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Fri 11 May 2018 12:24 AM

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Opinion: How the Gulf's entrepreneurial youth can shape the future

The region's start-up culture is helping to deliver solutions traditional companies have failed to meet

Opinion: How the Gulf's entrepreneurial youth can shape the future

Venture capitalists in Silicon Valley often encourage aspiring entrepreneurs to think about resolving “big problems” rather than conceiving “big ideas”. In this context, the Middle East and North Africa – plagued by decades of instability, mismanagement and stagnation – are overflowing with opportunities for enterprising and innovative entrepreneurs.

The Arab Youth Survey reveals that 10 percent of young Arabs believe the digital revolution to be the “most impactful” development in the Arab world over the last decade, but this figure could increase dramatically in the coming decade, as four essential “E”s – education, employment, entertainment, and enterprise – are ripe for transformation.

Arab parents and students alike are painfully aware that their national educational systems offer inadequate preparation for higher education and an increasingly globalised, hyper-competitive labour market. The growing demand to supplement local education is being addressed by several regional start-ups. In 2012, Egyptian entrepreneurs launched Nafham (Arabic for “we understand”), an online platform that offers free video tutorials for the national K-12 curriculum. It has since expanded to Kuwait, Algeria, Saudi Arabia and Syria.

At the higher education level, Edraak (meaning “realisation”), a “massive open online course (MOOC)” platform similar to Coursera, is collaborating with the region’s leading universities, including the American Universities of Beirut and Cairo, to offer popular courses online for free.

Given that Arab governments have not yet approved the certification of online programmes, and MOOCs have not yet proven to be sufficiently engaging for learners, these start-ups still face major hurdles.

Ineffective education systems have helped contribute to a youth unemployment rate of 25 percent in the Arab world, the highest in the world according to the International Labour Organisation. Arab companies such as Akhtaboot and Nabbesh have helped hundreds of thousands find employment and freelance work, while more recent start-ups are helping to teach technological proficiency. Repl.it offers online coding lessons. Dubai Wrappup, recently acquired by Silicon Valley’s Voicera, built an adept note-taking app powered by AI.

While these start-ups have been trailblazers in creating new digital jobs in the Arab world, there is still much to be done to meaningfully reduce regional unemployment.

New media, new options

Arabic entertainment, along with media, has probably been the industry most transformed by the digital revolution. Kharabeesh (meaning “scribbles”), one of the first platforms for creative Arabic content, garners about 165 million views a month. High levels of smartphone penetration have allowed Arab millennials to create authentic visual stories about their lives that often cannot be found on conservative state media. Arab women like Hayla, a young Syrian from Aleppo whose comedic videos of Arab family dynamics have been viewed more than five million times, and Ola Malas, a Syrian living in Washington DC who recently launched a satirical video series tackling social taboos in the Arab world, are helping to lead this social transformation.

In Saudi Arabia – which boasts the highest per capita consumption of social media and YouTube viewership – young people creating entertainment videos from the convenience of their living rooms are gaining millions of followers. Eager to capitalise on this trend, YouTube opened a studio in Dubai offering vloggers the tools, training and studio space to create content. Audio content is next: journalists across the region are starting to experiment with Arabic podcasts and expect their listener base to grow in the coming years.

Finally, in a region famous for its world-class souks and merchants, the digital revolution is slowly but surely beginning to transform Arab commerce. Arab millennials increasingly use their smartphones to order food and transportation services via apps like Careem. Yet only 53 per cent of Arab youth – more in the Gulf than the Levant and North Africa – shop online due to a combination of high shipping costs, cumbersome customs regulations, obsolete online payment laws, and limited shopping options.

Given that only a small fraction of Arab businesses have an online presence, the majority of online purchases currently goes to regional behemoths such as Souq.com (recently purchased by Amazon, of course), ambitious newcomer Noon.com or international outlets that offer shipping to the Middle East and North Africa. Fostering online Arab enterprise will require greater co-operation with local governments to improve the region’s financial and logistics architecture to provide secure payment transactions and faster shipping.

Start-up challenge

As Chris Schroeder documents in his book Startup Rising, Arab entrepreneurs are continuing to launch companies despite the obstacles presented by political instability, red tape, scant venture capital, and a business culture that penalises rather than celebrates failure.

In Morocco, a failed business risks a jail term for bankrupt owners. Tunisian tech entrepreneurs are lobbying their government to facilitate the process of shutting down failed start-ups, which can currently take up to a year. Algerian entrepreneurs have sought to wean customers away from the government – a bloated rentier – as the sole provider of services and introduce the concept of citizens as customers. In Jordan, the Arab world’s largest online bookstore, Jamalon, is battling government censorship while trying to grow its offerings.

The Arab world’s first wave of digital transformation has helped to address problems exacerbated by both government inadequacy and excessive regulation. As more and more Arabs acquire access to 4G smartphones, the opportunity for further growth is tremendous. McKinsey estimates that the digital market could add $95bn per year to the Middle East’s GDP by 2020.

While the next wave of digital transformation – including AI, VR and cloud computing – offers a promising sign of what’s to come, as the old Arab proverb goes, a single hand cannot clap. Success is a team effort, and both Arab business and Arab governments must rise to the challenge.

Maysam Ali, assistant director of the Stevens Initiative

Arabian Business digital magazine: read the latest edition online