In a recent international conference in Istanbul, Usama Fayyad, Executive Chairman of the Jordan-based Oasis500 business accelerator, said: "It is not about creating jobs. It is about creating new companies." The simple concept and the explanation that followed made me realize: Usama, along with many others in the Middle East and North Africa facing a monumental challenge of unemployment, understands something that we in Washington are still struggling with: the solution to our unemployment challenge will not come from existing large companies hiring more employees. Rather, it will come from the creation of new small and medium businesses. While this concept seems obvious, it bears repeating.
Small and medium businesses (fewer than 500 employees) account for 52 percent of all U.S. workers. Small firms accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009 in the United States. No doubt, the sentiment expressed in Istanbul holds true throughout the rest of the world.
The meeting in Istanbul brought together representatives from more than 10 countries, and they eagerly honed in on common challenges and solutions. It comes as no surprise that the biggest challenge identified was regional unemployment. Usama, who previously held leadership roles in NASA's JPL, Microsoft and Yahoo!, discussed his Oasis500 business accelerator. Through an intense boot camp of training for candidate-entrepreneurs, Oasis500 evaluates not only the business ideas but also the individuals. A select few gain admission to the 100 day long program, out of which they will launch a company with a clear business plan and growth strategy that will also be linked to potential investors. Those who did not make the cut still gain essential training in business development.
With the goal of 500 new businesses in Jordan in five years, Usama's Oasis500 will put a significant dent in Jordan's employment challenge. In just over a year of operation, Oasis500 has trained more than 350 companies, invested in 44 of them, and helped 10 raise investments from $100,000 to $3mn. The key, he says, is finding investors for the boot camp, which is the most costly portion of the program. Once local businesses and investors recognized the value of the accelerator in creating a pipeline of potential investments, they've started supporting the boot camp. "Even if a company fails," Usama added, "the entrepreneur is now changed and will try again."
While Oasis500 is a new model in the region, the conviction that only the creation of new businesses can meet the challenge of unemployment is widespread. In Tunisia, Mondher Ben Ayed, CEO of TMI, launched a program that brings American MBA students to Tunisia for several weeks and matches them with Tunisians. The first group of business students, from Georgetown University, visited interior towns and identified business opportunities. These opportunities are not technology startups -- they are barbershops and convenience stores. The students then develop specific business plans and are matched with investors to launch these businesses.
Meanwhile, in Washington, the debate rages on: should we increase or cut taxes on the "job creators?" This is not just a theoretical debate; it comes with an opportunity cost. Resources are scarce and therefore need to be prioritized.
If they can get it right in the Middle East and North Africa, we ought to try it in the United States. Let's place our major focus on supporting and fostering an ecosystem that will spur the creation of new small and medium-sized companies. We should work to match U.S. venture capital funds with accelerators that will provide them with investment opportunities.
Let's directly target unemployment where it exists by unleashing all the tools we have at our disposal. If we can send American students to assist Tunisian entrepreneurs in identifying and developing business plans, shouldn't we also send American students to hurting cities in the U.S. to do the same thing?
Mickey Bergman is director of the Middle East Programs at the Aspen Institute -- Secretariat of Partners for a New Beginning.