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Tue 27 Jan 2015 03:11 PM

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Davos: Arab investors urged to focus on tech start-ups

One of the conclusions of this year’s WEF in Davos points out that investing in technology start-ups in the Arab world will play a huge role in creating more jobs for youth.

Davos: Arab investors urged to focus on tech start-ups

Arab business leaders attending the Davos summit have highlighted that investing in technology entrepreneurs is a solution for youth unemployment and economic and social inequality in the Middle East.

Some of the regional attendees of this year’s World Economic Forum in Davos stated that investments in the digital economy in the Arab world were significantly less than in other regions although it could solve problems related to the regional youth unemployment, which currently stands at 25 percent.

The Arab region has circa 10 times less than India, 15 times less than China, 35 times less than Europe and 200 times less than the USA, invested in venture capital per capita per annum, explained Dany Farha, CEO of BECO Capital, a regional venture capital firm focused on technology investments in the Arab region.

“If unemployment maintains its current rate, the Arab region, which is expected to have a population of 598 million in 2050, will have 149.5 million people out of jobs,” he said.

“It’s time we close the gap with the rest of the world and increase investment in the technology sector by backing the firms who can invest, coach, support and unlock tremendous value, create valuable white-collar jobs and contribute to improving lives and humanity in our region.

“To me, what is really imposing is the tremendous contribution of technology to employment and GDP growth at the national level.”

According to Farha the technology sector is one of the few sectors that can create a positive impact quickly and with modest amounts of capital.

He stated that 10 technology companies based in the Arab region, which didn’t exist five years ago, now had a collective workforce of 2,600, a combined enterprise value of over $2.5 billion, and generated over $800 million in combined annualised revenues.

He said: “Compounding is a very powerful mathematical characteristic, when all these companies are growing at between 50 to 150 percent annually, and more such companies are being built and succeeding today, you can see how $800 million can get to several billion dollars in annual revenues in just a few years from now, growing their headcounts and enterprise values in similar fashion.

“These technology companies create jobs and are accretive to the economy, again, a unique characteristic of the technology sector.”

This year’s World Economic Forum, an annual conference attracting business and government leaders to discuss pressing global economic issues, was held from 21 to 24 January in Davos, Switzerland.

Arabian Business digital magazine: read the latest edition online