A seminar titled «Key Long-Term Success Factors for Saudi Family Businesses» highlighted the economic strength of family businesses in the Kingdom, with figures showing that their wealth amounts to approximately 22.5 billion riyals, and their investments in the Saudi market account for 10% of GDP and 40% of non-oil GDP.
62 % of the wealth of family businesses in the Kingdom
The speakers explained, at the seminar in which the Riyadh Chamber of Commerce—represented by its Family Business Committee—participated alongside Al-Tamimi & Associates Law Firm and Consulting, and PWC, that the Kingdom accounts for 48% percent of family businesses in the Middle East and is home to 62% percent of the wealth of family businesses.
Graham Nelson of Al-Tamimi & Associates noted that family businesses outperform their non-family counterparts because they possess many advantages, including long-term investment, a long-range vision, a focus on non-financial goals, support for communities, collaboration with partner and competitor companies, and social responsibility.
Control over 90% of commercial activities
For his part, Jerry Watts, legal counsel at Al-Tamimi & Associates, discusses the most prominent challenges facing family businesses, revealing that this sector represents the backbone of the Gulf Cooperation Council (GCC) economy, accounting for 80% of all companies in the Middle East, while controlling 90% of total commercial activities and non-oil GDP in the region, and employing 70% of the total private-sector workforce.
Watts noted that most companies in the Gulf are less than 60 years old, with family businesses managed by members of the first or second generation, while only a few companies have third-generation members involved in management; 66% of family-owned companies operate in five or more sectors.
Development for Survival and Competitiveness
As a result of global competition in local markets and a more open economy, family businesses in the Gulf region face significant challenges, However, Watts explained that many of them have successfully navigated this development phase by separating the company from private wealth and establishing or utilizing the services of a family office to manage private wealth independently, in addition to institutionalizing the company by improving governance frameworks, attracting talent, and investing in infrastructure. Several corporate organizational structures were reviewed, and he emphasized the importance of establishing a family charter. Firas Haddad noted that family businesses in the Middle East are more ambitious in the medium term, with 40% of them expecting to achieve strong growth over the next five years, which is the second-highest rate in the entire survey. Of those expecting this growth, 98% are confident they will achieve it, noting that the areas requiring professionalization are operations, governance frameworks, and skills.
