Time for Mideast to Unshackle Its Start-Ups

World Economic Forum founder and executive chairman, Klaus Schwab, said in his opening remarks at a WEF meeting on the MENA region in Jordan that the wide participation in the gathering underlined the business community's confidence in the Middle East and its future, particularly as many young entrepreneurs are taking part in the meeting alongside political leaders and the business community.

The youth, he said, have the determination to participate in bearing the responsibility, and that "we, as political and business leaders, have to listen to them", noting the key initiatives that will be launched during the forum on promoting entrepreneurship and empowerment of start-ups in the region, news outlets reported.

King Abdallah of Jordan welcoming the 1,100 participants from 50 countries said: “If we all do our part, this can be a once-in-a-generation chance to drive radical change across this region and ultimately drive radicalization out of this region. It can be our chance to release the talent, energy and hopes of millions of men and women; our chance to bridge the gap between what young people see and long for online, and what they have offline.”

Unemployment is a "disease" that affects the Middle East more than other regions, said Maurice Levy, the head of the global advertising agency, Publicis, and it is one "for which we absolutely need help in finding jobs and finding solutions at a level which has never been seen before".

Speaking at the World Economic Forum on the Middle East and North Africa’s event, held at the Dead Sea in Jordan, Levy said the region was not lacking in talent, entrepreneurs or ideas.

"Where we are short in the region is enabling these start-ups to really take-off and develop in an environment which is favorable for growth."

Majid Jafar, the chief executive of the Sharjah-based Crescent Petroleum, said the forum’s regional business council, representing 40 leading companies from across the region, has been working on tackling youth unemployment "from the bottom up" through skills programs.

Over the past two years, these businesses have helped to up-skill more than 100,000 young people, he said, and is heading towards 200,000 people while seeking 500,000 next year.

He said that top-down reforms were also required from regional governments. "Not just the long-term things—education reform and legal reform, which take a long time—but easier immediate things. Making it easier to register a company, contract management and dispute resolutions … Things like bankruptcy laws, which Jordan has initiated."

Economic Bloc

Dominic Barton, the global managing partner of McKinsey & Co, said: "In this region, we produce about 1/30th of the number of innovators that we see in other parts of the world. It’s not about the talent. At McKinsey, this region is a major source of talent for us, globally." He said he was looking to find out what needs to be done to foster entrepreneurship.

Arif Naqvi, the chief executive of the Dubai-based financier Abraaj Group, warned against lumping the Mena region together as one entity, pointing out that Casablanca is closer to New York than Dubai. He said just six cities–Casablanca, Tunis, Cairo, Abu Dhabi, Dubai and Riyadh–generate close to half of the Mena region’s GDP.

$100b Investment Gap

The private sector must help the Middle East and North African countries meet a $100 billion infrastructure investment bill in the coming years, Arabian Business reported.

Kito de Boer, the outgoing head of mission for the Office of the Quartet mediating in the Israel-Palestine conflict, said that the region lacked a development bank such as those that operate in other parts of the world to channel investment funds into infrastructure projects.

“Everybody else is doing it, the Chinese, the Russians, the Turks, Africans and Europeans, but lots of western banks have pulled out of the Middle East. The challenge is how to keep investment in the region and to collect capital in the most cost-effective way,” he said.

To meet growth targets, the region needs to double its infrastructure investment to 10% of gross domestic product per year. But the low oil price and resulting pressure on government budgets mean that the public sector is struggling to meet that target, he said.