MENA Family Business: Succession & Governance

MENA Family Businesses Face Succession Challenges

A significant transformation is occurring in the Middle East and North Africa (MENA) region as family businesses, which form the economic backbone, prepare for the largest intergenerational wealth transfer ever. Capital Insights (Vol. 2, Issue 3), produced with Capital Club Dubai, examines the problems and prospects that family-run businesses in the region and beyond are facing.

Family businesses make up more than 90% of private sector companies in MENA and contribute up to 70% of GDP, highlighting their importance to the region's economic stability. An estimated $1 trillion in assets are expected to be passed down to the next generation within the coming decade. However, this enormous transfer presents a serious difficulty: a legacy without structure is a burden. Experts agree that many of these economic giants risk failing because of their own success if they do not fully embrace formal governance.

Succession Crisis and Governance

The core of the issue is a succession crisis. Dr. Adil Alzarooni points out that almost half of UAE business owners do not have a formal succession plan. Only 10–15% of family businesses worldwide make it to the third generation. This poses an economic and business risk. The traditional, informal, founder-led model that initially fostered growth becomes a weakness during transitions, frequently resulting in governance breakdowns, ownership fragmentation, and value loss.

Fadi Hammadeh notes that "uncertainty fills the space, and uncertainty can quietly erode stability" when succession conversations are postponed. The magazine emphasizes that instability can be avoided by implementing strong governance. This entails transitioning from relying on family ties to developing institutional resilience.

Government Initiatives in the UAE

H.E. Abdulaziz Al Nuaimi of the UAE Ministry of Economy and Tourism emphasizes that this is a "national imperative," not merely an option. The UAE government promotes this transition through programs like the THABAT Venture Building Program, which trains the next generation, and the enactment of the new Family Business Law. The law provides a framework for families to codify their charters, define roles, and manage ownership transitions.

Amin Nasser of PwC Middle East emphasizes that family disputes frequently arise from the entanglement of family, ownership, and management. Businesses can avoid disputes by establishing formal structures such as family councils and constitutions. Walid S. Chiniara refers to this change as "Governance 3.0," a dynamic system that becomes the "architecture of continuity" by "transcending static charters and legal scaffolding."

NextGen Leaders: Tech and Transformation

The next generation confronts the challenge of preserving legacy while driving innovation. They place a higher priority on digital transformation, technology adoption, and ESG. But there is a substantial gap. Dr. Alzarooni notes that while 88% of next-generation leaders are interested in generative AI, only 9% are involved in its implementation.

Bridging generational divides on the rate of change is crucial. Matt Knight and Dr. Vern Glaser suggest an AI adoption framework that aligns with family business values, using AI as a "Digital Assistant" to free up humans for relationship-building, a "Data Wizard" to turn legacy data into foresight, and a "Creative Coach" to spark innovation that remains true to the family's heritage.

Lea Boyce argues that excluding competent women from succession is "misgovernance," not tradition. Succession should be based on merit rather than a patriarchal birthright in an increasingly complex global market.

In conclusion, the survival of MENA's most important economic actors hinges on their willingness to evolve. The families that thrive will professionalize, invest in future leaders, and govern by design, not default.

Click to read full issue – https://qrco.de/CIFB

CAPITAL INSIGHTS: Capital Club Dubai reaches 100,000+ Global Business Leaders. Next Issue Theme – DISRUPTION 2035.

Reference e-links to previous issues:

• Financial Ecosystem – https://qrco.de/CIFE
• Innovation- https://qrco.de/CIInnovation
• Deglobalisation & Resilience – https://qrco.de/CIDR

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