Bahaa Eddin Al-Dahoudi is a CIPE-Atlas Corps Think Tank LINKS Fellow at Project on Middle East Democracy (POMED).
Besides experiencing three destructive wars in less than ten years – Operation Cast Lead, Operation Pillar of Defense, and Operation Protective Edge – the Gaza Strip has suffered since 2007 from two unprecedented major political events that affect both the lives and future aspirations of the Palestinians: the Israeli blockade and internal division.
The Gaza Strip, now in its seventh year under Israeli blockade, remains isolated from the outside world. The blockade affects many fields including education, business, the environment, technology, and culture. What is more, there is the internal Palestinian division which has further exacerbated the situation. The political and social division among the two largest Palestinian factions, Fatah and Hamas, has led to declines in many areas.
Program Officer Stephen Rosenlund discusses best practices in corporate governance based on CIPE’s experience in the MENA region.
On September 9-10 in Ramallah, I had the privilege of participating in a CIPE-supported training workshop on corporate governance with the leaders and technical staff of nine Palestinian chambers of commerce from the West Bank. This was an unprecedented gathering organized by our partner the Palestine Governance Institute (PGI) and the Federation of Chambers of Commerce, Industry, and Agriculture to activate the chambers as resources for their member firms on corporate governance matters.
The two-day training workshop immersed participants in applicable legal and regulatory frameworks, the role of oversight institutions, and best practices in corporate governance at the firm level. While the different requirements applicable to publicly traded and private companies were examined, presenters emphasized the imperative for all firms regardless of size or ownership structure to adopt sound corporate governance practices. Data from numerous studies show that investing in corporate governance is a good business decision that enhances the performance and sustainability of companies. In addition, it has a positive aggregate effect on society in the form of economic development.
Moreover, well-governed companies tend to act ethically — by resisting paying bribes, for example — and therefore reduce the amount of corruption in society. A private sector that has its own house in order is also better positioned to engage in dialogue with public officials to bring about needed policy, legal, and regulatory reforms that will improve the environment for business.
More than 98 percent of commercial entities in Palestine are not covered by existing corporate governance codes, which apply to companies listed on the Palestine Stock Exchange and commercial banks. Most of these are structured as family firms — whether in ownership or management — which creates special difficulties for corporate governance.
To address the thousands of family firms that form the heart and soul of the Palestinian private sector, CIPE partner the Palestine Governance Institute (PGI) recently published a Corporate Governance Manual for Family Firms (available in Arabic and English) with the Federation of Palestinian Chambers of Commerce, Industry and Agriculture.
This seminal publication — the first of its kind in Palestine — was informed by extensive consultations with local experts, family firms themselves, and other stakeholders including lawyers and academics.
PGI engaged in extensive outreach to the business community in developing these guidelines, including conducting a baseline assessment through interviews with over 100 owners and managers of family firms across the West Bank and Gaza.
At the beginning of the film Under the Same Sun, Nizar, a Palestinian businessman, looks at the smashed windshield on his car and reads a note that says, “We hope this makes things clear for you.” A newspaper has just exposed his business relations with an Israeli, and he faces public outrage over his perceived betrayal of the boycott of Israeli goods.
His brother tells him that you cannot trust Israelis—after all, his other brother was shot by an Israeli soldier during the first Intifada. His landlord cannot let him continue to lease office space for fear of vandalism. The news also causes familial rifts for Shaul, the Israeli businessman—his sister and brother-in-law who live in a West Bank settlement refuse to speak to him. His Israeli business partner will not work with Palestinians; he didn’t trust them even before “the incident” that killed his son.
The story is fictional. Search for Common Ground brought together Israeli and Palestinian directors, producers, and actors to create a mockumentary about an Israeli and a Palestinian who start a joint venture company to bring solar energy to Palestinian villages in the West Bank. Shaul is motivated by profit and sees Palestine as a viable market to enter. Nizar wants to help his community achieve energy independence, so it will no longer have to rely on purchasing Israeli generators.