More than half of the population in the Middle East is under the age of 25, and this incredibly large population of young people has raised a number of concerns over the past few years. However, many people see the region’s demographics as an asset, especially in terms of entrepreneurship. A recent study by HSBC Private Bank has affirmed this view by finding that the Middle East boasts a higher proportion of millennial entrepreneurs than any other region in the world.
The study looked at more than 2,800 business owners with organizations valued between $250,000 and $20 million. Researchers found that the average entrepreneur in the Middle East employs about 100 individuals and generates more than $10 million in revenue. These figures are nearly double the averages found in the United States, France, Germany, and the United Kingdom. Moreover, the average age of entrepreneurs in the region is only 26.
HSBC Private Bank also found an important distinction between how people in various regions evaluate success. In the Middle East, as in many regions in Asia, success is judged by the actual size of the business created. In contrast, entrepreneurs in North America and Europe tend to use personal wealth as the primary marker of entrepreneurial success. This finding is especially interesting since startups in the Middle East and Asia tend to be both much larger and much more effective at generating income.
The oldest entrepreneurs were found in the United States with 62 percent of them over the age of 55. In the United Kingdom, nearly half of all entrepreneurs are in this oldest age group. In France and Germany, the majority of entrepreneurs were considered “middle-aged,” meaning that they were between the ages of 35 and 55.
What Millennial Entrepreneurship Looks Like in the Middle East
Middle Eastern youth are clearly enterprising. The study revealed that nearly half of all entrepreneurs in the region decided to create their own businesses during their high school or college years. This number is significantly higher than the number of young entrepreneurs in other parts of the world. Further, about a quarter of Middle Eastern business owners turned to entrepreneurship after making some headway in their careers. These individuals had thought about entrepreneurship at earlier stages of life but wanted to get firsthand professional experience before creating their own ventures.
The impulse for entrepreneurship among people under the age of 30 is growing around the world, but is seen most strongly in the Middle East perhaps because of the extremely young average age in the region. Economic engagement like this is key to the development of countries in the region. The HSBC Private Bank study found that younger Middle Eastern entrepreneurs are creating foundations and estate plans to give back to the community at rates much higher than their older counterparts. In addition, younger entrepreneurs tend to be more interested in social change and more engaged in addressing social issues. Older generations are more likely to donate money, but younger generations prefer donating time and knowledge.
When HSBC released the report, its Global Market Head of Private Banking, Middle East explained why we should view Middle Eastern youth as an asset. He also described how the entrepreneurial drive of the young population has the power to reshape the region’s economic future. The approach to entrepreneurship among the young is marked by creativity, and governments have been shifting policies to support millennial entrepreneurs as they launch their first businesses. While the sincerity of such programs has been called into question, the fact that governments are making any effort is a testament to how important entrepreneurship is for the future of the region. It is also likely a motivational factor in so many young people choosing to become entrepreneurs.
The Strong but Shifting Entrepreneurial Legacy in the Middle East
Moving forward, it may prove helpful to consider the role that family plays in business in the region. More than 60 percent of active entrepreneurs in the Middle East come from families who own businesses. However, only about a quarter of millennial entrepreneurs are shareholders or executives in the family business. Evidently, millennial entrepreneurs find it important to prove their own ideas and grow their own market share. At the same time, these individuals responded that they are more likely to bring family members into their business than to leave their business to be with family members.
The HSBC Regional Head of Corporate Banking and Structured Finance for the Middle East and North Africa says that young entrepreneurs are more likely to embrace a collaborative approach to business as they take over family businesses or create their own. Creating circumstances that promote collaboration could open pathways to business for people who would not otherwise consider entrepreneurship. In a way, collaboration is seen as a natural progression as the Middle East business landscape evolves. More options are becoming available, but competition is also increasing. People need to adapt aggressive, creative growth strategies, which often involves casting a wider net among friends and family for support and input.