SIDELINES
FORBES MIDDLE EAST
6
Succession Continues Family businesses have been the lifeblood of Middle East economies for decades, ever since the Arab world first began forming its metropolises in the desert. But today, many of these have evolved well beyond what those early founders could have imagined, handed down through generations, diversified across multiple sectors, expanded across continents, and listed on regional stock exchanges. In the U.A.E. alone, family-owned businesses reportedly account for 60% of the GDP and 80% of the workforce, according to a 2022 report by KPMG. But will they continue to grow? And will new generations continue to be the ones taking the businesses into the next era? PwC’s 2023 family business report forecasts positive results as long as they continue to build and capitalize on consumer trust. According to the report, 65% of the family businesses surveyed in the Middle East reported growth in their most recent financial year, indicating a recovery from the pandemic slump, and 74% believe they will grow further in the next two years. But trust is paramount, and while family businesses are traditionally trusted more by consumers, as the consumer demographic changes and Gen-Z release their spending power, issues such as ESG, diversity, and sustainability are coming to the forefront. In short, a brand’s reputation for good behavior can make or break its future. Changing demographics will also determine whether a family business remains a family affair. According to a 2019 survey from Deloitte, more than 70% of family businesses fail before reaching the third generation. This shows a natural evolution. The founder establishes the nascent business and commits to building their vision, the second generation is born into a growing enterprise and is inspired to take it further, but the third generation is born into a wealthy legacy and seeks their own success. However, handing the batten to one or more of your children is not the only way to grow. Going public and taking a step back can also secure a prosperous future. In our 2023 list of the Top 100 Arab Family Businesses, over 60% are major shareholders in a company listed on a regional stock exchange, with most being the founding shareholders. While family members remain on the boards, the management and operations can be entrusted to senior executives, allowing new generations to follow their own path while keeping a foot in the door of their birthright legacies. The path of succession can deviate for those families willing to broaden company ownership. This month we speak to second and third-generation leaders, as well as one that is safeguarding a listed business on behalf of its family founders. Rita Maria Zniber, Chairman and CEO of Moroccan agribusiness group Diana Holding, is leading the business first established by her late husband, side-byside with their daughter, Diana. Hassan Allam and Amr Allam, the Co-CEOs of Egyptian construction company Hassam Allam Holding, are continuing their grandfather’s vision, heading a family business that has been growing for nearly 90 years. And Tarek Hosni, CEO of Saudi pharmaceuticals giant Jamjoom Pharma, has just led the Jamjoon family’s thriving business through an IPO, the largest on Tadawul this year so far. I hope you enjoy the issue. —Claudine Coletti, Managing Editor
F O R B E S M I D D L E E A S T.C O M
AUGUST 2023
