To govern or not to govern: Egypt’s largest family businesses share secrets to long life

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From a well-defined constitution to professionally-developed governance strategies and more, determining what makes a business last is by no means an easy task.

The answer to the question must include values, proper employee communication, and digital capabilities, according to business consulting giant PricewaterhouseCoopers (PwC)’s Global Family Business Survey.

Egyptian family-run businesses who have seen the most growth in the last 15 years show certain traits that have contributed to their growth, success and survival. This indicates that it is of utter importance for family-run businesses to routinely observe their healthy, successful peers and learn from their experiences, adopting best practices and implementing strategies backed by evidence..

At least 50-60 percent of Egyptian companies are family owned, according to the Egyptian Centre for Economic Studies (‘ECES’). “Family businesses contribute about 80 percent to the national income, constitute about 75 percent of the private sector’s activity, and employ approximately 70 percent of the labour force,” says Al Tamimi and Company law firm in its review of the family business landscape in Egypt.

Understanding the importance of this sector, Business Forward launched its annual campaign this year. It was themed on family businesses, and its closing ceremony took place at the iconic Ewart hall, bringing successful, resilient family business examples together, under the spotlight. Through this campaign, the business community in Egypt got a glimpse of the ins and outs of effective governance leading to a thriving family business that lasts for generations. Three family businesses were selected by a jury of experts and were awarded for their distinguished governance structure and sustainability strategies during the ceremony.

The first panel discussion in the event, moderated by Hakim Meshreki, assistant professor of marketing at AUC School of Business and a family business owner, and Nabil Diab, partner and chief operations officer at PwC, featured the three winners of the awards. They were: Nahdet Misr Publishing House, Al Manar Group for automobile fluids, and El Araby Group. Winners were companies that had been in the Egyptian market for years, and for at least three generations.

Dalia Ibrahim, the CEO of Nahdet Misr Publishing, revealed that one of the secrets to her company’s success was an agreement to form a “family council” to professionally handle all the business of the family.

“A family council wasn’t an idea that anyone in the family resisted. It’s was good to get our thoughts and ideas aligned. We were able to better identify and pursue our objectives,” Ibrahim said. She added that Nahdet Misr also hired specialized committees that support all family members of various levels.

Making unified decisions that everyone approves of isn’t the only tricky aspect to deal with when it comes to running a stable family business. Striking a balance between family and business can be quite a challenge too. “Balancing between family and business wasn’t easy for us, but having a clear leadership and focus made everything very smooth,” Ibrahim explained.

Regarding good governance strategies, Ibrahim said that Nahdet Misr decided to approach the aspect of governance safely by hiring a professional consultant— which has given their business a boost.

Were these challenges any easier for renowned El Araby Group? It seems not. “The road to governance was bumpy. It required persistence and patience, especially with younger generations entering the picture,” said Mohamed Abd Elgayed El Araby, the chief operations officer (COO) at El Araby Group.

El Araby said that at a certain point in time, it became necessary to have an official governance structure. “We had the first generation guiding us when things got difficult, but we realized we needed something stable that we could rely on when the first generation was no longer around. We didn’t know what ‘corporate governance’ was but we felt the real need for a regulating system, and that’s how it started” he added.

For his part, Ahmed Nawara, the CEO of Al Manar Group, agrees that governance is crucial. “Governance requires a lot of commitment. But as much as you need a good consultant, high family commitment is also important, and it starts at the founder,” Nawara added.

“Applying governance and tackling sensitive topics like succession and ownership structure needs a lot of trust. I was personally very lucky to have my father as my mentor. He was very supportive and trusted every decision I made,” Nawara added, believing that without trust, a family wouldn’t be able to keep its business going for long.

To make room for the younger generations and allow them to truly lead their family businesses, succession planning becomes imperative. Ibrahim said that drawing a frame beforehand makes the process clearer, especially that not all the younger members of the family are interested in joining the company.

“We have regulations in place to ensure that the younger generations that join are truly passionate about the job. First, they must graduate from respectable universities, work at a professional company outside the family business to get proper experience, then apply for a vacancy at the company if there is any available,” she added.

Whether it’s succession planning, governance or regulations put forward by a family council, families running businesses have non-stop work to do, dozens of challenges to overcome, and need to place significant trust and respect for each other to make all else possible. Nonetheless, the path becomes smoother when a family decides to pave the way for younger generations, make the best use of the wisdom of the older generations, and always be prepared for the future.

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