Family-owned businesses need to reform

Publicly-listed companies in the Middle East must radically overhaul their corporate governance if they are to be taken seriously by international investors.

Good practice calls for both a manageable board and a board with some independence, but a glance at the statistics for listed companies in the six-nation Gulf Co-operation Council shows just how far behind their international counterparts they lag.

The main problem is the domination of families in these companies. While it is no secret that the GCC's economic landscape is dominated by families, the extent of their presence on boards is astonishing.

New research from TNI, the Abu Dhabi-based bank, shows that 75 per cent of all businesses in the region have at least two board members from the same family. In Kuwait, a single family can "own" up to 100 per cent of a board, while in Saudi Arabia, this proportion goes down to 75 per cent. In Dubai, however, no one family holds more than 50 per cent of a company board, while in Qatar, 30 per cent of board seats can be owned by a single family.

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Bonfire of tax and regulation fires growth

Any suggestion that the first four years of Georgia’s Rose Revolution might have been “easy” does not go down well with Nika Gilauri, the new minister of finance.

“It is not easy to change the history of a country,” he says. “It is not easy changing from the most corrupt country in the world to one of the most incorrupt. It is not easy achieving 10 per cent annual growth of gross domestic product for three years. And it is not easy having gone from energy dependence to one of the most energy independent countries.

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OECD warns against reform complacency as new report highlights priorities for action

With a number of the world’s most advanced countries finally shaking off the sluggish economic growth of recent years, now is the time to step up, not slacken, the pace of reform, according to the latest edition of the OECD's annual Going for Growth report.

In a preface to the report, the OECD's Chief Economist, Jean-Philippe Cotis, cautions that cyclical buoyancy in continental Europe and Asian OECD countries must not lead to complacency. “Governments should resist the temptation to ease up on reforms aimed at boosting productivity and creating more jobs”, says Mr.Cotis.

It is in part thanks to the progress already made in reforming labour and product markets that unemployment has begun to fall in Europe, claims the report. But more needs to be done to boost long-term growth. Removing obstacles to labour force participation and job creation would increase living standards. Opening up product and financial markets to greater competition should raise productivity and rebalance national income away from business profits and into higher salaries and job creation, it adds.

Now in its third year, Going for Growth highlights the weaknesses that are holding back OECD economies from raising material living standards and suggests five priority areas for action for each of the OECD’s 30 members and the EU area.

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