When succession came to Dubai: How do family-owned businesses dominate the GCC economy and what makes them so powerful?

On this week’s episode of Taking Care of Business, COO; Carl Allsopp is joined by Farida El Agamy who is the General Manager of the Tharawat Family Business Forum to talk about all things family businesses and enterprises in the UAE and GCC. They further discuss succession plans, and how much percent of the private sector is family owned!

Carl and Farida start to discuss what the Tharawat Family Business Forum does?

Farida explains that the Tharawat Family Business Forum is a nonprofit platform organisation that gathers family business owners from across the MENA in order to foster learning across industry and build a community which enables business owners to plan succession, business longevity and more.

She further adds that they educate, offer learning opportunities for owners. But also do a lot of research, and the reason why they do a lot of research is because across the MENA region and the GCC countries there's very little insight and know-how around family ownership and family businesses, and specifically also their impact, their macro macroeconomic impact.

Carl then asks Farida, what is a family business, or family enterprise?

Farida explains the way they look at it is that it's an enterprise where the majority of control is in the hands of a family.

In their case, they mostly work with family businesses that already are in the second or third generation, and have had that first succession moment already.

How important are family businesses to this sector? How much of the private sector is family-owned? Farida shares that 70% of the private sector in the region is family-owned, this includes automotive business, confectioners and more.

Family business planning isn’t just planning for the now or your future, but rather planning for a future and legacy of your grandchildren and the generations ahead of them coming into the family business. This is known as legacy and forum planning.

What’s the difference between family businesses and family enterprises? The family business is the operating traditional asset. It's a factory or the enterprise that generates the revenue for the family. It might also be called the legacy asset. So, that has been the one thing that has been handed over across generations. The family office is an investment platform.

Why is succession culture important?

Farida explains that succession planning is great but families need to adapt it as their culture, getting their children involved into the business beforehand from younger ages so they are better equipped to understand the family and its legacy. Farida then explains how the Tharawat Family Business Forum helps businesses navigate through family succession planning, the different leadership styles in family businesses and how to work around them. Farida then explains how the Tharawat Family Model works on a system that thrives on educating families through their peers, she discusses the importance of peer learning and how it can make an impact. They really believe in that and that it's much more impactful for someone to listen to a peer that has gone through the same journey and that has come out of it with a better structure, a better system, better communication in the family.

Carl and Farida then talk about how relevant family enterprises still are in the 21st century, how they can help the private sector persevere as 70% of the private sector is family owned. Farida then shares that she thinks family enterprises are very important and thinks given the right context and the right input they will always outlast any other model. She also adds that about 60% of job creation in the region is family. So family businesses ultimately are healthy drivers for the economy. They then expand into how family businesses need future-proofing and how that can also drive the next generation forward.

What is ESG?

Farida explains that ESG is environmental, social and government principles that are applied in an enterprise. She explains that companies need to question themselves and that a company is being measured not just by its financial success, but also by standards that ask it to report on How do they impact society? How do they impact the planet? How do they impact the ecosystem that makes them thrive, that makes them grow, and what do they give back to it?

Carl and Farida then expand on the importance of ESG, the government pressure and lastly how family businesses compare to government forums.

Interested to know more on the Tharawat Family Business Forum?

Take a look at their latest blog, check out their memberships and what they do!

Tune in to hear all this and more on Taking Care of Business, every Friday!