The proverbial Middle East is the land of deserts and oil reserves, verdant oases and strong families. Reports suggest that family businesses are, often, more influential than corporates when it comes to the Middle Eastern province. A 2019 PwC report states that family firms contribute about 60% to Middle Eastern GDP and provide a source of income to 80% of the region’s workforce. Further, PwC maintained that Middle Eastern family businesses had passed an estimated 1 trillion dollars worth of wealth from one generation to the next, over the last decade.
While generational wealth transfer wasn’t especially convoluted in previous decades, the ongoing period may pose a challenge. Many of the major family businesses in the Middle East are employed in traditional industries like distribution, franchising, industrials, real estate and construction, and hospitality and these industries, while having been golden geese in earlier decades, have entered a rough patch during the last few years. The overarching reason for this disruption is, indeed, the ongoing Covid pandemic which has affected the population on a global level.
Despite the difficulties being thrown into their paths, Middle Eastern business families have exhibited remarkable resilience and have remained ahead of the curve when it comes to diversification. Accordingly, when we take a look at the top 100 family firms in 2021, it is evident that 87% of the listed businesses are diversified conglomerates with varied interests. To remain relevant and resilient and ensure sustainability, these conglomerates invest in a number of different sectors and geographical locations. Such a measured move ensures two things – more initial capital outlay as well as enhanced scope for growth and spreading the risk factor. For instance, the Covid pandemic and resulting lockdowns and social distancing put a major dampener on the travel and hospitality sectors but, at the same time, it also offered a major boost to the technology and entertainment sectors across the globe.
While the major family businesses in the Middle East have greatly diversified their business streams, gender diversification is still a distant dream here. A huge majority of family businesses in the Middle East are still controlled by men, and a lot of the original founders are still running their dream projects. Statistically speaking, out of the top 100 family-run companies featured by Forbes this year, 32 of the chairpeople are the original founders or co founders, and only three are chaired by women: Mohsin Haider Darwish, managed by Areej and Lujaina Darwish; the Olayan Group, headed by Hutham Olayan; and the Orientals Group, run by Yasmine Khamis. With the looking wave of modernization and generational wealth and business transfers, there is hope that more women will rise to the top in the near future.
For this year’s toppers, Forbes only considered businesses or holding companies that are jointly owned or run by Arab families. The publication collected data from a variety of sources including the stock exchanges, reports from consulting firms and universities, and other primary sources. The family businesses were ranked on the basis of the following criteria –
The size and value of their total holdings including listed entities, real estate and hospitality assets, and revenues from other holdings.
Total employees on record.
Diversification and sectoral performance.
Age and legacy of the company.
In keeping with these terms and conditions, Saudi companies dominated Forbes’ list of the Top 100 Arab Family Businesses In The Middle East 2021. Indeed, the list consisted of 36 families from the Saudi kingdom, 25 entries from U. A. E and 7 families from Kuwait. The list is topped by renowned names like the Olayan Group, the Mansour Group, the Al-Ghurair Investment Group and the Al-Futtaim Group.
Image Credits : forbesmiddleeast.com