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Failure is a good thing
The clamour for a change in bankruptcy law is growing, and Kipp is a supporter, because how will businesses evolve and innovate if entrepreneurs are all too frightened to try?
January 26, 2011 3:23 by Samuel Potter
The chief executive of the Khalifa Fund, which provides business loans to SMEs in the hope of encouraging Emirati entrepreneurship, has added his voice to the growing clamour calling for an overhaul of the bankruptcy laws, according to the National. His call follows comments made earlier this month by the boss of the Abu Dhabi Council for Economic Development, and by the boss of Dubai’s largest private equity firm, Abraaj Capital.
Ahmed al Mutawa, Khalifa Fund boss, said that in order to encourage small and medium sized enterprises, the laws must be reworked. “If failure [of your company] can put you in jail, then it’s not encouraging for entrepreneurs and young people [looking to start a business],” he said. However, al Mutawa believes banks will be reluctant to see a change to the law.
Two weeks ago, Fahad Saeed al Raqbani, the director general of the ADCED, said bankruptcy laws in the UAE were in need of an overhaul if the country was to attract more foreign investment and avoid capital flight. “[Investors] are going to go to the countries that serve their best interests. If closing a business takes four to five years, then of course they’re going to go elsewhere,” he told a conference.
And just this week, Arif Naqvi, Group CEO of Abraaj, said that insolvency laws across the region were outdated. “There is no question about it. Insolvency laws in this region are completely archaic, there is no bankruptcy protection,” he said. “The essence of capitalist behavior, which is what all of us aspire to, needs to have bankruptcy protection as without that you don’t innovate, you don’t take risk and you do not allow entrepreneurship to flourish,” he told an economic forum in Riyadh.
The open debate follows the first bankruptcy of a UAE company. Back in November we reported that Al Murjan Real Estate filed for bankruptcy in Sharjah, becoming the UAE’s first court-mandated bankruptcy of a distressed property project since the downturn hit.
Kipp is very definitely one of those websites that laughs when we see people fall over. We can’t help it, we’re sorry. It’s not nice to see people hurt, of course, just like it’s not nice to see people bankrupt (and no, we don’t laugh when people go bankrupt). But the fact is, failure is an essential part of life. It’s a motivator, a teacher, leveler, all in one go. We can’t learn to pick ourselves up if we don’t fall down, and as many philosophers and business gurus have observed, you often learn far more from failure than from success.
A change in the insolvency laws could unleash a wave of entrepreneurial activity across the country. Some of it would fail, yes, but some of it would also succeed. And those successes will provide our jobs and growth and industry for the future. We hope to see more people standing up for this issue in the coming weeks.