Entrepreneurship Is The Key For A Brighter Future In The MENA Region
Over the last five to ten years, several disruptive innovations have changed the landscape of the MENA region, bringing a message of hope for entrepreneurs that the situation has been improving. However, a lot of barriers to successful entrepreneurship still exist, including failure-averse culture, education systems being less adapted to market demands, limited access to funding, and so on. The current entrepreneurial ecosystem is not a supportive environment for those aiming to start a business. Furthermore, the turmoil and political instability after the Arab Spring created new obstacles, stalling the development of some of the MENA countries. Therefore, urgent transformations must occur quickly to make the business environment more entrepreneurship friendly. It is today a question of "survival" for some countries, although there are strong disparities inside the region, with the UAE, Jordan, Egypt, Morocco or Lebanon being more advanced and offering better conditions to launch startups.
Across the MENA region, entrepreneurship is crucial for reducing the high levels of unemployment. Officially, 25% to 30% of youth (aged 18 to 29) in the region's labor market do not have jobs.The public sector is still considered the main employer. The region has traditionally relied on it to provide employment. However, it is not realistic to rely only on the public sector- 60% of the population is under the age of 25 and, according to the World Bank, by 2022, more than 60% of the youth in MENA market will work for jobs that have not been created yet. So, the countries in the MENA have to create at least 100 million jobs by 2020 to answer to the population's needs for employment. To achieve this, entrepreneurship is a viable alternative source of job creation and economic growth.
Entrepreneurship is not only about company creation, but above all about the human capital, the people who work to make a startup grow and succeed. In the MENA region, even with the disparities that exist among the countries, there is today a common consensus about a lack of people with the skills essential to work for startups and develop entrepreneurship initiatives. Government reforms, including trainings, education programs, financial supports and tax incentives, are necessary to create new jobs and hire skilled people to allow those ventures to succeed. An example of tax incentives that could be implemented by the regional governments is to offer tax exemptions for a period of two years to startups that create jobs. Companies in the region already have a problem of raising funds, but with the introduction of tax exemptions, startups would be able to hire talented people and pay them as much as some larger companies do.
Securing funding is a key challenge for entrepreneurs in the MENA countries. The mindset of the investors can sometimes be an obstacle to innovation. First, I believe that, in the MENA market, we can easily make a distinction between an entrepreneur who has a long-term vision and a businessman who is more focused on generating short term cash. It is regrettable that most of the investors in the MENA countries target short-term returns. This way of thinking can be a barrier to innovation, especially since it is true that entrepreneurial disruption takes time to become profitable.
In the first years of a disruptive company, it is almost impossible to monetize. As long as investors lack a long-term vision, entrepreneurship initiatives will not grow enough in the MENA countries. Moreover, I think many HNWIs, private investors or family offices make a wrong arbitrage. They prefer to invest in fixed income or assets, such as real estate, rather than in SMEs or startups, which is, I believe, an old way of thinking. Of course, investing in real estate can often be very profitable and provide stable and high returns, but investors should diversify their portfolios more and invest in innovative companies. It has a potential to give them higher returns and bring something new to the region to develop the standard of living of the population.