Anti-government protests are often overestimated in the short run and underestimated in the long run. One need look no further than recent events in the Arab countries of North Africa and the Middle East, the region known as MENA, to understand that the long run is now.
Many investors understandably remain on the sidelines of a region infamous for political unrest, poverty and corruption. Others are betting on a new generation of entrepreneurs writing their own narratives of innovation and technology at a regional and global scale.
Traditionally, young populations have strong aspirations for a better life. They are better educated, better connected, more politically aware and have a stronger sense of national pride and dignity than many give them credit for. As such, they want to have a voice in deciding their own futures. Mass events unite them and give them stronger sense of responsibility. People are feeling empowered, they have demonstrated together for their rights and have stood guard together over their homes and families. They are responsible for their own future. This empowerment recharges also the entrepreneurial energy throughout the region. Such events have given people self confidence that will translate into vibrant economic activity when the situation normalizes.
The MENA region registered remarkable growth during the last few decades due to it’s extraordinary market dynamics. Begin with a population of 320 million people, nearly twice the size of Brazil, with a GDP larger than Russia and India, and per capita GDP nearly twice China’s. Add disposable income growing 50% over the past three years to eclipse $1 trillion in 2010. Make it a young market, with over 100 million people under the age of 15, who love their connectivity and mobile phones. Mobile penetration, in fact, will approach 100% in three years. Social media penetration hits 25%, growing 125% year over year. There are more college and graduate students and engineers turning to start-up and medium-sized ventures than ever before.
Arabic, Islamic and culturally-attuned versions of proven successful web companies can be quite lucrative, as they have international yard sticks. Investor support could not come at a more critical juncture for the nascent movement toward entrepreneurship. Too often, founders and CEOs who receive initial funds from friends and family. While money has been available in the region for some time for later-stage, profitable enterprises, “most entrepreneurs never survive the desert crossing, and those who do are totally alienated to the notion of raising capital for equity having survived a harrowing prolonged ordeal.”
There is already a broad information tech environment, with nearly 3,700 companies employing more than 150,000. It’s a leading producer of film, print and video in the region. But they focus on the wide local entrepreneur talent itself. Sonbaty observes, “The raw number of individuals combined with ingenuity and opportunity means you get many more and better projects and ideas.”
Located geographically in the heart of this rapidly growing region, he notes Jordan is “an amazing place to do start-ups that benefit from local strengths, political and legal stabilities and its capitalist orientation — it is a great environment to operate and grow companies. “
Dubai in many ways, as no other place in the region, stands as better evidence of the raw will it takes to create something that was never there before. Anyone who comes to this city state can only see and feel the power of vision and determination. Dubai has become the home to families and peoples from around the world. Dubai became a trendsetter. It is a first mover that has shown the way to what this region can become.
Business ideas are coming from every corner of the MENA region.
The new generation is educating themselves and bypassing failed systems. They are seeing online what can be done and no longer being told what can’t be done. Young people are hungry for success and recognition. To feed this hunger, these investors know that their job is more than investment capital, but the commitment to mentor and build an ecosystem that embraces entrepreneurship.
Google was among the many global tech companies in the region connecting entrepreneurs. It held a conference last December with the goal “to invest in the Egyptian talent pool and to increase online penetration by giving developers, academia and businesses the tools to grow local content in order to make information more relevant and more accessible,” says regional director Wael Fakharany. More than 2,000 people attended over the course of three days. Similar sized gatherings are happening regularly from Beirut to Morocco every month.
Despite significant progress and potential the narrative of political risk and concerns over rule of law remain perhaps more uncertain than ever. There is no doubt, that the direction will be determined by whether regimes in the region realize that 21st century developments should not be met by a 19th century mindset – that political reform will be matched by the unquestioned economic reforms and opening up processes of the last five to seven years.
These investors, however, are without delusion and believe the region will create a voice and identity unique to their rich culture and heritages. “Look, it will not run as smoothly as in the US, but it will work well and it will advance the regions’ societies,” Alfi says. “There will be pride in many MADE IN MENA companies and role models. They will inspire people who have little chance or alternative in the old ways rather than violence and extremism.” Unleash this entrepreneurial movement, Naqvi argues, “and with time, the structural impediments will be issues of the past.”
