Mohammed Alardhi is the executive chairman of Investcorp, chairman of Muscat Stock Exchange MSX and chairman of Royal Jet
April 10, 2023
Research carried out into family businesses in the GCC by global consulting firm Deloitte earlier this year found that most anticipated notable growth in the years to come. This runs contrary to overall predictions in developed nations across the globe, where businesses are bracing themselves for a challenging period.
We maintain a level of optimism in the GCC owing to our increasingly diversified economies, meticulous planning and strategic spending by governments, as well as rising oil prices.
Despite unexpected shifts in global economic conditions, our governments’ efforts and citizens’ resilience have given our nations a series of strengths and opportunities to expand upon, and we must not take these for granted.
Entrepreneurship is woven deep into the fabric of Arab heritage, and family businesses in the GCC have been instrumental in driving business in our nations, from forming synergistic partnerships with global players to creating home-grown names that have supported national economies by enhancing trade and employment.
What gives family businesses an edge over corporations is their ownership structure, which places a greater emphasis on the long term.
Family-owned businesses are estimated to employ 80 per cent of the GCC workforce. Sarah Dea / The National
According to What you can learn from family business, an article published by the Harvard Business Review, family owned businesses do significantly better during economic slumps than publicly owned companies of a similar size. They also boast better long-term performances even though they may seem to lag slightly behind their public counterparts during periods of economic growth.
These findings are very interesting and offer a great deal of hope to GCC countries. Therefore, I call upon all family business owners across the region to take this opportunity to highlight their economic contributions and engage with other stakeholders to maximise their potential and help drive their nations towards increased stability and growth.
There is definitely room for governments to collaborate with large-scale family businesses, and perhaps encourage them to form strategic partnerships with smaller companies in the local community, including young and aspiring entrepreneurs. Our region is home to myriad young, bright and innovative minds who could use mentorship and engagement to help realise their visions and spur growth within their sectors.
Family-owned businesses are estimated to employ 80 per cent of the GCC workforce, according to research published by the Academy of Strategic Management in 2020. Given the fast-evolving hiring trends and a shift towards increased digitisation of business, as well as an increase in remote and hybrid roles, I believe that family businesses are well placed to empower and benefit from a richer and wider talent pool than we have seen before.
Family businesses in the region are positioned to create opportunities for a broader range of job seekers like never before.
By introducing more part-time, hybrid and remote options, these businesses can create employment opportunities that address the economic inclusion of people who were confronted with challenges regarding job accessibility in the past – for example, part-time students, women with caregiving responsibilities that require them to stay home as well as disabled people whose needs are best accommodated by them not having to travel to work.
Diverse talent undoubtedly adds great value to any organisation, and family businesses in the region are positioned to create opportunities for a broader range of job seekers like never before.
Furthermore, increased digitisation and streamlining of business processes can lead to more efficiency and boost revenue.
With developed countries across the globe facing a series of economic setbacks, more and more foreign investors are looking towards the Gulf for better returns. We must strike while the iron is hot – family businesses in the region that have been key players in building the business landscape in their respective countries are uniquely positioned to form strategic partnerships with foreign investors who have a keen interest in the region but who would find great benefit in collaborating with seasoned business leaders who know the ropes.
Our region has come a long way and this is no small feat – we must be conscious of our greatest strengths, namely our wise leadership, our citizens and the businesses that have contributed towards the building of our societies and continue to drive socio-economic change. Given current global economic trends, it is imperative that we hone in on our strengths and encourage collaboration and engagement geared towards growth and results for all involved.
Local and family entrepreneurship has been a key driver of growth and has helped our region to diversify interests and maintain economic stability even amid unfavourable global conditions. There is still a long way to go and many untapped opportunities. However, if all parties keep their eyes on the prize and maintain a collaborative mindset, I am sure our region will be successful in paving the way to a more secure and prosperous future for the coming generations.
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Schools counsellors in Abu Dhabi have put a number of provisions in place to help support pupils returning to the classroom next week.
Many children will resume in-person lessons for the first time in 10 months and parents previously raised concerns about the long-term effects of distance learning.
Schools leaders and counsellors said extra support will be offered to anyone that needs it. Additionally, heads of years will be on hand to offer advice or coping mechanisms to ease any concerns.
“Anxiety this time round has really spiralled, more so than from the first lockdown at the beginning of the pandemic,” said Priya Mitchell, counsellor at The British School Al Khubairat in Abu Dhabi.
“Some have got used to being at home don’t want to go back, while others are desperate to get back.
“We have seen an increase in depressive symptoms, especially with older pupils, and self-harm is starting younger.
“It is worrying and has taught us how important it is that we prioritise mental well-being.”
Ms Mitchell said she was liaising more with heads of year so they can support and offer advice to pupils if the demand is there.
The school will also carry out mental well-being checks so they can pick up on any behavioural patterns and put interventions in place to help pupils.
At Raha International School, the well-being team has provided parents with assessment surveys to see how they can support students at home to transition back to school.
“They have created a Well-being Resource Bank that parents have access to on information on various domains of mental health for students and families,” a team member said.
“Our pastoral team have been working with students to help ease the transition and reduce anxiety that [pupils] may experience after some have been nearly a year off campus.
"Special secondary tutorial classes have also focused on preparing students for their return; going over new guidelines, expectations and daily schedules.”
