“You’ll be glad to know that there is logic behind the perceived madness,” CEO Badr Jafr explains two minutes into our conversation.
Two hours later, it’s clear why he says this. From the outside, even the most cursory glance gives the impression that Crescent Enterprises is all things to all people. Look closer, and you see a highly integrated, structured business that employs thousands of people, is highly profitable, and is challenging the norm of the way Arab companies do business. Transparency, social awareness and emotional ownership are just as important to Jafar as a decent P&L sheet. Welcome to Badr Jafar’s world; welcome to the new way of running an enterprise.
“The non-trodden path is always the exciting unknown path. I truly believe in the value gains behind adopting these corporate governance principles,” says Jafar, adding: “Some of the reasons why a lot of companies in the region have not moved towards international standards is because they feel ‘if I’m the first mover, I’m going to be the one most disadvantaged,’ so it becomes a chicken-and-egg scenario: who’s going to move first? But, I believe in everything you do, you must lead by example... it’s not just about good practice for the sake of good practice, it’s because you think you are actually going to do better and be more profitable and successful as a business or a group by adopting those standards.”
That may all sound very idealistic, but Jafar is talking from a position of strength and experience. He may only be 33 years old, but has already run and done more than most entrepreneurs twice his age. As managing director of the Sharjah-based family business Crescent Group, he is best known for being the president of Crescent Petroleum.
Established over 40 years ago, Crescent Petroleum was the first regional, independent, privately-owned petroleum company to engage in the acquisition, exploration and development of petroleum concessions, and the production and sale of crude oil, petroleum products and natural gas. Today, Crescent Petroleum has operations and offices worldwide and is a world beater in its field.
But if you think the Group is all about the energy industry, think again: Crescent Enterprises (of which he is CEO) is another wholly-owned subsidiary of the group. Formed only six years ago, it is where all the family’s non-energy businesses are parked. There is aviation, real estate, media, private equity and, of course, the highly successful shipping and logistics outfit Gulftainer. During the last six years — through the worst recession in living memory — Gulftainer has grown by 15 percent year-on-year.
According to its annual report, by 2016, it will be turning over $1bn of revenues. Add to that the other 13 companies under the Crescent Enterprises umbrella, and you are talking huge potential for success.
“My father who founded the businesses is an entrepreneur, and I always say that he taught me everything I know, but he hasn’t yet taught me everything that he knows! One very important thing he taught me is never to accept things for what they seem. Always question and use your common sense and initiative to try and see where the opportunity lies,” he says.
But for Jafar, building such a huge and successful enterprise is just part of the story. While Crescent Enterprises is “very profitable”, Jafar says he is now looking to develop what he calls “integrated reporting”.
He explains: “I would not consider any entity to be successful just based on its annual financial returns. Profitability is, of course, a key aspect of success, but beyond that an integrated report goes into social returns and, wherever possible, environmental returns. Integrated reporting doesn’t exist widely in this part of the world yet. Some companies are leading the way, like Abraaj Group and Aramex, and we are making significant efforts to create an integrated reporting structure ourselves. Yes, we are profitable today but we want to ensure that we are self-critical about our social returns and our environmental returns. We are looking at the best integrated reports worldwide, like Unilever and Walmart, and will bring that best practice here.”
In other words, what Jafar will produce in terms of an annual report for his privately owned company will be even beyond that produced by most FTSE 100 companies.
“We want to try and demonstrate what the real net impact of Crescent Enterprises is on its tens of millions of stakeholders and beyond what it might generate just for its few shareholders,” he says, adding: “I hope it happens because there is a concerted belief that it is in the best interests of their individual companies, not just because it is best practice. That’s the only way that you are going to propagate action on a wide scale, and at the speed needed.”
All this leads rather neatly to the Pearl Initiative — founded separately by Jafar — which is a private-sector-led, not-for-profit initiative set up to improve transparency, accountability and business practices in the Arab world. It has a growing regional membership network of business leaders committed to driving joint action and sharing knowledge and experience.
The Pearl Initiative has been developed in cooperation with the United Nations Office for Partnerships. It also has a centre of excellence at the American University of Sharjah.
Today, it has a board of governors made up of nineteen successful “thought leaders” from around the GCC, with 78 companies having signed up.
Jafar explains: “Before the Pearl Initiative, there were a number of initiatives in the region to try and tackle through regulation some of the major issues that markets are facing here, like lack of transparency, lack of good governance, presence of corruption etc. I felt strongly that this regulatory approach was always going to have limited results. If you look at some of the most advanced markets globally you find that regulation alone doesn’t work. What you need is a concerted effort by the private sector to discover the incentives behind adopting some of these practices.”
So what do companies gain by being part of this? Jafar says: “It is different for every company. For example, we have a member that is a major regional contracting company. The biggest challenge they face is corruption in the procurement process. So they asked how they can work with their peers and their competitors to try and demonstrate that they actually have a lot more value destruction in the long-term over any short-term gains they may get [due to corruption].
“Where are there best practices in the region and the world that have dealt with these specific issues? If one company goes to another and says ‘we want to work with you on this,’ there will be scepticism, but we’re completely independent and non-profit. So, our agreement with that company, for example, is focussed mainly on working together on corruption.”
That said, Jafar is equally active in promoting this new way of doing business amongst new companies — particularly with regard to targeting SMEs. In fact, he is going beyond that, trying to get the message across to entrepreneurs long before they launch their first company.
He explains: “Their formative ideas are generated when they are in school and in university, and it’s very important that the Pearl Initiative has a presence in all the leading centres of education in the region. We think that ethical behaviour can be taught as early as pre-school. As you grow older, when business school students are more focussed on business practices, then you can be much more focused on how governance standards globally are moving.”
Several joint initiatives are under way, including with the University of Sharjah, the University of Cambridge, Zayed University, Al Ain University, and the Higher Colleges of Technology in the UAE. Last month, Jafar launched a huge student competition across the whole of Saudi Arabia involving tens of thousands of students in case studies of best corporate practice in the kingdom.
And so in ten years time, does he believe transparency will be the norm when it comes to Arab business?
“I never expected to have too many quick wins but I am very encouraged by the results so far. In many of the discussions that we have had with business leaders we say ‘look, you seem to be agreeing with everything that we as the Pearl Initiative are standing behind, so why haven’t you embraced these practices yet within your business?’ They say ‘nobody engaged us before.’ So it’s not a matter of ‘we don’t believe it,’ it’s a case of ‘we do believe in this, but we haven’t been properly engaged in a collective process before’,” he says.
The early signs are encouraging, and you would think that just running Crescent Enterprises is more than enough for Jafar — but that would be to seriously underestimate the man’s talent, ability and enthusiasm. One of the best examples of this is Global Gumbo Group (G3), which he established as a 50/50 partnership with the legendary music producer Quincy Jones — again, a venture focused on the principles of social enterprise.
The idea is to develop a robust music industry in the Arab world, and create a hub for Arab talent to be able to launch globally. Sounds tough? Not if Jafar’s track record is anything to go by. His first G3 project was a re-working of the famous 'We are the world' song in Arabic.
“Many said we would never be able to get Arab stars to work together and people outside wouldn’t be interested. Well, G3 got 27 of the biggest stars to sing all together in solidarity, and it generated 17 million hits online, 90 percent of which were outside the Arab world. It was the biggest Arab song online, and that was achieved with no marketing budget whatsoever,” he says.
In less than a year, G3 has signed a partnership agreement with the Dubai Government, through the Dubai World Trade Centre. It plans to roll out three big events. The first is Dubai Music Week, which is going to be the first music industry trade show, festival and workshop in the MENASA region.
“It’s going to be a venue for companies connected to the music industry to launch their new products, software and apps; for artists to come over and debut their albums and songs here; for us to bring new artists from the region to launch their songs and albums internationally; and we are also going to do a Quincy Jones talent search, using our social media partners to locate young talent with the objective of launching one new crossover international music star every year at Dubai Music Week,” he says.
The first week will start at the end of September this year, and G3 will also host a Dubai Rocks and a Dubai Classics event later this year and early next year. G3 is also looking at developing projects in Abu Dhabi, Doha and Beirut.
Right now, Jafar is on a roll. How does he do it all? “I am a big believer in what I refer to as creative capitalism. I am interested in how financial values can be created but beyond that I am more interested in the triple bottom line with the social and, wherever possible, the environmental return. Therefore I look at what I do as being quite simple, since everything is based on that philosophy.”
You get the feeling, after talking to Jafar for two hours, that his success today is just the beginning of something much, much bigger.
Jafar on Social Entrepreneurship:
“This redefines what it means to be successful in business. For the sake of us all, now and in the future, it is no longer sufficient to produce profitable organisations. We are responsible for producing organisations that generate positive social and environmental impacts. I have called this a focus on the ‘triple bottom line,’ where we must measure ourselves against ‘planet’ and ‘people,’ as well as ‘profit’. This is one of the central pillars of the Pearl Initiative, which I launched in partnership with the United Nations Office for Partnerships. Through this initiative we are seeking to promote a culture of corporate transparency and accountability, with the objective of creating fully engaged corporate citizens working for the common good of the society in which they operate. In essence, it is about organising our marketplace of ideas and expertise to find practical ways of reconciling economic interests with social responsibilities.”
On Arab women in business:
“Everywhere around me I see gifted, strong, driven, and inspiring women in business. This has been brought about by a structural change in attitudes and an improvement in gender-neutral education provision. More than that, I look to the next generation of young Arab women and see that they have a number of role models to provide them with inspiration. They know that with hard work and determination they will have the same opportunities as their brothers have to succeed in business and other important parts of society. This generation can be the one that carries the torch of social entrepreneurship forward, ensuring that a company is an engaged corporate citizen looking for a return in ‘people’ and ‘planet’ — and not just ‘profit’. I am increasingly convinced that the people Social Entrepreneurship will generate the highest return from will be women.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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