Entrepreneurship in the Middle East has increased substantially in recent years. A number of cities in the region have become major startup centers where people are establishing groundbreaking, innovative companies. At the same time, individuals in the region face a number of hurdles in getting their ideas off the ground. The Middle East has an incredible amount of potential for the future, but investments are necessary to keep this momentum going. In particular, investment is needed in three key areas: education, access to funding, and regulation.
- Providing more education for entrepreneurs. To be successful, entrepreneurs need educational opportunities to improve their business skills and learn how to take their ideas from concept to reality. Someone with a truly remarkable idea who has no idea how to get it off the ground has little chance of establishing a successful business. Many of the earliest startup hubs in the world were located near major universities and research centers, if not directly connected to them in some way. Perhaps the most prominent example of this connection is the close relationship between Silicon Valley and Stanford University.
Business developers in the Middle East have noticed that people who graduate from regional universities often have a strong theoretical understanding, but lack the technical skills they need to actually bring products to market. The region has a number of excellent universities and talented educators, but a shift toward technical and applied learning may be needed to give Middle Eastern entrepreneurs a chance at success. Technical training can also provide business leaders with a strong base of skilled workers.
The private sector in the Middle East would likely see great returns from investing in technical training. These programs can turn out professionals who could help the private sector grow and cement the region as a center of entrepreneurship. Secondary school and university curricula can also expand to include the principles of business development. The Arab League Educational, Cultural and Scientific Organization (ALESCO) has the ability to create training programs for teachers and build this sort of education into school, starting at an early age.
- Increasing access to funding opportunities. One of the biggest hurdles for entrepreneurs in the Middle East is securing funding. This one hurdle encompasses many challenges that business developers must navigate to ensure the viability of a company. The International Finance Corp., a part of the World Bank, reported that small- and medium-sized businesses in the Middle East receive only 8 percent of all bank lending in the region, despite the fact that they make up the vast majority of businesses in this part of the world. Many companies with promise must close their doors because they cannot find the funding necessary to keep afloat until they become profitable.
By investing in both banks and microfinancers throughout the region, individuals and institutions can increase the pool of funding available for entrepreneurs. Many banks will not lend to entrepreneurs because of the perceived risk, but working with these organizations to improve internal procedures could result in a significant amount of new capital opening up for entrepreneurs. Governments should also get involved in the effort to promote startup ecosystem. As this ecosystem develops, it will begin to support and invest in itself, and in time, generate significant tax revenue. Government funding has become available in certain countries, and other nations could increase entrepreneurship by following their lead.
Local investment will continue to attract more venture capitalists and encourage the creation of more startup incubators. While the region has seen an impressive increase in the number of incubators in recent years, not all of these organizations provide quality guidance and fair funding deals. As the region grows, it will attract more experienced mentors.
- Removing regulatory burdens. Some entrepreneurs are discouraged from pursuing their goals due to regulatory issues, especially those surrounding intellectual property rights. Without these essential rights and the ability to enforce them, technology startups cannot survive, as anyone can copy their technologies. Officials need to enact legislation that supports small- and medium-sized businesses as they become established and obtain licensure. In addition, laws that provide protection from creditors are essential for the future of business development. Entrepreneurship has especially blossomed in Gulf countries, where more protections exist than in other parts of the region, largely due to these supportive legal frameworks.
Regulatory issues also involve the free flow of ideas. Since countries in the Middle East are not as integrated economically as many of those in other parts of the world, this flow can break down across borders. For a strong future, entrepreneurs from different countries need the ability to discuss ideas, share experiences, and benefit from each other’s discoveries. A push in this direction is evident in the Silicon Oasis in Dubai, a free trade zone where entrepreneurs can seek mentorship, learn about intellectual property rights, and obtain access to various business support services. Silicon Oasis has attracted some of the world’s biggest technological innovators to Dubai, which helps Middle Eastern companies gain recognition on the global level.