By Joanna Harries (International Expansion, Endeavor)
I just returned from the World Economic Forum’s Special Meeting on Economic Growth & Job Creation for the Arab World, held at the Dead Sea, Jordan. I attended thoughtful keynote addresses, and panel debates, but think the jury’s still out on whether the overall tone was one of pessimism or optimism. The topics of Education, Employment, and Entrepreneurship certainly highlighted massive challenges for the region, but will they prove insurmountable?
As the forum title suggests, one looming issue overshadowed all conversations: how will the region create enough jobs to absorb the burgeoning young population entering the labor force each year? Exact statistics vary, but approximately 100 million new jobs are needed by 2020. Or, as one gentleman said to stress the urgency, “two million Egyptians enter Cairo each day looking for work that isn’t there.” When translated into growth, collectively the region must grow annual GDP by 7-8%. Tough, when 15% of FDI is being pulled from the region, and some of the largest economies are in transition (Libya now joins Tunisia & Egypt). Couple this with impatient youth (the Yalla Energy!), who want immediate change, not long term plans. Then acknowledge the skill gap between the unemployed, and their potential employers. Employers in the region aren’t big on training, and prefer to bring in expatriate workers to close the gap. Enter entrepreneurship, which can empower youth to create their own jobs.
Sounds deceptively simple, but despite the strong case for unleashing entrepreneurship, the tactics needed to get there require cooperation from multiple stakeholders. Regional governments must lower the cost of failure (e.g. going to jail if a check bounces), and open borders to allow truly regional businesses to scale. Collectively, 350 million consumers represent a huge market opportunity, but in reality, most entrepreneurs stay local and small. An Arab Small Business Act, and the creation of a Ministry for Entrepreneurs, were both suggested as possible solutions to accelerate regional entrepreneurship.
As we know at Endeavor, resources are especially needed to back those entrepreneurs with the ambition and business capability to scale rapidly. Only a few will grow fast enough to deliver substantial new jobs (but then, you only need a handful). Regional funding is certainly available, but criticized for not being leveraged or channeled correctly. Venture capital is still in infancy, and risk aversion is pervasive. As Dr. Naif Al-Mutawa (founder of The 99 Comics) pointed out, “the first due diligence question is often: how much did your father invest?” What about start ups without self-financing options?
MENA is a region of Haves and Have Not’s, a tension that largely contributed to the Arab Spring. As WEF founder and executive chairman Klaus Schwab expressed in his opening remarks, “we may be different, but we are interdependent.” If regional cooperation takes root, and new governments can learn the lessons from the uprisings, then I echo what I heard from a 27-year old Tunisian woman in attendance: “We can’t afford to be pessimistic.”
A few other notable quotes…
“The Libyan youth continued to surprise me. When I was pushed to settle, and make concessions, they would not.” – Mahmoud Jibril, Chairman, National Transition Council of Libya
“How do you get the Arab youth from the street into discussions with multiple stakeholders?” – Madeleine K. Albright, Chair, Albright Stonebridge Group
“The region needs fewer leaders, and more doers.” – Habib Haddad, CEO, WAMDA
The Special Meeting’s full report can be found here.