Diplomatic Pouch / December 17, 2015
By Larry Luxner
Despite all the bloodshed unleashed by the Arab Spring — which began exactly five years ago today, on Dec. 17, 2010, when a frustrated Tunisian street vendor poured a can of gasoline over his head and publicly set himself on fire — the revolt encouraged young people to take risks and effect change, especially in business.
That’s the conclusion of Cairo-born entrepreneur Khaled Ismail, who started his first company in 1991 after graduating from MIT and is today one of Egypt’s most successful businessmen.
“I think that change is irreversible,” he said. “People have more guts today. They are willing to take risks. Until 2011, entrepreneurs were on their own. Now in Egypt, we have several angel investors, venture-capital funds and NGOs which are all supporting entrepreneurs.”
Ismail was one of five speakers at a Dec. 4 wide-ranging discussion titled “Trends in Entrepreneurship in the Middle East and North Africa.” The panel, moderated by Paul Salem of the Middle East Institute, kicked off Arab-American Day 2015 — an all-day event at Washington’s Ronald Reagan Building that also included an evening reception hosted by Ambassador Salah A. Sarhan of the Arab League as well as political activist and perennial U.S. presidential candidate Ralph Nader.
“In the last four years, that change has been dramatic,” said Ismail, a leader in Egypt’s burgeoning telecommunications industry. “It’s not the Bay Area or Silicon Valley yet, but Egypt is on its way to becoming a hub for entrepreneurship — particularly Cairo. And all of that has been accomplished without intervention by governments, which he insisted “should not compete for funding with the private sector, which I see quite often in the Arab world.”
Ismail, exuding optimism, said the entrepreneurial spirit among young Arabs is “one of the few bright spots in the Middle East, among many dark spots” including civil wars in Syria and Libya, the deteriorating situation in Yemen and continuing violence between Israelis and Palestinians.
“Thousands of startups in Egypt have managed without government support. They find their way. They establish companies offshore. They do this and that,” he said. “They don’t wait for government to ease up. Of course if they did, it would be even easier, but they’re not waiting for it to happen.”
In the United States, one government program aims specifically to encourage this trend. Known as Presidential Ambassadors for Global Entrepreneurship (PAGE), it’s headed by Bert Kaufman, a senior advisor in the U.S. Commerce Department’s Office of Business Liaison.
“As the president travels around the world, one of the questions he always gets from foreign leaders is, ‘How can I tap into the entrepreneurship and innovation I see coming out of Silicon Valley?’” said Kaufman, who helped launch PAGE two years ago.
At present, 17 U.S. business leaders are involved in the program, including Rich Barton, founder of the hugely successful Expedia and Zillow websites. Others include Steve Case, co-founder and former CEO of America Online, and women’s designer clothing magnate Tory Burch.
Another U.S. official, Sarah Heck, director of global engagement at the White House, insisted that entrepreneurship is a “cornerstone” of the Obama administration.
“One of the central pillars of President Obama’s famous speech in Cairo [in 2009] was using entrepreneurship as a way to connect with people the United States hadn’t been so great in connecting with,” she said. “We want to ensure that entrepreneurship is imbued in everything we do around the world, but particularly in the Middle East.”
To that end, the Global Entrepreneurship Summit — an annual tradition that started in 2010 at the White House — has been held in a different country every year, including Morocco and the UAE. Next year’s summit will take place in California’s Silicon Valley; the effort involves officials from the U.S. Agency for International Development, the Small Business Administration and even NASA.
“We want to make sure that whoever comes into the White House [in 2017] is really focused on using entrepreneurship as a way to advance American interests around the world,” Heck said.
When it comes to entrepreneurship, perhaps the Arab world’s best hope is the United Arab Emirates.
“Forty-five years ago, we decided we’d use oil revenues as a means to an end in order to diversify our economy away from petroleum,” said Saud Al Noweis, commerce, trade and economic counselor at the UAE Embassy.
Today, oil and gas exports account for less than 40 percent of the country’s revenues; in Dubai’s case, that share is less than 3 percent, said Al Noweis. And soon, thanks to heavy South Korean investment, the UAE will become the Gulf’s first country to generate electricity from nuclear power, further reducing its dependence on oil.
“We began in the early 1980s to invest oil revenues — through our sovereign wealth fund — in international companies,” he said. “We also leveraged our geographic location in the Middle East for global trade, so that today, Dubai and Abu Dhabi have some of the finest ports in the world.”
Last year, the UAE launched the Khalifa Fund, which gives grants to local entrepreneurs who want to start their own businesses. The fund provides $400,000 in “seed money” interest-free, with a flexible payback period. If the company is a success, its founder can borrow additional funds at 4 to 5 percent interest.
“Now you can create a job for yourself instead of applying for one,” he said, adding that “one of the things that allows us to be successful is tolerance. Another is the empowerment of women in UAE society. In a country where Emiratis are only 10 percent of our own population, we can’t do it by ourselves.”
In addition, he said, “a lot of young Emiratis are scared to open their own startups, because it’s taking them out of their own comfort zones.” But last year, “we invited all 1,500 Emiratis studying in the U.S. to come to Washington. We invited the Khalifa Fund to extend loans to students in their last year. So now, you can start the process in the U.S. through our embassy.”
Given what’s going on across the region, said Al Noweis, most young Arabs — if given a choice — would move to the wealthy UAE if they could.
Foreign investment hasn’t exactly been pouring into Tunisia, the country where the Arab Spring started. Three terrorist attacks this year have devastated Tunisia’s tourism industry and political instability continues to be a huge problem, though Firas Ben Achour is doing everything he can to turn things around back home.
The healthcare and technology entrepreneur is president of Tunisian American Young Professionals (TAYP), a nonprofit organization established following the uprising that ultimately overthrew Tunisia’s Ben Ali dictatorship in January 2011.
“Our goal was what our diaspora in the U.S. could do to help the revolution, specifically from the economic side,” he said. “We believe Tunisia was on the right path to democracy, but that to establish a democracy, you need to have a vibrant economy.”
As such, the Washington-based TAYP focuses on what Ben Achour calls the four E’s: entrepreneurship, exchange, exports and education.
“Post-2011, the balance in Tunisia tipped from the old to the new. This younger generation of Arabs is trying to control their own destiny. You saw a tremendous increase in the number of young people trying to solve their country’s problems. The ecosystem itself was lagging; it had to catch up.”
Ben Achour says that despite Tunisia’s many problems, he’s “very optimistic.”
“You see more and more incubators, and universities focusing on how to create entrepreneurship programs within their curriculum. Foreign and local investors are interested in these small businesses, whether they’re in agriculture, manufacturing or high-tech,” he said. “What’s missing now is just the lubrication that makes all these components work together like a well-oiled machine.”