MBA students: How would you feel if one of your courses tested your entrepreneurial skills abroad by requiring you to set up a business in one of the Middle Eastern or North African countries? Would you be up for the challenge?
When you graduate "go and do the craziest thing you can do" -- or if you are part of a Middle East Diaspora community, take your business savvy spirit and start a venture there, advised Shwan Taha, one of the panelists at the Wharton MENA Business Conference.
Like many in the audience, Iraqi entrepreneur Shwan Taha completed university and/or business management studies in the U.S. Shwan Taha founded Rabee Securities, the first international Iraqi-based brokerage firm and brokered the largest IPO since the Saudi Arabian Mining Company in 2008 earlier this month. So it was no surprise that Taha was invited to address budding entrepreneurs at Wharton... but his advice did surprise much of the young audience as they nervously laughed at "getting permission" to risk business failure. So it was only fitting that he offered both advice and a challenge:
- Invest in a frontier market, like Iraq, Tunisia, or Lebanon and;
- Invest in whichever sector that could serve the young generation... in the service sectors, like education, health care, and coffee.
Regarding other MENA sectors, "... logistics is a big opportunity," added Joe Saddi, who heads Booz & Company.
Saddi and Taha joined a panel of high-profile Middle Eastern business leaders like Maha Al-Ghunaim, Chairperson of Global Investment House, among others to discuss "Economies of Freedom: Reshaping the Future of the MENA region" at the second annual Wharton MENA Business Conference on Feb. 16, which was held at the Wharton Business School in Philadelphia. Regardless if a MENA country qualified as an "economy of freedom" it shared in the problem outlined by Freddie Baz, Group CFO of Bank Audi: 92 million jobs would need to be created in the MENA region for full employment by 2030 (excluding oil exporting countries in the Gulf), according to the World Bank.
Let's not forget the telecommunications sector. As Alex Shalaby, MobiNil's chairman, explained why telecoms matter, "The "teledensity" levels are indirectly correlated with Human Development Index indicators" such as health, education, and adult literacy. So expanding the telecoms sector is not just an immediate economic opportunity -- but a long-term socio-economic opportunity.
In a nutshell, the above advice is born out of some key observations:
- the effects of brain drain from Taha's native Iraq;
- the large number of business students attending prestigious American business schools, like Wharton, hail from Egypt, Lebanon, and several Gulf Cooperation Council countries; and
- local investment must occur before expecting huge foreign direct investment (FDI) to flow into a frontier economy.
Saddi's prescription to "Reshaping the future of the MENA region" means reviewing the five key "tensions" if any progress is to be made on tackling the new number one concern (earning a fair wage) from the Arab Youth Survey 2012, which was conducted byASDA'A Burson-Marsteller. The results shifted more towards economic, rather than political, aspirations as 'earning a fair wage' displaced 'living in a democracy' from the previous survey.
The question: Where would Diaspora students from MENA work after earning an advanced degree? More pointedly, would they take the more direct approach and risk starting a business venture there to challenge the narrative of high unemployment rate in the Middle East and North Africa region?
Expanding the SME Space to Generate MENA Employment
The observed business and economic challenges mirrored the governance and political challenges so often repeated in government policy conferences. Zubair Iqbal summarized it best: "We can't say that once we fix the political conditions, then the economic conditions will follow... we need to deal with the contractionary pressures to create a space for the private sector to grow."
Basically, the tensions holding back private sector job creation, within a country, also reflect at the macro-level between countries: MENA's intra-regional trade is low compared to other regions. According to 2008 trade data by the intra-MENA trade continues to operate "below its potential" as intra-MENA exports stood at 5.9 percent and intra-MENA imports stood at 5.1 percent of its total trade. As such, it was no surprise when Saddi concluded his assessment of MENA's entrepreneurial landscape with "Think about how SMEs account for only one-third of trade" across the region.
Endeavor, which focuses on high-impact entrepreneurship in both emerging and frontier markets, is well aware of the MENA landscape for entrepreneurs in both the tech and non-tech sectors. Endeavor Lebanon's Managing Director, Tarek Sadi, told me that in his experience "40 percent of jobs created by entrepreneurship come from 4 percent of the entrepreneurs" so why not support high-impact entrepreneurs who can help the larger unemployment challenge in MENA.
Too bad a representative from Endeavor's offices in Turkey, Lebanon, or Egypt were not there to share how their model supports entrepreneurs to get to the next stage of creating more employment through honing its own business growth.
Two days after the conference, almost serendipitously, NASDAQ Dubai announced an advisory group to explore launching the first equity market in the Middle East that will only focus on attracting financial capital for small to medium-sized businesses in the region. NASDAQ Dubai estimated that about 72,000 SMEs generate 40 percent of Dubai's gross domestic product.
Hopefully, as NASDAQ Dubai designs its framework, it will consider the question: Why does access to finance remain a challenge in the case of women-owned SMEs? Earlier this year, the women's access to finance was a key questions posed by Nasser Saidi, economist at the Hawkamah, the Institute for Corporate Governance. I wish that this question would be addressed in large mainstream gatherings and not just "women-focused" talks and conferences. Entrepreneurs may face challenges individually, but solve problems collectively -- across genders.
MBA students: Whether you follow Taha's advice to do the craziest thing in a frontier market, start your own SME -- or not -- please don't view women in entrepreneurship as some distinct, or unique challenge to the region. Women entrepreneurs are very familiar with operating in "frontier markets." If you do happen to follow his advice: awesome. Investing your time and business strengths into an uncertain environment does a lot more than worrying about the unemployment statistics from half a world away.