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Entrepreneurial Developments in the
MENA Region
Example of an Information Rich PowerPoint Project
Prof. R. Simeon
Overview
▫ Intro to the MENA Region
▫ Historical Developments
▫ Regional Characteristics
▫ Main Countries Affected by Entrepreneurship Developed
▫ Significant Developments
▫ Highlights of Companies/Organizations
▫ Future Issues in the MENA Region
Introduction to the MENA Region Algeria Bahrain Djibouti Egypt Iran Iraq Israel Jordan Kuwait Lebanon Libya Malta Morocco Oman Qatar Saudi Arabia Syria Tunisia UAE West Bank Gaza Yemen
MENA is an acronym referring to the Middle East and North Africa.
The MENA region stretches from Morocco to Iran.
It carries a population of 381 million people (6% of the world population). The vast majority of this population live in middle-income countries.
The MENA region carries 60% of the world’s oil reserves and 45% of the world’s natural gas reserves. 8 of the 12 OPEC nations are within the MENA region.
It is relatively synonymous with the term the Greater Middle East.
Historical Developments Throughout history there has been civil instability in the area that have been extremely publicized in the media, attracting attention worldwide.
Iran-Saudi Arabia proxy conflict: Traced back to the Iranian revolution, both countries have long supported different militaries since the Cold War and, more recently, the Lebanese Civil War.
Israeli-Palestinian conflict: Key issues revolve around borders, control of Jerusalem, Israeli settlements, and more importantly, cultural and religious interests.
Rise in terrorism: After the terrorist attacks of 9/11, the Bush Administration declared its War on Terror, invading Afghanistan to take down the Taliban Regime, in 2001.
U.S. Invasion of Iraq in 2003: Carried over from the War in Afghanistan, the invasion-Operation Enduring Freedom- had the mission to “disarm Iraq of weapons of mass destruction, to end Saddam Hussein’s support for terrorism, and to free the Iraqi people.”
- President George W. Bush
Rise of ISIS: Originated from Jama'at al-Tawhid wal-Jihad in 1999 (ISIS since 2014) pledged allegiance to al-Qaeda. It identifies its leader, Abu Bakr al-Baghdadi, as a caliphate, claiming religious, political and military authority over all Muslims worldwide.
Historical Developments Iraq Civil War Ongoing conflict, as ISIS conquered major areas in northern Iraq. The
Arab Spring A revolutionary wave of violent and nonviolent protests, riots, coups, and civil wars throughout the MENA region.
Syrian Civil War A multi-sided armed conflict resulting from protests calling for the removal of President Bashar al-Assad during the Arab Spring. Violent government response lead to many armed groups fighting and displacing over 6M people.
Libyan Civil War Ongoing conflict, stemming from the Arab Spring. After death of Muammar Gaddafi, government control is unclear. The economy is shook as oil industry collapsed with most of its facilities blocked or damaged by rival groups.
Yemeni Civil War Ongoing conflict as two groups want control of the government. Many organizations and countries have called for ceasefires as over 3M people have been displaced. “The people
want to bring down the regime.”
- Protesters
U.S., Australia, France, and the UK send essentials via airdrops and soldiers to help the Iraqi people.The world, realizing it underestimated ISIS as they use social media to generate fear.
Multiple ceasefires have since occurred with months of negotiations, but an agreement has yet to be reached.
S.W.O.T. “The Middle East and North Africa (MENA) region is in turmoil.”
- The World Bank Syria, Iraq, Libya and Yemen are all in civil war. This has led to extreme loss of lives and physical infrastructure.
There is a refugee crisis, as 15 Million have fled to already economically-strained surrounding countries.
All Middle Eastern countries have experienced high youth unemployment. Gaza carries the highest total unemployment rate in the world, with GDP at 40% of its potential.
Oil prices dropped below $28 per barrel, January 2016. This was a more than 60% decrease since June 2014.
“...the scale of the oil price collapse is such that many economies are facing significant deficits which have to be financed by drawing on reserves or debt issuance.”
- Giyas Gökkent Senior Economist
Institute of International Finance
S.W.O.T.
Within the Arab countries populations, 60% of the population is under 25 years old. The median age is 22, compared to a global median age of 28.
The Middle East has also sustained remarkably high education enrollment rates. Education is nearly universal at the primary level, following an estimated 70% enrollment at the secondary level.
Political developments seen in Jordan, Tunisia and Morocco have shown that engagement in policymaking has increased. Jordan First (below), for example,
The (above) figure shows supporters of Nidaa Tounes celebrating after the first results following the second round of the country’s first free presidential election on Dec. 21, 2014 in Tunis.
promotes the concept of a modern democratic state.
Regional Characteristics
Natural Resources
International Relations
Corruption
“After decades of corrupt and repressive rule, citizens in these states are facing brutal and ineffective security forces, habitually divisive and confrontational politics, and a lack of productive avenues through which to lodge their grievances and assert their rights.”
Vanessa Tucker Director of Freedom House
Trade LinksHomogenous Culture
Main Countries Affected by Entrepreneurship Development
Kingdom of Saudi Arabia
● Population of 28 million ● GDP Composition:
Agriculture: 2.3% Industry:
46% Services:
51.8% ● Labor Force of 11.67 million
(about 80% non-national)
Saudi Arabia’s Capital City of Riyadh
Pro Huge increase in entrepreneurship and startups, many startup communities to foster new entrepreneurs. Gender inequality in labor force is disappearing.
Con Poor economic growth due to heavy reliance on oil prices, reduced government spending and subsidy cuts.
Morocco
● Population of 34 million ● GDP Composition:
Agriculture: 14.5%
Industry: 29.2%
Services: 56.3% ● Labor Force: 12.04 million
Morocco’s Capital City of Rabat
Pro Universities are creating business and entrepreneurship majors, the government modernizing the administrative procedures and aspects for entrepreneurs, events and conferences are being organized and sponsored.
Con Lack of support, experts and mentors that could support entrepreneurs
Iran
● Population of 83 million ● GDP Composition
Agriculture: 9.2%
Industry: 38.8%
Services: 51.9% ● Labor Force of 29.07
million
Iran’s Capital City of Tehran
Pro $400 billion economy, second largest in the Middle East next to Saudi Arabia. Highly educated population with strength in the tech field.
Con Lack of foreign investors, driven away by the fear of past obstacles, such as a lack of transparency and outdated legal and auditing practices. Shortage of skilled labor.
Jordan
● Population of 8 million ● GDP Composition:
Agriculture: 4.2%
Industry: 29.6%
Services: 66.2% ● Labor Force of 2.055 million
Jordan’s Capital City of Amman
Pro Jordan reduced its minimum capital requirement for starting a business by more than 96% in 2008.
Con Establishing a business requires ten procedures, lack of venture capital, financial institutions are somewhat risk-averse.
Lebanon
● Population of 6 million ● GDP Composition:
Agriculture: 5.6%
Industry: 24.9%
Services: 69.5% ● Labor Force of 1.6 million
Lebanon’s Capital City of Beirut
Pro Extremely startup friendly, Central Bank of Lebanon launched an initiative to encourage commercial banks to invest in startups directly. Many entrepreneur forums such as Lebanon for Entrepreneurs and ArabNet
Con High number of entrepreneurs
Egypt
● Population of 94 million ● GDP Composition:
Agriculture: 11.2%
Industry: 36.3%
Services: 52.5% ● Labor Force of 31.14
million
Pro Young Tech-savvy population with increasing interest in starting their own business. Education system introducing entrepreneurship to the people.
Con Slow and complicated business registration system, poor contract enforcement, and high taxation.
Egypt’s capital city of Cairo
● Population of 9 million (only 15% are nationals)
● GDP Composition: Agriculture:
0.8% Industry:
46.9% Services:
52.3% ● Labor Force: 5.087 million
(85% are expatriates)
United Arab Emirates
UAE’s Capital City of Abu Dhabi
Pro Dubai’s ruler and Vice President recently set up a $544 million fund to help entrepreneurs. Laws are supportive of entrepreneurship. Multicultural society with countless firms.
Con Extremely competitive environment for entrepreneurs.
Significant Developments
● Professionals believe the MENA job market is picking up 63%
● Top Industries perceived to be employing most talent by employees are: ○ Oil and Gas 30% ○ IT and Telecom 24% ○ Hospitality 8% ○ Education 8% ○ Healthcare 7%
● Misalignment of education and employment
● Top 6 departments with highest shortage of skills: HR, IT, Engineering, Marketing, Sales and Finance
Organization Highlights
Souq.com was founded in 2005 by Ronaldo Mouchawar alongside Jabbar
Internet Group’s Samih Toukan and Hussam Khoury. Billed as being the
‘Amazon of the Middle East’, Souq.com operates both as a retail site and as a marketplace for third
party sellers.
It features more than 600,000 products and attracts over 24 million visits per month. The company now
has over 2,000 employees across operations, customer service and
logistics. Souq.com also emerged as the second most searched for brand in 2014 in the United Arab Emirates,
according to Google.
Ronaldo Mouchawar, Founder of Souq.com
Organization Highlights
In a society with both tradition and laws restricting women from the workplace, Khalid Al Khudair, through his company Glowork, has sought to connect them with jobs. The site now boasts a database of over 1.2 million Saudi women and has connected thousands with jobs.
Organization Highlights
Ralph R. Debbas founded W Motors, the Arab world’s first manufacturer of high
performance luxury sport cars in Lebanon in 2012, before moving the
company to Dubai a year later. W Motor’s first vehicle, the $3.4 million Lykan
HyperSport was the most expensive car to feature in the Fast and Furious
franchise, with its appearance in the latest film.
Future of the MENA Region - More Political Accountability: political competition including broad based political
parties, adequate transparency, regulation of party financing, disclosure of parliamentary votes, etc.
- Checks and Balances: ensuring separation of powers like an independent and effective judiciary, legislative oversight via parliaments with independent oversight institutions like Supreme Audit Institutions and Anti-Corruption Agencies
- Robust Civil Society and Media: Freedom of expression and open media with civil society organizations monitoring public and private agencies and citizens’ feedback via report cards and surveys
- Effective Public Sector Management: strong and results-oriented public administration, ethical leadership and safeguards concerning assets, conflict of interest rules, effective financial management, procurement, and regulatory agencies
- Social Sector Service Delivery: improve better service quality and delivery - Public Investment Management: must be strengthened to increase execution rate
of investment budgets - Strengthen Social Accountability: Engage in both supply and demand to ensure
that enhancing public engagements lead to long-lasting results
References
▫ http://www.youthpolicy.org/mappings/regionalyouthscenes/mena/facts/ ▫ http://knowledge.wharton.upenn.edu/article/how-low-oil-prices-are-battering-
the-mena-region/ ▫ http://documents.worldbank.org/curated/en/567541468275942178/pdf/90142
0BRI0Box30coll0KNOWLEDGE0NOTES.pdf ▫ http://al-bab.com/albab-orig/albab/arab/econ/suleiman.htm ▫ https://www.entrepreneur.com/article/284540 ▫ https://www.bayt.com/en/research-report-17482/ ▫ https://www.entrepreneur.com/article/245762 ▫ http://www.international.gc.ca/name-anmo/peace_process-
processus_paix/canadian_policy-politique_canadienne.aspx?lang=eng ▫ http://www.nytimes.com/2009/11/29/world/asia/29torabora.html?_r=1 ▫ http://www.independent.co.uk/news/world/middle-east/prince-mohammed-
bin-salman-naive-arrogant-saudi-prince-is-playing-with-fire-a6804481.html ▫ http://www.huffingtonpost.com/dr-yousaf-butt-/saudi-wahhabism-islam-
terrorism_b_6501916.html ▫ https://georgewbush-
whitehouse.archives.gov/news/releases/2003/03/20030322.html ▫ https://fas.org/sgp/crs/natsec/RS21405.pdf ▫ http://www.bbc.com/news/world-middle-east-29052144 ▫ http://www.nybooks.com/articles/2016/06/23/how-to-understand-isis/ ▫ http://www.huffingtonpost.com/uriel-abulof/what-is-the-arab-third-
es_b_832628.html
References
▫ http://www.middleeasteye.net/news/yemen-s-arab-winter-1470341500 ▫ http://www.cbsnews.com/news/syria-crackdown-has-killed-5000-people-un-
says/ ▫ http://www.nytimes.com/2015/10/13/world/middleeast/syria-russia-
airstrikes.html?_r=1 ▫ http://www.bbc.co.uk/news/resources/idt-841ebc3a-1be9-493b-8800-
2c04890e8fc9 ▫ https://www.washingtonpost.com/news/worldviews/wp/2014/08/08/when-
obama-talks-about-iraq-his-use-of-the-word-genocide-is-vital/ ▫ http://www.bbc.com/news/world-middle-east-29003321 ▫ http://www.nytimes.com/2014/06/16/world/middleeast/iraq.html?_r=0 ▫ https://www.eia.gov/beta/international/analysis_includes/countries_long/Libya
/libya.pdf ▫ https://web.archive.org/web/20150320232806/http://www.conflict-
news.com/libyas-second-civil-war-how-did-it-come-to-this/ ▫ http://in.reuters.com/article/yemen-security-china-idINKBN0MY0LV20150407 ▫ https://www.icrc.org/en/document/yemen-humanitarian-pause ▫ https://www.theguardian.com/australia-news/2015/apr/12/australia-calls-for-
yemen-ceasefire-on-eve-of-julie-bishops-visit-to-iran ▫ http://en.abna24.com/service/middle-east-west-
asia/archive/2015/06/19/696106/story.html ▫ http://www.cfr.org/yemen/yemen-crisis/p36488 ▫ https://www.foreignaffairs.com/articles/middle-east/2015-03-25/houthi-who ▫ https://refugeesmigrants.un.org/more-3-million-displaced-yemen-
%E2%80%93-joint-un-agency-report