The First regional Family-Business conferenceRegional and local business experiences converse in Sana’a [Archives:2007/1027/Business & Economy]

February 22 2007

By: Raidan Al-Saqqaf
Under the auspices of Prime Minister AbdulQader BaJammal, the first congress for family businesses was launched yesterday with the participation of over 200 local and regional businessmen, sharing their unique experiences in business and trade while exhibiting how family businesses can still survive and strive in today's modern-age economy.

The discourse on the affairs of family businesses in Yemen and in the region tackles a number of fundamental affairs that concern family business in the region in general and in Yemen in particular, and this conference comes just in time to discuss the particular problems and obstacles that face family businesses in the region, as well as the opportunities and growth prospects that are open for discovery and profitability.

Yemen Times has met with several participants who were present during the opening session of the conference, and asked them on several issues relating to the issue of family businesses in Yemen and in the region, including the realities of family businesses in Yemen and in the region and their impact and influence in the local markets and regional economy, and also how to tackle the problems faced within the family corporations leading into an introduction of the concept of corporate governance and the best governance practices in family businesses in the region.

The other sessions of the conference deal with the organization structure of family businesses and the unique roles played by certain members within the corporation, as well as the role of ethics and the trends of organizational behavior as examined in several parts of the region with several case studies presented. While considerable emphasis would be given to the factors critical for continuity and success for family businesses, especially as the theme of the conference was bonding, continuity and growth.

YemenTimes has met with several participants including local and international businessmen, officials, academics, and experts in the area of business management, and asked them a few questions around their impressions, their thoughts and messages on the subject.

Mr. Ahmed Bazaraa, the Administrative director of the Yemeni Businessmen Club, stated that the collapse of family businesses is the direct result of internal disputes within family members, and it very important to plan succession within the family as well as the roles of different family members in order to avoid conflict within family businesses.

Inline with that notion, Prof. Nanda Gopal of the family Business Academy has indicated that the corporate governance system of any family business needs to be properly designed and implemented in order to decrease confrontations within a family business. Prof. Gopal also pointed at the sustainability problem of family businesses, he stated: “Family businesses account for at least 90% of the GDP in any country in the region however by the second generation only 30 percent of those remain, and less 11 percent for the 3rd generation, and hence, I look at this conference as an opportunity to come up with strategies or at least working papers in order to increase that percentage or surviving family businesses.”

Mr. AbdulRahman Al-Haidari, General Manager of Al-Haidari Corporation, has indicated that there is a problem of empowerment within local family businesses, he says that in many cases the second generation of managers is deprived of the authority needed in order to make changes in the family business, especially as the second generation would be better able to detect the market trends and also in terms of bringing in new technology that might help the business become more competitive and more efficient and in turn more profitable. Al-Haidary elaborates that younger managers in a family business are not permitted to use their creativity in harvesting opportunities that have a great potential in boosting business growth and profitability.

Taking a broader view on the regional level, Dr. Nasser Saeedi, Executive Director of the corporate governance institute in Dubai has stated that the main difference between Yemeni family businesses and their counterpart in the region exist because of the difference in sophistication between the regulatory environment and the legislative framework in Yemen, he added that it is his recommendation to undertake some substantial reforms in the laws of Corporation and Enterprise which would eventually help family businesses develop through the separation of the roles of the Chief Executive Officer and the Board of Directors, and potential reform the role of the Chief Financial Officer in family businesses in the region.

Building on that, Mr. Fathi AbdulWase'e, Depty manager of Tadhamun International Bank, has indicated that the problem of regulation is a problem of enforcement, stating that in the Yemeni business environment businessmen do not share the same sense of security because many investment laws are not practices, and many regulations that tackle criminal behavior in the business environment are simply not enforced. However, he adds, there is light at the end of the tunnel, Mr. AbdulWase'e said that he is optimistic about the future, adding that there are nowadays more opportunities to trade overseas and internationally.

The Family Business Conference is a first of its kind, an assembly of businessmen who have a genuine desire to learn more about best practice and know the challenges laying ahead of their corporations, with over 250 local and international first-generation entrepreneurs and businessmen, this conference resembles an opportunity to accrete and grow in spite of the challenges that lie ahead family businesses in this part of the world.

One-on-one with Khalid Rajeh Sheikh, Minister of Trade and Industry

Would Joining the World Trade Organizations affect Family businesses in Yemen?

Most companies in the region and beyond are family businesses, and joining the WTO would not affect family businesses negatively. However, the concern is that a stock market might play a role in the dissolution of family businesses, as they enable partners to sell their shares in the stock market especially if the share value increases as such, and I think this conference is a great opportunity to discuss this issue and come up with strategies in order to help family businesses in Yemen deal with a stock market.

How capable are Yemeni companies in competing with multinationals in the domestic market?

It is true that Yemeni companies are less efficient, especially as their business has been focused on the domestic market which is still partly-open because of customs boundaries and regulations that limit trade. However, liberalizing the domestic market would put the companies in Yemen to the test in terms of competing with regional and multinational companies which may be more efficient. As a consequence, some companies would strive and grow; others would struggle to survive while some may become insolvent.