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Unless you are isolated in a distant dark cave, in which case you won’t be reading this anyway, you must have heard the terms: entrepreneur, startup, TNBT (the next big thing), funding and investment. Of course, these are not new terms but they have been gaining extensive popularity in a do-it-yourself fashion in other parts of the world over the past few years. The focus in this article is on a sensitive geopolitical area of the world – MENA (Middle East and North Africa).
Entrepreneurs are not those who simply run their own small businesses; they are those who come up with great ideas and turn them into high impact products or services. The MENA region has been on the entrepreneurship dealers’ radar for sometime now but we are not seeing great examples of high growth companies or any considerable success stories – at least nothing to justify the strength of the PR campaign and multiplicity and enthusiasm of players.
MENA is a huge market with great potential. Apart from a few exceptions, it shares the same culture, language and market dynamics. A simple geopolitical comparison may suggest a similarity with the European Union and hence a similar approach and similar business results. The story is totally different.
Entrepreneurship requires an enabling eco-system and infrastructure to flourish. Some of the basic ingredients may exist in this country or that, but from a holistic perspective, the situation is far from assuring. There are various reasons, and manifestations, as to why entrepreneurial system in MENA is not working thus far and is not likely to bear fruit in the near future.
There were several success stories in business in the region both locally and regionally but these were traditional businesses most of which were built as family endeavors over several years with unique recipes of success. One can easily spot empires of real estate, construction, distribution, retail and franchise, media and entertainment, to name just a few. However, recent entrepreneurs emerged as hobbyists influenced by companies that survived the dot com bubble effect and western literature and media that gave entrepreneurship a special focus over the past decade.
Early MENA entrepreneurs were picked up by foreign embassies and other missions in various countries to serve two distinct purposes: find new markets (or capital) for home entrepreneurs and use related activities and their inputs and outputs as a catalyst of security and stability in the region (economic prosperity leading to political stability). Thus, there were no initial initiatives to establish and cultivate entrepreneurship at the official level. Like governance systems, business systems are centralized and well defined (and protected).
With geopolitical boundaries, and despite recent developments ranging from introducing reforms to changing regimes, the MENA market remains fragmented and faces more challenges than one can think and it can cope up with. Geographical and political barriers reflect badly on the business climate not only from a logistical point of view, but in terms of rules and regulations (if any), restrictions, currencies, transfer of funds, payment gateways, marketing and customer support.
With seasonal official support and lack of local or regional planning, entrepreneurial activities and institutions remain dependent on, and affected by, external institutions. Such institutions normally come with their own agenda, priorities and cultural perspective that are usually incompatible with local or regional interests.
The other major concern for the region’s entrepreneurs and startups is funding and investment. Angel investors are very hesitant and lack technical expertise to evaluate ideas and projects. Venture capital and bank loans are usually inappropriate and demanding. Other sources like crowd-funding and crowd-investment, including their regional adaptations, are prohibitive to most entrepreneurs in the region. This is not to include ideas that tend to solve major problems that require initial resources and capital – only one or two person projects where a minimum viable product can be built with personal funds.
To add insult to an open injury, political turmoil is not likely to end soon and several countries in the region are either witnessing major activities of unrest or suffering from full scale war close to home. It is not clear when the curators of entrepreneurship will pack their suitcases and leave, or focus on more demanding issues, but it will leave the region’s entrepreneurs with more to do on their own and with little experience and minimum official support.
It is easy to spot the size of the dilemma from observing the same known people and projects applying to every accelerator, workshop, incubator, show and competition or pitch. Most universities have established centers of excellence and technology parks that simply compete with local commercial training shops. You see activities, speakers, media reports and PR posters but almost zero impact on the ground. Too much ado about nothing!
Unless entrepreneurship is seen as a strategic initiative in the region and adequate resources and attention are allocated at the highest level, local markets will continue to be characterized as consumers of foreign products and services as well as copycat business models at best. With increasing threats to traditional economy and business practices, what is seen now as emerging economy may soon become a submerging economy. It is not easy to float in such a hostile environment.