governmental level in conservative Muslim countries, decisions and meetings will often be postponed until the period of Ramadan is over. This causes lower productivity and performance and can negatively affect business people due to the postponing of important policy decisions and processing of government transactions.

In an extensive 2013 survey for the National Bureau of Economic Research, an American private nonprofit research organisation, economists Felipe Campante and David Yanagizawa-Drott looked at 32 Muslim countries, eight of them in Africa, during Ramadan. The report concluded that fasting has a significant negative effect on output growth in Muslim countries.

Fast like an Egyptian

Ramadan in Egypt offers an interesting case study of how any negative decrease in workers’ productivity is counterbalanced by consumption and demand rising significantly. In Egypt this leads to higher prices and higher profit margins for merchants during Ramadan.  It is estimated that $3.4bn of Egypt’s annual $22bn spending on food per year occurs during Ramadan, representing about 50% more consumption than any other month. While high consumption can lead to economic growth, in the case of Ramadan it is admittedly only a short-term effect.

Meanwhile, restaurants and cafes report an 80% increase in their customers, especially those establishments that offer entertainment. Going to cafes after iftar and spending time there watching television, smoking shisha and chatting with friends is a Ramadan tradition.

Furthermore, Ramadan is a popular time for airing new TV series, an important factor in a country that  exports shows to the rest of the Middle East. Last year, production costs for serials shown during Ramadan reportedly exceeded $124m.

At the end of Ramadan in all Muslim countries, there is normally a lot of activity as people traditionally visit families to celebrate Eid-ul-Fitr, the three-day festival marking the end of the fast. Many people buy new clothes and furniture for the celebrations and hosting of visitors, and also exchange gifts – providing another economic boost.

Beyond Africa and the Middle East

Arguably, any economic impact of Ramadan is beside the point – the main purpose of the month being to serve as a time of religious reflection through self-restraint and deprivation. And of course that endeavour occurs far beyond just Africa and the Middle East, with the fast bringing particular challenges in different regions. Ramadan follows a lunar cycle, starting about two weeks earlier every year, gradually moving through the 12-month calendar. It currently falls within the summer months in the northern hemisphere, meaning that in higher latitudes Muslims have to contend with early sunrises and long drawn-out days before late sunsets.

“Doing Ramadan in the UK is tough,” says Abdirizak Mohamed, a British Somalilander who has started a meat processing factory in Somaliland. “You can be fasting from close to 4am until around 10pm. It’s 10 times harder than fasting in Somaliland.”