By Tony Kaye

We spoke with the head of the Tharawat Family Business Forum in the United Arab Emirates, Farida El Agamy, who will be a guest speaker at Australia’s Family Business  National Conference held from 17-19 August 2016, in Melbourne.

Farida El Agamy was a young lawyer practising in Switzerland when her father offered her the opportunity in 2010 to move to Dubai to head up a family business forum he had helped establish in 2006.

Six years down the track, Farida remains firmly entrenched in her role as general manager of the respected Tharawat Family Business Forum – one of the leading organisations in the Middle East region dedicated to family business research, education and exchange.
Tharawat, the word for fortune in Arabic, is a membership-based network that was formed in 2006 by 15 leading Middle Eastern families and Farida’s father, Dr Hischam El Agamy, as an independent, non-profit business network for Arabian family-owned businesses.

Its vision is to contribute towards the growth and stability of 80-90% of the businesses in the Arab world that are family-owned, using a range of different platforms such as conferences and workshops to provide support for family enterprises.

What are the key challenges for family businesses in the Middle East?

“We do have a very specific set of problems, one of which is a total lack of data,” Farida says. “Even though the Arab region has around 460 million people in it, there’s only one or two universities that do a little bit of research on family businesses. So we haven’t really studied the dynamics of the family business sector, and yet the large majority of the private sector is family owned.”

Farida says the concept behind Tharawat is to have a platform that is completely independent and neutral from vested interests.
“We understand what the challenges are, and we also understand that in the Middle East, considering all the problems that are currently very evident in our region, we absolutely need stable and long-term employers.

“The stability that a family business can bring, be it to a village or a small town, and the way they employ people is really one of the things that I personally emphasise a lot.

“It’s one the drivers that makes me motivated to go to the office every day, because I believe we can, though best practice, create a win-win situation. As the family business becomes more successful, they will create more employment for people in the region, and I think that is a beautiful win-win situation that we are trying to work towards.”

What are the challenges around succession in the Middle East?

“Wherever you have a family business, succession is going to be one of the key issues that has to be addressed,” Farida says.

“In the Gulf countries, a typical challenge here is the number of children. Until about 20 years ago, it was completely normal to have up to eight, nine even 10 children per nuclear family. From the first generation to second generation, very quickly it escalates. That causes two problems: will the business be able to sustain and support that exponentially growing number of people, and second of all how do you integrate so many individuals into the family business?

“So in the Gulf people are trying to come up with different models to try and address these challenges. I find there is a big awareness these days about succession planning, but I still think we are succession planning a little short term.

“Our association has always taken a very clear stance that succession planning is not about who becomes the next chairman, it should be about every single position in the company for family employees.

“If you do it that way it becomes a much easier process and less dramatic. It’s more of a mindset shift than a governance question.”
Farida says some families in the Middle East are looking at family funds, where they support start-up ideas by family members, give them a certain amount of money, and support them so they can add value to the broader business.

“The families that do that however have to deal with the fact that there can be failure, and I think this is where the failure conversation in connection with succession planning needs to be had more clearly. Unless you allow people to sometimes make mistakes, it will be very difficult for you to have a motivated next generation.”

What can businesses outside of the Middle East learn from the Arab world?

“There is one big thing that I always say, and it’s resilience,” Farida says. “I would say that Arab family businesses are amongst the most resilient groups of people that I’ve ever seen.

“It’s impressive to see stories of companies, for example in Syria and Lebanon, because these two countries over the last 120 years have been through so much turmoil. We have several stories of companies that were started in Syria in the late 1800s, then moved to Lebanon because there was some type of war and started up again, and then there was nationalisation so they closed down and went back to Syria to start up again.

“There are families that have done this four to five times, so to have that resilience and that vision and that strength to keep going, despite the fact that your whole environment is crumbling around you over and over again is fascinating.
“This is something that personally I’m always taking away, that if you have that kind of strength and tenacity you can make it work. But it takes a lot of energy and a lot of strong personalities.”

What are the opportunities for family businesses in the region?

“Right now, because it’s such a volatile time, I think we see businesses looking both within and outside of the region,” Farida says. “There’s 460 million people, so it’s a big market; they all speak the same language, which makes things very easy in terms of communicating your product.

“The members in our association that have real economy focused businesses, in food, infrastructure, education and healthcare are still very much engaged in the region. But we do see that many of them who have private wealth accumulated are actually looking to invest outside.

“One of the reasons we are coming to Australia is that they are always looking for partners outside, especially to either bring a product that we produce here to the outside world or to bring in new businesses to our region.

“For example, a lot of things right now are renewable energy, water, water purification, food security. All of those topics are of high relevance these days.

“That’s also why I’m hoping some of our members will come with me to the Family Business Australia conference, to see if there are any opportunities to collaborate.”