Interview with Ahmed Bazara, Chairman of Shamil Bank of Yemen and Bahrain
The Automotive & Machinery Trading Center (AMTC) is the flagship of the Bazara Group in Yemen. It is mainly involved in the distribution of Toyota & Lexus in the Republic of Yemen and has been so for a long time. Today, the group employs more than 3000 people in different areas, spreading from banking and insurance to steel and gases manufacturing to fisheries, health & education. Ahmed Bazara, Chairman of Shamil Bank of Yemen and Bahrain, speaks to Tharawat magazine of the challenges and opportunities that come with the future generations, the mentality of Arab family businesses, and the increased pressures of international competition and globalisation.
Your family business is based and active in Yemen. What would you say are the marked differences between the mentality of family businesses in Yemen and family businesses in the rest of the Arab world?
Generally speaking, Yemenis are actually often considered to be the origin of Arabs. So if we talk about the mentality, I believe it is similar all over the Arab world. However, when it comes to family business practices, it has a lot to do with the culture and the mentality. Probably there are lots of similarities between Yemeni business families and those in the rest of the Arab world. The difference, however, is that some of these GCC countries, Saudi Arabia, UAE, and Bahrain, have made some significant progress in organising the family relations as well as the business. In Yemen we are a bit late with this particular issue; some companies have started to implement structures in the family and it is progressing quite well. I think this aspect will be of importance for many years to come.
Do you think that Arab culture is conducive to sustaining family businesses?
I do not see a direct conflict. There are no elements in the culture that are against the family business concept. But I think people and societies are progressing and evolving and with that, there is also a new concept of how to conduct the family business and how to sustain it in the long run. There are new techniques and new structures that are appearing everywhere. They will give family businesses a positive image, and will definitely market themselves fast. I do not see a conflict between this development and Arab culture. In fact, I believe that Arabs and Muslims have a lot to offer to the world and can contribute positively to family businesses practices.
So you believe that the attitude for change is present?
I think that there is openness but family business issues or problems are mainly about human attitudes. And it is the same in Arab and non-Arab cultures. It is about values, and also about how the families organise themselves and prepare themselves for their future growth.
When exactly did you join the family business?
See, I cannot put a specific date to it. I grew up in a family, which has been in business for a very long time. I remember well that I started working when I was in secondary school. My brothers and I used to spend the summer in the car repairing workshops. I remember it as a wonderful time. Later, I was working and studying at the same time. After I finished high school I served in the military service for one-and-a-half years where after I joined the family business again. I did not continue my education; I got married and worked for another five years. Then I went to the U.S. for my studies and once more I came back to the family business. After spending ten or fifteen years focusing on our core business, we started to diversify our operations. This was my main responsibility while my two brothers kept busy with the core line of business.
So you went into a different direction. Have you been working alongside your father all this time?
Yes of course, and we are still working together today; my father, my two brothers, and myself. Actually, without the great help and support of the whole family, I would not have been able to expand into different lines of business.
You are the second generation working actively with the founder, which means that now you must slowly be facing the 3rd generation coming into the business. What is generally the greatest challenge in succession?
In my opinion, it has to do with culture. Usually, fathers will stay in the family business till the very end. There are exceptions; I have seen some families, where the fathers withdraw at a certain point. Not for any particular reason, they just want to relax. Once then the second generation takes over, they can fully retire from the business. In most family businesses, however, the founder or the father is there until the last minute. In my opinion, it is not a bad idea but it has to be organised. It has to be arranged in a way that his involvement does not hinder the vision of the company and the expectations of the new generation. It is a matter of harmonising the two things. We would like to preserve the tradition and the values of the founder, the rich experience, and at the same time, we also would like to grow. We would like to get new ventures, new lines of business, and new technologies. These aspects sometimes conflict. But through dialogue they can be resolved.
What is the role of the next generation, as opposed to the generations already active? Should the next generation focus on keeping alive what has been founded or should it focus on innovation?
I would say both. I recall, after graduating from school with two degrees in computer sciences and business management, I thought I was the most knowledgeable person on earth. Whenever I brought forth some idea in management, finance, or technical issues, I always faced ‘No’ as a first answer. It takes time. I have been in the business for almost twenty years now, and after this time, I realise the value of what happened back then. It needs patience from the new generation. I always advise the younger generation to go back to the basics of our rich Islamic culture. By being kind and obedient to the elderly, especially to the father, we are exercising religious duties, or what’s called in Arabic “‘ibadah”. This brings us much happiness. And again, it is a matter of time and trust before things go into the right direction and generations get along well.
But regarding the question of preservation versus innovation; it is important to respect the overall guidelines. When it comes to a family business, you cannot speak only about corporate performance but have to consider family achievements and the family reputation in society. The name, which has not come to this status by default. It is established through hard work, a long history of honesty and integrity, of values and ethics. It takes a long time for society to recognise a name. But today, in any new project that we start, people just see our name in the shareholding and it does make such a big difference. Whether it is in the bank, the steel manufacturing, or the insurance company; the name matters always. For example, we have a steel company called AISCO Arab Iron Steel Corporation but it is known as Bazara Steel. We tried to change this but we cannot! People insist on calling it Bazara Steel. Which is very interesting and also quite entertaining. People also like to pay a little bit more for the name. This is what really strikes me most.
Keeping up what the older generation has done is an absolute necessity. But we also need innovation. We need new blood. We need the enthusiasm of the new generation.
What are the major changes your generation has brought to the business?
Mostly the family business fathers go slowly with changes, especially those initiated by the sons or the new generation. They are not sure if they are mature enough or have enough experience. It takes them a long time until they are quite comfortable with trusting the youngers’ abilities. So it took me some good time until I convinced my own father that we should add to our core business, which is the automobile business. We have been the Toyota agent in Yemen for around 55 years, and with that, we are one of the oldest agents in the world. Five years ago we celebrated our 50th anniversary with Toyota.
After long discussions and consideration, my father accepted to go into the banking business, which was a big move into a totally new industry for our family. It took some time. Then after another five years, we added another line of business. We kept expanding into different industries. Slow and steady. Now I feel that I need more people working with me, especially from the family. I would like to withdraw gradually and let others get involved. This is very natural but it has implications for the family structure. I am quite aware that there are many challenges that are awaiting us in the days to come.
What are the steps that the Bazara family is taking to prepare future leaders to take over what you put so much hard work into building?
Honestly speaking, we are in a very early stage when it comes to the family organisation itself. It takes time to convince everybody of the importance of structuring the family and to separate the family matters from the business. My style is that I would rather not discuss any business issues at home. It is not working as well as I would like it to but again I think that gradually we are trying to build these values into the rest of the family. My father is enjoying excellent health and just turned 80 years old. But we have quite a good number of brothers and sisters and convincing them that it is important to be prepared when we discuss these matters in the family council is not always easy. At this point, I am an executive in some of our companies but not an owner. I am an owner through the ownership of my father. Ownership is still regulated through family structure, and this needs to be organised in the future. I personally believe a lot in the relationship I have with all the family members, and I know we can get this done easily. We definitely would need and seek the assistance of either consultants or people who have prior experience, and you know each family has its own specific issues, which need careful consideration. There is no template for this process. We are trying to make progress in this area, step by step.
To achieve this restructuring, are you taking into account the opinions of the 3rd generation?
Some of them have been in the business with us for ten years. My 35-year old nephew is in the business as well. But we have five young members studying in the US, one of them is my son. In just a few years time they will be joining the business and it will be a challenge. We discuss now what to do with these young people, and how to set the business discipline, the guidelines, and the rules. This is a concern definitely and if not done properly it will be problematic. By the way, this is only the beginning; after these five young people, we have another ten or fifteen coming in. Only from my mother and father we are almost 90 family members as of today. And time goes too fast. In the years to come you will be dealing with a big number of incoming family members.
So you have to build the business and the family structure at the same time?
Indeed, we have to build both at the same time because each one will have some spillover effects on the other.
Many theories say that family and business should be considered separately. You mentioned before that you do not like to talk business when you are at home to keep your family life intact. But is it at all possible to really separate the two?
This is what I would wish for. When we are at home I would like to just talk about relationships, to go and visit my sisters and nieces, and celebrate when someone has had a baby. We do organise meetings in different places where we meet and get together, but this nice atmosphere, can be easily destroyed by someone saying ‘what happened to this transaction and this company or to this problem?’. It is again about culture; you have to set examples from a role model. Maybe I am not a role model so far, as my father is still active and naturally considered the role model for everyone. Maybe I am the role model for my children, my family. To a great extent they are in agreement with me. But we will see how these things develop with time.
You also have a lot of outside activities. For instance, you are chairman of the Yemen Businessmen Club. What is your capacity in this and why is it important for family businesses to get involved in this type of organisation?
I have a lot of what I call non-family and non-business activities. I am involved in a number of social activities, the Yemeni Businessmen Club is just one of them. At YBC, we focus mainly on young businessmen with a good education, reputation, and with integrity. So our members are successful business people. I have also been for some time the deputy vice chairman of the Sana’a Chamber of Commerce, actually for almost seven or eight years now. In addition, I am heading another four or five NGOs, which are social contributors. And in brief, I have been one of the founders of what is considered to be the largest NGO in Yemen (www.csswyemen.org) , active mostly in the health sector and education. I am also the president of the SOUL for Development (www.soul-yemen.org) concerned with the health and education of women and children. It is a very powerful NGO in Yemen. We started it in 1997 and it became one of the most reputable NGOs, mainly working with both international organisations like Oxfam, GTZ, JICA and US AID and others. They are implementing big projects in the health and education sector mainly for women and children, whereby we are talking about 70 percent of the population.
I am also the secretary general for the Yemeni Cancer Control Foundation (www.nccfyemen.org ), another NGO. We are deeply involved in it, as we think it very important. These activities do a number of things: first of all, it is a self-fulfilment; you do something that you are happy about yourself and hopefully God. In addition to the great feeling of helping others, it also contributes positively to the family and therefore the business image. So in a number of ways these contributions have a business return. It is an added value. Now we are building up the Bazara Foundation, where we will put our charities, whether it is Zakkah or not Zakkah, and other contributions from different groups of the business, and we expect this to become a very strong organization as well. This trust will have a clear vision on what to do: The Bazara Foundation will be involved in education from A-Z! Training of unskilled labourers up to university graduates. Currently, our group is sponsoring a quite good number of students in Yemen, and a few internationally. In addition to education, the foundation will also help in the other areas such as health, culture, charity and other environmental and water projects. We will institutionalise this foundation because we believe it will last for a long time. It will have its own investment and business so that it can become sustainable.
It seems like your family business has changed a lot over the last decades. How did your own perception of the business change over time?
I think the business has grown substantially, and the way I look at things has changed over time. And hopefully, it will keep changing. We have more and more challenges coming towards us, and new family members are joining the business and will need to adapt to these events. I think it is a natural process, the process of change. It looks like it is the trademark of family businesses; if we do not change we will be in trouble.
This is also the reason why a high percentage of family businesses has failed to go beyond the third generation. Do you believe that has something to do with a resistance to change?
Since we are not officially in the third generation, although we are in the doorway to this transition, we think that we will survive this evolution. But it needs some hard work and things should be taken seriously, especially from the senior members of the family. And the earlier we work on it the better and easier we make it for the next generation and us.
I think the big challenge is the third generation. The fourth generation will have different challenges. We have to be attentive. Although we do not feel the urgency immediately, we know that we need to do something now before it becomes difficult. It will not always be possible to get everyone on board with the family business. Some family members might like to do something else. We have to have ways and exit strategies for these people. But more so we have to be creative in order to retain the talent and attract the family members to the business.
We are facing a post-crisis world and are facing a lot of changes not only in families but also in global and regional economies. What are the major challenges and opportunities that family businesses in the Arab world will be facing over the next five years?
One challenge we are already experiencing is globalisation. We live in a so-called borderless world. We feel it locally that a lot of changes are happening and I think this will become more serious in future. This will definitely put some pressure on family businesses to go beyond the borders of their own cities and countries. This is one of the things that our group is also starting to feel; we slowly need to start operations outside Yemen. However, you should consider your own resources and especially your human resources. It is very important to consider the competence in the family. Only businesses with strong human resources can make it in the international scene. That raises the issue of building up the human resources of the family business both for family and non-family employees. How do you retain them, keep them motivated, keep them united and compensate them properly? But this is only one of the challenges. Another challenge is competition: Family businesses have to compete against international players and therefore have to start operating with a different mentality. Arab countries are opening up and I think very few countries have not yet signed the WTO agreement. I can imagine that gradually, this will bring a different type of competition and different standards for everything. Family businesses are mainly running the economic show. This means that they have to be alert. Some countries are already working on an international standard and they already have international or even global presence in different markets. However, the majority are still localised either in the same city or region or in the same country. These are the two main challenges faced by family businesses in the years to come; human resources and competition.
It is often said that the family businesses’ main competitive advantage is that it is a family business. They have a higher success rate globally compared to corporate businesses. Do you think being a family business is also in the future going to give you a competitive edge?
The fundamentals of the family business have remained the same. it is the economic dynamics that are different. But the business rules are still the same and family businesses will continue to excel. Provided we understand the new dynamics of the economy and there are no counter forces from outside. We can be successful as long as we are not forced to go public or for either legal or financial reasons control gradually is diluted. Such external factors can always limit your success. Should you lose your control then how can you be successful? As long as family businesses adapt to changing dynamics in the economy, they will excel.
Tharawat Magazine, Issue 5, 2010