Hischam El Agamy founded the Tharawat Family Business Forum to help family enterprises in the region exchange ideas and suggestions.
Tharawat means fortune in Arabic, and Mr El Agamy, also an executive director at IMD business school in Switzerland, launched the forum in 2006 as a non-profit network for Arab family-owned companies. It is a membership-based organisation and provides educational programmes, networking opportunities and a platform for the intergenerational and inter-regional exchange of experience.
This month, it joined hands with the Family Business Governance Center of Jordan to create awareness around issues facing family businesses across the Middle East and North Africa.
Family-owned businesses are estimated to account for 40 per cent of the region’s GDP but only 8 per cent are publicly traded, according to a report from Al Masah Capital in 2011.
There is talk of IPOs, but family businesses don’t seem ready. Why is that?
Until 2010, we heard a lot of talk about IPOs and now it is about private equity. All the IPOs that were done in the region were not for raising cash, but [rather] because family businesses want the exposure in the region and outside. Some family businesses adopted the governance rules of an IPO and are trying to implement the governance system related to corporate, shareholder and family members’ role in it. So, some of them applied the rule of IPOs without going public. There are some good examples, but there is room for improvement. Implementing governance structure, and understanding its impact takes time.
What are the challenges facing family businesses?
The internal challenges include the implementation of an efficient governance system and ensuring the family is involved in a way as an employer, owner and shareholder. We are also seeing a trend of fitting in the next generation of the family business. And we are seeing the increasing role of women, especially in the Middle East, India, Africa and Europe, and the starting of new businesses within the family business. Family businesses also see they have more responsibility towards the stakeholders, such as clients, NGOs, suppliers and employees. How family businesses and future leaders adapt to changes in technology and regulation and how they can integrate it into the business is also crucial.
What kind of role will the younger generation play?
They are creating new opportunities, and many of them are creating SMEs under the umbrella of the family business. There are a lot of start-ups happening under family businesses, and a lot of these family enterprises are encouraging start-ups through funding and their network.
What is the level of interaction between the older and younger generations?
There is a dialogue that must happen. When the younger generation comes back from a management school, they come back to the reality, and it is more complex than case studies. It is important for the older generation to give space to the new ideas and dialogue. And the younger generation needs to adapt their communication to the reality, priority and context – for example – of the Middle East where it is important to create jobs. Both sides need to listen to each other.
How do you see expat family businesses shaping up in the Arabian Gulf?
They have brought a lot of business and a trade network from Africa, India, North America and Europe. This played a role in favour of the flourishing of the family businesses here and entrenching innovation in the region.
What does the Tharawat Family Business Forum do?
We support the sustainability of family businesses by sharing the best practices, experiences and ideas. Tharawat was founded in Dubai with 15 families as its core members from five Arab countries. Now there are 23 core members from 16 countries, with 400 families interacting under the umbrella. We do events in Arab countries and outside around issues such as governance, the role of women in family businesses, and the next generation. The next conference is in London in August on the values driving the business.
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