The Entrepreneurial Spirit of the Middle East: A Risk or Reward?

“People that challenge the norm, have original opinions that move a discussion forward, and act with tenacity and determination.”  – A fitting definition for anyone possessing entrepreneurial flair. It conjures up images of energy and passion  directed towards a goal. It could also accurately describe many caught up in the “Arab Spring”.

Since the spark of the popular movements across the Arab world, the critical debate about youth political empowerment and their increasing unemployment has been ongoing in academic circles. Many note the dynamics of Arab societies are changing: policy makers and business leaders are beginning to take this onboard. But is this new energetic force a political risk or a source of untapped opportunity?

People between the ages of 14 and 24 make up just under a 5th of the global population yet  represent more than 40% of the world’s unemployed. Indeed, this data visualisation from the World Economic Forum shows 341 million are not in employment or education in the developing world. In relation to the MENA region, one in four young people are unemployed and more than half the population are under 25 years old. Similarly, close to 16.7 million of young Europeans are out of work and within in some parts of Europe, such as Greece and Spain reports suggest more than 50% cannot find a job.

This is seen as tragic, with a slew of articles lamenting ‘Generation X’ as the ‘lost generation’. The career paths of the world’s youth looks winding, narrow and dark. However, they don’t only represent a ‘lost generation’. Nor should they just be seen as a ‘political risk’. While urgent attention needs to be paid to the large jobless contingent  a hasty political response should not ignore the considerable opportunity amidst this potential microcosm of unrest.

Youth unemployment within MENA has been managed in a variety of ways; we’ve seen salary increases (to prevent sectoral attrition) and increased employment in government jobs too. However, in the long run this makes it difficult for private sector enterprises to compete, as they can’t afford to pay as a competitive rate. It can thus reduce innovation, and international competitiveness. Moreover, it’s deeply contested whether expanding the public sector is beneficial for economic growth.

Regardless, the ILO predicts that youth unemployment rates in the Middle East will rise to 28.4 percent in 2017. By 2020 it’s estimated that decision-makers and the private sector will have to provide about 80 to 100 million new job opportunities in MENA alone. With the number of under 25’s only set to increase how long states can absorb this extra capacity is debatable.

A new tack is needed. One that considers to the social structure and personality traits of today’s youth.

The Middle East, for millennia, has been home to great thinkers, innovators and, doers – all of whom have possessed an entrepreneurial spirit. One only needs to view the region’s architectural feats, or learn about the Gulf’s evolution from desert sands to international business hubs to note the region’s talent. This is as equally as true today as it was in the ‘pre-oil era’.

Indeed, a recent survey notes that it is young people who are most active in enterprise. This applies particularly to the GCC. For example, a country specific study conducted by the GEM network examined the key aspects of entrepreneurship among Emiratis and found nearly 80 per cent perceived it as a good career choice and 60 per cent saw venture opportunities in the short term.

Relatively, the Middle East is in a good position to foster talent too. A recent study by the GEM Consortium found just 17.3% of young Europeans believe there are good business opportunities available and that they have the skills and knowledge to start a business,in MENA this figure is almost double. Furthermore, although almost two thirds of young people in Europe think starting a business is a good career choice, this is dwarfed by the figures from their peers in the Middle East -three-quarters of whom see it as a good thing. Being brought up in the MENA region, suggests one is less scared of failure too: those aged 18-35 in the EU were much more likely than anywhere else in the world to report that fear of failure would prevent them starting a business.

Monday the 18th of November marked the beginning of Global Entrepreneurship Week 2013. A five day campaign involving more than 7.5 million people participating in events across 130 countries. The aim? To support and develop aspiring entrepreneurs, create new business and more importantly, encourage “an entrepreneurial career”. This year’s theme focuses on enabling budding Entrepreneurs to “take a step forward”. There has been wide participation in the initiative. Indeed, the Gulf alone will see a variety of activities from the Dubai World Game Expo to GEW Oman hosted by the National Business Center. Perhaps this a promising sign of things to come.

The Arab youth are educated, energetic and possess talent. Indeed, it wouldn’t be inappropriate to say they possess an ‘entrepreneurial spirit’. With 8 percent of adults involved in early-stage ventures it’s clear that Christopher Schroeder (author of “Startup Rising) observations are true: entrepreneurial ventures are often sparked from the bottom up. Young people with access to technology are evidently able to take initiative. This can translate into economic and employment benefit for the region too. A global outlook and active participation in initiatives fostering Entrepreneurialism is a good start. Let’s hope it will continue.

Link to piece in Arabic: روح ريادة المشاريع في الشرق الأوسط: مخاطرة أم مكافأة؟