Businesses need to have a greater purpose than just generating profits for their shareholders, says Arif Naqvi, founder of the private equity group Abraaj that has led pioneering work in stakeholder engagement and forging long-term partnerships.
Arif Naqui
Group Chief Executive
Abraaj Group
“The role of the entrepreneur is to be an engaged part of society and to make a difference in the community.”
Arif Naqui

For Arif Naqvi, it is never just about business. Business brings profit and generates enormous economic value, but Naqvi willingly declares himself at odds with the economist Milton Friedman’s credo that “the business of business is business”. There is simply more to the story than that.

“Dr Friedman took us fully down the road of profitability, but it was profit at the expense of stakeholder engagement,” he says.

As the Founder and Group Chief Executive of Abraaj, Arif Naqvi has built a business on the opposite credo. In less than 15 years, Abraaj has grown from a firm with one office and USD 60 million in assets under management, to 25 offices and USD 9 billion in assets under management. The firm’s markets and investments fall squarely into that swathe of geography that some call emerging markets but which Naqvi insists should be termed “growth markets, since these markets have already emerged”.

“The fact that we can show strong earnings growth across our portfolio of businesses and very low losses in markets that some perceive as risky speaks volumes for the fact that we’ve got our fundamentals right,” he says.

But Abraaj is also built on the foundation that creating a sustainable and successful business in growth markets has to be achieved in concert with like-minded actors. “I like to say: ‘You cannot be an island of excellence in an ocean of turbulence’. What that really means is that I cannot be the only business of my kind in my marketplace. I have to work hard to influence others,” says Naqvi.

“Our business is not just about making money in the companies we own. It is also about using a multi-stakeholder model to address the issues and opportunities that are before us. Issues such as urbanization, demographics and technology, for example, which are seismic in the impact they will have on our community. To achieve the broadest definition of success, one needs to understand these growth trends and identify how best to leverage them for the long-term.”

In 2013, Arif Naqvi was awarded the Oslo Business for Peace Award for pioneering the importance of stakeholder engagement in the private equity industry. Since 2012, he has been a member of the Board of the United Nations Global Compact. From this vantage point, he sees great changes coming up.

“The financial crisis was a wake-up call. People recognized that the Friedman focus on profitability had left us in a world that was significantly worse off. Now we’re entering a phase where business is an essential element of a multi-stakeholder society. In this environment, I feel it’s of crucial importance that business plays a responsible role and shows that profitability does not have to come at the expense of truly inclusive growth.”

He points to initiatives like the Global Compact, UN Principles for Responsible Investment and Business for Peace as examples of how business is taking a more holistic view to creating shared value.

“All of these initiatives are happening simultaneously and have gained momentum because of the world we live in. Their role cannot be underestimated as they have fostered the recognition that businesses have to be wholly attuned to nuances around them. I call this a ‘corporate foreign policy’ in the sense that it has forced companies to recognize what they stand for and then project this to their  stakeholders,” he says.

But perhaps this is not really that new. In a sense, it is a return to an earlier notion of the fundamental role of business. Naqvi, who studied economics at university, draws a parallel to one of the founding fathers of economics.

“Adam Smith said the role of the entrepreneur was to bean engaged part of society, and to make a difference in his or her community. I believe that’s exactly what the UN Global Compact stands for and it is what we believe in at Abraaj and seek to demonstrate every single day,” he concludes.


The next generation of leaders will be those who truly make sustainability the norm in business, believes Arif Naqvi.

“Today’s generation are already believers. They see responsible business as the only viable way forward. In the coming years, they will move into positions of power and this is when things will really start to change. In the past 15 years at the Global  Compact, we have walked the long road towards progress in this field. In the coming 15 years, sustainability will grow wings. I’m happy to be on the Board of the UN Global Compact at a time when this awareness is being transformed into a daily
reality,” says Naqvi.