Family-owned businesses flourishing in Kingdom

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Updated 12 April 2016

Family-owned businesses flourishing in Kingdom

JEDDAH: Family businesses will grow further and flourish in the Kingdom, says a top Saudi industrialist.

Anees Ahmed Moumina, CEO of SEDCO Holding Group, expressed this optimism on the sidelines of the Family Owned Business Forum at the Jeddah Hilton on Monday.
The most important element of family business is corporate governance and this forum talks about this issue, Moumina told Arab News.
Eihab H. Abou-Rokbah, chairman of Arabian Mehad Excellence (AME) and the driving force behind the forum, said family businesses have always been there. “The good thing is that they adapt to changes better than the companies not owned by families.”
The chairman added: “I do really believe family businesses should have strong management and financial foundations. With these two, there is no doubt about solid growth. And if family businesses have good corporate governance in place, then they will sustain for a very long time."
Mark Goyder, founder director of Tomorrow’s Company, said a number of family business owners and people from each generation could benefit from the deliberations.
“There was valuable discussion where we talked about the principles of corporate stewardship. The discussion also focused on how the younger generation learns the tools of the trade. The workshop explored how to preserve the values in a dynamic market,” Goyder said.
Tarek Alnabulsi, managing partner of Institutional Sustainable Growth (ISG), said the participants at the forum shared their experience and focused on succession planning.
He said family businesses represent 90 percent of the enterprises in Saudi Arabia. So sustainability of these businesses is very important for the Saudi economy.
The key challenge facing the family businesses is succession planning, he said, adding that family businesses in Saudi Arabia will continue to show better performance than other companies globally.
He said there are some challenges facing family businesses in Saudi Arabia. “Entrepreneurship is very important in family businesses,” he said.
Adib Haroun Rashid, Ernst & Young’s MENA family business centre of excellence leader, said: “Ernst & Young created the family business center of excellence to focus on issues facing family businesses and how their families can deal with those issues. When we looked at the issues, we found common themes that successful families have done to ensure successful transition between generations.”
According to him, the first and foremost is to set up proper governance rules that enable family members to have clear roles and responsibilities, and segregate business and family issues.
This will help create forums for dealing with family topics outside the business and also establish clear communication channels related to business and family issues.
“The second issue is related to succession. We found that around $1.6 trillion will change hands from one generation to the other over the next 10 years globally,” he said.
Accordingly, a clear succession plan for ownership and management is needed to be put forward in order to ensure smooth transition between generations and ensure continuity of business.
Adib said in Saudi Arabia, the family businesses will continue to contribute to the economy even during the transitional phases between generations.
“They thus need to start planning on succession and proper governance structures to ensure the continuity of their businesses and the unity of the family,” he added.

WEEKLY ENERGY RECAP: Keeping things in balance

Updated 08 December 2019

WEEKLY ENERGY RECAP: Keeping things in balance

  • The over-compliance will result in cuts of 1.7 million bpd

Brent crude rose above $64 per barrel after OPEC+ producers unanimously agreed to deepen output cuts by 503,000 barrels per day (bpd) to a total 1.7 million bpd till the end of the first quarter of 2020.

The breakdown is that OPEC producers are due to cut 372,000 bpd and non-OPEC producers to cut 131,000 bpd.

Current market dynamics led to this decision as oil price-positive news outweighed more bearish developments in the US-China trade narrative that has weighed on oil prices throughout the year, with US crude exports rising to a record 3.4 million bpd in October versus 3.1 million bpd in September.

OPEC November crude oil output levels at 29.8 million bpd show that producers were already overcomplying with its current 1.2 million bpd output cuts deal by around 400,000 bpd. 

The over-compliance will result in cuts of 1.7 million bpd, especially when Saudi Arabia continues to voluntarily cut more than its share.

This makes the agreed 1.7 million bpd output cuts pragmatic since it won’t taken any barrels out of the market.

It isn’t a matter of OPEC making room in the market for other additional supplies from non-OPEC sources, as OPEC barrels can’t be easily replaced.

Instead, this is about avoiding any oversupply that might damage the global supply-demand balance.

Saudi energy minister Prince Abdulaziz bin Salman has effectively kept his promise and managed to smoothly forge a consensus among OPEC and non-OPEC producers.

He has also successfully managed the 24-country coalition of OPEC+ including Russia in reaching an agreement.

Despite suggestions otherwise in recent coverage of the Vienna meeting, the deeper cuts announced on Friday have nothing to do with the Aramco IPO. Let’s remember this meeting was scheduled six months ago and the IPO has been in the works for much longer.

The Aramco share sale did not target a specific oil price. If that was a motivating factor it could easily have chosen another time.