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A backbone for Bahrain

Families in Business speaks with Khalid Kanoo, founding member of the new Bahrain Family Business Association, about the current issues facing family businesses in Bahrain and why he would like to see more of these businesses going public in the future

Families in Business (FIB): Why did you decide to form the Bahrain Family Business Association (BFBA)?

KHALID KANOO (KK): As I was involved in family business issues and participated as a speaker in various seminars, meetings and conferences for several years and wrote several articles, I felt that it is the right time to establish a family business association in Bahrain. We want to help and support the family businesses in their endeavours by providing required information and support. We want to organise seminars and meetings so that they become adept in resolving problems, both in the family and business, that hinder the progress of the family businesses, ie professionalise the business.

FIB: Who was involved in the formation of the Association?
KK: The BFBA had its inception meeting in November 2005 with 35 founding members who readily agreed to become members. Having gone through various processes and government formalities, the Association was issued a licence and the BFBA was officially established on 30 July 2006. The process of finalising the office premises and other requirements are being arranged and we hope to be up and running by 15 February 2007. We plan to invite over 365 family business owners to join our association and our target at a later stage is to bring a majority of the family businesses in the country under our umbrella.

FIB: Was it a difficult process to get people "on board" with the idea of an association?

KK: I did not experience any difficulty in getting people "on board" to become members of the association as many were willing to be part of this association from its inception.

FIB: What do you hope to accomplish through the Association?
KK: Many family businesses are aware that they have problems either in the family or in their businesses. However, the majority of the families are not aware that there are ways and means to resolve those problems. Proper advice and support can be obtained that would improve their company's performance by networking with other families as well as receiving professional advice to not only improve their family structure but also their business performance.

Our aim is basically to create awareness and provide all the required information and support to help them perform better as a family and as a business.

The Association shall endeavour to fulfil the following objectives:

- Provision of all kinds of support and attention to the
family businesses in the Kingdom of Bahrain.
- Helping the family businesses in developing their family structures, regulatory and work strategies.
- Developing family management modules for family
- Assisting the family business in developing business relationships with their counterparts in Bahrain – networking.
- Helping and directing the family business in contacting government agencies and for coping with internal and external difficulties and challenges in collaboration with the appropriate authorities.
- Provision of advisory and related services to the Association members and helping them to solve the
problems that may arise between business parties.
- Seeking solutions for the family business internally, in addition to business problems inside and outside the Kingdom of Bahrain.
- Organising awareness campaigns that benefit the family businesses.

FIB: How many family businesses are there in Bahrain and is the number growing or shrinking?
KK: According to the latest statistics, about 95% of the businesses in Bahrain are family-owned businesses. There are over 16,000 companies registered as family businesses in Bahrain, but we do not know the number of companies that are not registered with the Ministry of Commerce.

Presently there is a booming situation in Bahrain since His Majesty King Hamed bin Esa Al Khalifa took over the reign of Bahrain in 1999. Businesses are growing fast and
expanding at all levels with investments pouring in. Several high-rise buildings such as the Bahrain Financial Harbor, the World Trade Center and the National Bank of Bahrain are built and many contracts are awarded inviting financial, real estate and other services. This has resulted in many family businesses flourishing and expanding on a daily basis. Businesses in Bahrain are definitely not shrinking.

FIB: How are Bahrain family businesses unique or different from other family businesses around the world?
KK: The family businesses in Bahrain are really the same as in any other part of the world. There is, however, a cultural difference that is unique in Bahrain (as well as in other countries in the GCC) whereby family unity is very strong and the tradition and culture is binding. A strong bond of respect is maintained between the founder and other members of the family that sets them apart from other family businesses outside Bahrain. Women generally are not strongly involved in business, although in countries like Bahrain it is easier to find women executives and CEOs. The women movement is becoming very strong and many companies have women who own the family business and excel in their area of operation.

FIB: What are some of the biggest issues facing Bahrain
family businesses today?

KK: The major issue faced by the family businesses in Bahrain (as is the case in other countries in the GCC) is that the existing older members of the family are not willing to give up their position and do not want to have a successor during their reign. They wish everything to be under their control. This affects family businesses from growing due to continuous fighting between the older member and the younger members of the family. There are, however, many families where the line of succession is clearly defined and the younger members of the family flourish in running their company. In general, however, this [giving up of control by the older generation] is the major issue facing family business in Bahrain as well as other countries in the GCC.

FIB: Is the westernising of the East changing the face of
family business in Bahrain? If so, how?

KK: I think in Bahrain we have the best of both worlds. While we use the best from the West, we strongly maintain the local tradition and cultural values. In Bahrain, for example, we have everything that is available in the West but we maintain also our unique tradition and Islamic/Arabic culture. Many of the European and American companies are based in Bahrain while maintaining our tradition and culture.

FIB: How are Bahrain family businesses encouraging the next generation to work in the business or to become active shareholders in the business?

KK: Basically, family businesses encourage the next generation to work in the business. The younger generation, because of their upbringing and culture, want to stay with their family business. However, because many have had overseas education coupled with other inherent problems, the younger generation tend to leave the family business and start their own business. Nevertheless, in Bahrain because of the strong tradition and cultural values, leaving the family business is a major decision that is done only as a last resort. In my view, this is a new phenomenon seen in the past ten years, and with the strong economic boom prevailing which is favourable, many younger generation members may leave their family business to set up their own business.

FIB: What does the future hold for family business in Bahrain?

KK: Basically there are no obstacles, either legal or political, in establishing a family business in Bahrain, and there is nothing to stop any family business from growing except their inherent family problems. I feel that family businesses will become stronger and there will be an increase in public companies and IPOs. The younger-generation members of the family businesses may leave their family business and set up their own company and become stronger and successful – possibly a public company. Presently there may not be many public companies, but I hope that this will increase. It is likely that in the next three to five years there will be a considerable increase in public companies in Bahrain.

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