ANALYSIS: What prevents Arab world from becoming hotbed for entrepreneurs?

Ehtesham Shahid

Published: Updated:

Los Angeles-based Rama Chakaki calls herself a connector. As co-founder of a non-profit social impact fund for technology and education, and principal at a venture capital and private equity TURN8 Fund, she leverages her network to inspire, enable and support teams in achieving targets.

Rama was pleasantly surprised recently when she came across a program in Los Angeles teaching entrepreneurship and money management to girls as young as 11.

“Some university graduate Middle Eastern youth our organization mentors have never learned how to use a spreadsheet or put a budget together or pitch an idea to an instructor let alone an investor,” she tells Al Arabiya English.

Rama emphasizes that a lot needs to be done “to genuinely support the entrepreneurship ecosystem, particularly among increasingly marginalized youth in the region displaced by conflict or social inequities”.

Challenges galore

This is one of the several challenges young Arab entrepreneurs face today while getting their small businesses off the ground. Rama’s VIP.fund helps youth gain access to programs and alternative funding sources in the very early stages of setting up a business.

However, support groups such as these – commercial or otherwise – are few and far between and wherever they exist, they aren’t yet making sizeable difference on the ground.

Naseem Javed, Founder and Mentorian Worldwide at the National Mobilization of Entrepreneurialism, says nations around the world have tried hard to create entrepreneurialism and failed as classroom model did not work.

“The same nations were able to create well trained armies and high ranking officers because they were trained in tactical battlefield engagements and by veterans from the real battlefields,” he says. According to NaSeem, entrepreneurialism is a natural gift awarded to every child but our early upbringing and risk averse parents and teachers snatch that talent away.

“Re-kindling is only an ignite away, but requires two fundamental things; firstly training by only real global age entrepreneurs and secondly training on entrepreneurial issues and global age modeling, something way beyond the scope and curriculum of the established academia,” he says.

Few choices

Amira Rashad, co-founder and CEO at BulkWhiz, says that with one of the youngest populations in the world, and economic pressures to become less dependent on the traditional government and energy led sectors, the Arab world has little choice but to embrace entrepreneurship.

According to her, despite being at a relatively early stage of development, the entrepreneurial ecosystem in the region is flourishing. “With an unprecedented number of high caliber investors, stronger government support, and increasingly well-qualified founder teams, the region is well on its way to becoming a hotbed of entrepreneurialism,” she says.

Yet business spectrum remains lopsided for entrepreneurs in the region. According to a Brookings report, despite an increased societal recognition of the importance of entrepreneurs and SMEs as viable job generators, the public sector remains the largest employer in Arab states.

The challenges that hinder entrepreneurs include competition from larger firms, regulatory and socio-cultural constraints, and limited access to capital, says the report. It adds pervading culture of risk aversion and fear of failure as other major challenges. Going by such reports, a lot needs to be done to provide a positive ecosystem for Arab entrepreneurs.

The Arab trader

There are also those who see challenges as opportunities knocking for the region as it opens its doors to growth. Nasif Kayed, who calls himself the Arab Culturalist, says a large number of fresh graduate in this part of the world no longer looks for a job but an opportunity to build one’s own brand, company or idea.

“Trading is in our blood, and entrepreneurship runs deep in the Middle East. Dubai is a great example where many are benefiting from the endless possibilities,” he says. He hastens to add though that it takes courage to venture on your own and take a risk. “But call it the enthusiasm of youth with a strong SME environment, the possibilities are endless,” says Nasif.

A lot of these possibilities have shifted to the online space for obvious reasons. Khaldoon Tabazza, Founder and Managing Director iMENA Group, says the growth of online businesses in the MENA region in the past few years has been driven mainly by the market, with the ecosystem still in a relatively challenging status due to funding gaps, lack of experienced founders, and to a large extent talent as well.

“However, this has been compensated for by the growth in the market. Both international investors as well as acquirers of online businesses have been able to recognize the market potential ahead of regional investors,” he says.

Ideas and models

According to Tabazza, kick starting the ecosystem requires a mix of audacious ideas and models that can grow to large business. “They should have the potential to list, or to achieve otherwise attractive exits, coupled with the art and science of picking up the right business models that can thrive in the face of international competition at the local as well as the regional level,” he says.

Naseem Javed of the National Mobilization of Entrepreneurialism believes the goals to ignite Arabian entrepreneurialism are no different in this part of the world from regions such as Africa or North America.

The challenge is if the leadership is willing to openly declare a “national entrepreneurial manifesto” and bring about a respectable platform for emerging entrepreneurs to skate around and be looked at as upcoming leaders and not the next line of losers. The community cheers at failures and not the struggle”, he says.

Naseem concludes his argument by citing the Expothon Strategy, which was developed over a decade by Mentorian. Mobilization of entrepreneurial is a common sense exercise and does not require massive capital outlay but rather a different style of thinking and execution. According to him, smart nations are taking notice and nothing can prevent them from becoming hotbed for entrepreneurs.