Sheikh Fahim Al Qasimi and Yasmine Omari signing the MoU.

Pearl Initiative (PI), the leading business-led non-profit organisation promoting a culture of corporate transparency and accountability for the Gulf Region, and AQ&P, a strategic environmental, social, and corporate governance (ESG) consulting firm based in Dubai, have entered into a strategic cooperation agreement to collaborate on a programme of high importance to micro, small and medium enterprises (MSMEs) in the Gulf.

The agreement was signed by Sheikh Fahim Al Qasimi, Partner, AQ&P, and Yasmine Omari, Executive Director, the Pearl Initiative.

This partnership forms part of the Pearl Initiative’s Governance in MSMEs programme and has been forged to pool the parties’ combined expertise and knowledge of corporate governance to analyse contemporary gaps in implementation of governance principles by MSMEs. It is intended to run from December 2019 to June 2020.

These efforts build on past research undertaken by the Pearl Initiative, which established that the performance of many MSMEs in the Gulf Region has been curtailed due to a lack of awareness on the importance of the application of corporate governance principles.

A landmark research study published in 2017 by the Pearl Initiative established that only 55 per cent of MSMEs publish risk reports, more than half do not have a delegation of authority, and only 28 per cent had an audit committee. However, 75 per cent of them are looking to raise capital of some sort over the next one to two years and 75 per cent of MSMEs plan to hire new talent and/or grow geographically over the next couple of years.

This partnership is a step towards addressing these and other corporate governance challenges for MSMEs, which will be tackled using a specialised tool, the Corporate Governance Codex. The Codex will be utilised to prepare free individual analyses of the internal governance structures and frameworks of regional MSMEs. These analyses will be cumulatively studied to identify gaps in the implementation of corporate governance policies, after which bespoke training workshops will be offered to bridge such gaps.

Pearl Initiative and AQ&P will publish their findings in a joint Case Study Report, which will serve as a guide to good corporate governance practices and serve to help MSMEs evaluate their governance frameworks while benchmarking themselves against regional best practices.

Sheikh Fahim Al Qasimi, Partner, AQ&P said, “This collaboration with the Pearl Initiative comes at an important time for Corporate Governance as a key tenet of sustainability in the MSME sector. Through our collaborative research, we aim to identify a baseline of corporate governance in the region, with a clear route to a regionally specific set of codes and frameworks. The business environment and culture is unique in the region and therefore it is our responsibility to develop our own best practices in governance. Thanks to the Pearl Initiative, we have an organisation that can spearhead this for the important MSME sector.”

Yasmine Omari, Executive Director of the Pearl Initiative, commented, “At the Pearl Initiative, we have seen that companies which incorporate good corporate governance practices reap long-term rewards. Putting in place robust framework will enable MSMEs in achieving success and creating value that will ensure sustainability while also creating opportunities for increased investments and supporting companies in identifying risks they may face, while also mitigating against them, irrespective of their sector or size.”

This project follows from the success the Pearl Initiative has had in addressing the requirements of MSMEs by conducting webinars, student lectures, roundtables, focus groups and workshops through its programme. Earlier this year, it also established a digital platform called Corporate Governance Fundamentals, which offers toolkits and templates, graphic guides, and educational videos at no cost that provide information to help businesses build and customise their corporate governance policies and help them attract funding, establish increased market credibility and ultimately increase their profitability.

Founded in 2010, the Pearl Initiative develops programmes and publishes regional research reports and case studies, with aims to influence the regional business and student communities towards implementing higher standards of corporate governance within the Gulf Region.

With over 42 regional and international partners, the Pearl Initiative brings together business, government and civil society decision-makers to share best business practices and to help maximise the economic opportunities available to companies within the region. The Pearl Initiative also supports Gulf-based university students to identify and embrace strong ethics as they embark on their future careers.