Entrepreneurship in MENA

by tuftsigl
Jul 22

Alexandra Taylor is a candidate for the Master of Arts in Law and Diplomacy (MALD) in the class of 2015 at the Fletcher School.  She is also an Empower fellow.

The Arab uprisings that swept the Middle East beginning in 2010 have been cast as a burst of protest, in which Arabs rose up to demand political and democratic rights. Yet this interpretation often misses a key dynamic that fueled the uprisings. The initial spark for these protests, Mohammed Bouazizi’s decision to set himself alight after being denied the ability to sell his goods in Tunis, can also be seen as a demand for basic economic rights. Arabs, whether in Tunis, Cairo, or Sanaa, not only rejected dictatorship, but also called for dignity, economic security, and the right to make their way in the world and provide for their families.

More than three years after the uprisings, these economic rights are none the more guaranteed in the region. Demographic and employment statistics in the Middle East paint an alarming picture. The Middle East and North Africa (MENA) region has one of the youngest workforces in the world with more than half of its population under the age of 25. According to 2013 World Bank statistics, 1 in 4 of the youth in this category is unemployed. The World Economic Forum estimates that in order to keep up with projected population growth rates, the MENA region will need to create 75 million new jobs – an increase of 40% of the jobs available in 2011 – just to keep unemployment figures in the region at a steady level.

The Arab uprisings are a consequence of economic underperformance and systems of public sector employment and political patronage that have traditionally determined the economic opportunities of citizens in a highly inequitable manner. With the fall of regimes and emergence of new political systems, reforming economies and looking for new sources of growth and job creation is essential for the political stability of the Middle East. 

Fostering entrepreneurial and startup activity has the potential to accelerate growth and job production in MENA, especially for youth and those who have traditionally been excluded from the formal economy. Once startups mature into small and medium-sized enterprises, not only will they contribute to the GDP of the region, but this entrepreneurial activity can also serve as a source of innovation directed at the largest economic, environmental, and social problems facing Arab countries. Take the Palestinian company Souktel as an example. Souktel customizes mobile technology, especially SMS-based services, to enable communication between aid agencies and their beneficiaries as well as to connect job seekers in low-income areas with work opportunities. Founded in 2006, the company now reaches more than 10,000 job seekers and 50,000 families daily, improving aid delivery and connecting people in need of work with a wage.

Spending the summer with the Wamda Research Lab in Amman has been an amazing opportunity to hear directly from such MENA entrepreneurs regarding their concerns and the challenges they face scaling their businesses. Wamda is a platform for promoting entrepreneurship comprised of a news site, research arm, and capital investment fund. The group works to build up the entrepreneurial ecosystem of the Middle East by designing products and tools for startups, coordinating events to connect innovators, and bringing the challenges facing entrepreneurs to the attention of governments and policymakers. My work with them as a Summer Fellow has helped me to evaluate the assumptions and generalizations made about startups in developing economies and hone in on the specific context in which MENA startups operate. For instance, access to capital is cited in many markets – whether Amman, Nairobi, or New York City – as a barrier for startups seeking to scale their businesses. Yet, these contexts are extremely different. For instance, two issues specific to the Middle East that affect access to capital are risk-averse regulations that prevent many banks from giving loans to startups and punitive laws that make bankruptcy a nearly impossible scenario for an entrepreneur to recover from.

My colleagues and I have been busy interviewing more than 50 individuals from corporations and startups around the region to discuss these challenges and the steps forward, whether changes in local regulations or in private sector practices. Additionally, we’ve had the opportunity to sit down face to face with entrepreneurs through Wamda’s Mix N’ Mentor event earlier this summer in Amman. Wamda has held fourteen Mix N’ Mentor events across the region. These events bring together mentors, financers, Wamda staff, corporate CEOs, and startup founders to discuss the problems they face. Entrepreneurs receive time to express their difficulties and meet with other successful CEOs of startups or mentors within their sector to receive guidance. The June event also featured a keynote by the Ahmad Al-Hanandeh, the CEO of Zain, the largest telecommunications provider in Jordan, about the crucial need for corporate engagement with startups in the Middle East.

These events and conversations are invaluable in connecting a face and specific successes and struggles to the word “entrepreneur” in the context of Arab economies. Our challenge at Wamda is to identify the problems that these entrepreneurs encounter and help to develop solutions. 

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