“Have we created an equal system in which the youth can imagine themselves as entrepreneurs and eventually become entrepreneurs?” asks Dr Tarik Yousef.
The answer to that question is an issue on which the future of the Gulf economies rest. As the CEO of Silatech, a Qatar-based social enterprise established to address the growing need to create jobs and expand economic opportunities for young people in the region, Yousef’s passionate interest in the issue comes as no surprise.
“There are very high rates of interest among Qatari youth in becoming entrepreneurs,” he continues. “In fact, the data seems to suggest that they have, like many others in the region, a very strong interest in exploring entrepreneurship as a route to economic opportunity and building their careers.”
But how is that “strong interest” being translated into jobs that are providing growth in local economies?
“Oftentimes, we find ourselves looking at the low level of self employment on the ground and attributing it to a lack of interest,” says Yousef, adding: “That is where a lot of people get it wrong. Translating interest into entrepreneurship, into actual self-employment, into actual individual owned businesses, [should] be intermediated through a number of things.”
For instance, do entrepreneurs actually have access to finance and to easy regulations that allow individuals to set up a business, run it and manage it? And what about the costs of bankruptcy, should things go wrong? Yousef says that these concerns are certainly a problem.
“These policy constraints, or banking constraints, end up acting as disincentives, and dissuade people from embarking on self-employment as a career path,” he says.
However, while red tape is a barrier to small start-ups in most emerging markets, the Gulf also suffers due to the high numbers of nationals it attracts into its public-sector workforce. Here, locals can earn a comfortable salary, without facing the risk that comes with starting your own enterprise in the private sector. With the public-sector riches freely available, it’s perhaps understandable that many would rather avoid the possibility of failing, and then having to live with that stigma for the rest of their lives.
“What are the competing career paths that they could embark upon, and perhaps achieve their lifetime goals? Well, jobs in the public sector are one big source of competition. We find Qatari youth, Emirati youth, even Saudi youth, preferring to take that route,” Yousef says.
So what needs to be done to boost entrepreneurship levels?
“We do not believe that any one organisation can itself tackle these problems. We think what is going to be required are many players, working on many levels, to help change the sets of constraints and incentives,” Yousef says. “As a consequence, this will promote job creation, entrepreneurship and economic opportunity for the youth”.
As a result, Silatech is happy to provide policy advice as to how a government or a banking system can help young entrepreneurs. It is even willing to go as far as to make financial commitments through institutional funds that aim to empower small-to-medium enterprises (SMEs) and foster the culture of entrepreneurship.
“We have a lot of programmatic activities, where we are working directly with youth on skills and employability. We are one of the premier providers of microfinance activities in the region that target youth – whether it is youth savings funds or youth loans,” he says.
Yousef believes that all of these interventions matter as they hold the ultimate key to the solution: “While we are going to be doing some things by ourselves, we are always hoping to convene, encourage and support others, in coming into this space, to help change mindsets and policies, increase access and enhance the capabilities of youth in the region.”
At present, for instance, Silatech has been working with several finance providers to help with the formation of Arab youth enterprises. Some projects include efforts with private equity fund manager TunIvest and youth savings product Al Barid Bank in Morocco, to name just a few.
But one venture that really stands out is a venture with Kiva, the world’s largest online micro-lending platform. Kiva, a non-profit site, allows anyone to donate money – from as little as $25 – to a number of individuals of firms in emerging or low-growth countries that have requested loans via Kiva.
“We have taken the responsibility of establishing an Arab world channel on the Kiva platform three months ago,” says Yousef, adding: “Since its launch, more than US$1m in loans have been made through the channel.”
In addition to Silatech’s money, which contributed about a quarter of the full amount, US$750,000 has come from 20,000 individual lenders globally: “These funds have fully financed the funding needs of more than 750 youth run micro-enterprises in five countries in the region; Palestine, Jordan, Lebanon, Iraq and Yemen.
“A small program like this can possibly have an impact on tens of thousands across the board,” says Yousef.
One fly in the ointment has been the fact that a lot of institutions do not want to lend to young people as this demographic is perceived as high-risk. But Silatech’s experience in the microfinancing space shows that this group is no more risky than the rest of the population.
This particularly upsets Yousef.
“Look around you in the UAE, in Qatar and most of the Gulf countries. How many banks are willing to actually lend to young people for business purposes? Most of them are happy to lend possibly to individuals for consumption purposes,” he says. “Nobody is working on changing the constraints here. I hate for this debate to always be focused on whether youth are inclined to become entrepreneurs or not,” he adds.
Instead, Yousef is calling for an equal system in which the youth can move beyond simply dreaming about starting up their own business to actually becoming self-employed.
“I do not think there are enough government initiatives in the region that aim to do the right thing; no comprehensive initiatives that are really trying to tackle multiple areas of concern when it comes to the choice young people face outside the public sector,” he says.
“Nobody is doing any serious work on this issue. It is easy to say, ‘we are supporting our youth and offering jobs in the public sector,’ but it is another thing to tackle the choice they face if you really want them to become entrepreneurs,” he adds.
With the advent of preparations for the Qatar 2022 World Cup, Yousef is hoping for a change in the regional mindset.
“We are working with a number of Qatari stakeholders on seeing how this mega event can be a catalyst for initiatives that employ and reward skilled Arab youth – not just Qatari youth. There is a commitment by Qatar to using this event, seeing how it can serve larger development questions in the region, including youth employment,” he says.
“Everything is thinking through the entry point: How do you make an event like this serve the youth agenda in the region? Do you do it at the starting point of construction projects, the design?” he continues.
“Do you do it in the actual production of the final event? What do you do in between? Try to empower SMEs or favour SMEs?” he asks.
Right now, this issue is still being brainstormed. But Yousef sees it as a big opportunity to do something significant. At the end of the day, it all comes down to one thing for Yousef: finding a mentor.
“The tip I say is, find somebody whom you respect, someone who is willing to work with you and give you advice… somebody who can help structure expectations and help provide the big picture,” he says.
Through Silatech, Yousef is clearly planning to offer those mentoring skills to a number of young Gulf-based entrepreneurs in the years to come.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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