Why entrepreneurship will accelerate in Middle East
AT a time when the entire Middle East is looking towards a new dawn, it is good to remind ourselves of an era when inspiration, innovation and enterprise combined to make it the centre of the world. The region cradled flourishing civilisations Mesopotamia, Egypt, Assyria that represented the very pinnacle of human achievement in the ancient world. During the Islamic Golden Age, which lasted from 750 to 1258CE, the Arab world once again became the rallying point for knowledge and progress. The era saw the rise of the likes of the scientist and polymath Ibn Al Haytham, whose seven-volume Arabic treatise on optics, Kitab Al Manazir, exerted a significant influence on Western science. In 859CE, the visionary Fatima Al Fihri pioneered the establishment of the University of Al Karaouine in Fez, Morocco, which remains the world's oldest functioning institution of higher learning.
Since prosperity is very rarely an accident, it can be anecdotally argued that such achievements were the direct consequence of gifted minds whose unique, innovative ideas were identified, nurtured and progressed to perfection by compatriots. This, then, may have represented venture capitalism and angel investing in its primary form. The spectacular results are still evident for the world to see.
History aside, the relationship between innovators and investors is symbiotic. There is a limit to which entrepreneurs and investors can keep multiplying fortunes in a given scenario. Disruptive innovations the kind that jolt the system, thereby creating new levels of products and services, new markets and value networks are needed to help investors power through such walls. In the process, innovators who are enabled may become businesspeople themselves. This was seen in the case of Thomas Alva Edison. Not only did Edison's inventions and innovations like the phonograph, the motion picture camera, and the first commercially viable electric light bulb change the world, he also went on to establish General Electric, the world's third largest company according to Forbes Global 2000.
The Middle East needs to resound with such success stories. Encouragingly, various countries in the region have formed economic clusters, such as the King Abdullah Economic City in Saudi Arabia, Dubai Internet City in the UAE, and Smart Village in Egypt besides the off-shore joint-ventures in Casablanca, Rabat and Tangiers in Morocco all designed to promote innovation by seeking to bring together talent and investment within one enabling ecosystem. While such initiatives are salutary, much more needs to be done. This is borne out by The Global Competitiveness Index 2012-2013 released by the World Economic Forum: on the 'innovation and sophistication' front, just three out of a total of 22 Arab countries figure in the top 30 list Qatar (ranked 15), UAE (ranked 25), and Saudi Arabia (ranked 29). The same index holds Singapore in eleventh place outstanding for a tiny nation with a population of 5.3 million! Amazingly, Singaporean students are among the world's best scorers in mathematics and science. The country comes fifth in terms of collaboration between its universities and industry in the research and development space. Moreover, its government takes an exemplary lead in incentivising investors to mentor budding entrepreneurs.
There are several reasons why in our own region, gaps remain in the ecosystem needed to drive the interactive process between innovators and investors. For one, there is no clear pan-Arab authority that oversees the preparation of quantitative and qualitative data for the region. Such conditions of low visibility aren't particularly useful to potential investors, especially in the current macroeconomic climate. An investor who does not see sufficient reason to capitalise on innovation in the Arab world either because he has little faith in the calibre of such home-grown talent or because there isn't sufficient data that would allow him to make sound investment decisions would mean a terrible waste of opportunity indeed! Arab innovators would lose out too. They are hardly stimulated when Arab investors shy away from extending the commitment required to grow their ideas. Instead, they may take their talent someplace else, where faith, investment and mentorship would be more forthcoming.
To return to the point made at the start of this opinion, it is certainly good to remember the unique glories of the ancient Middle East. However, the making of an innovative society is not like riding the bicycle if we have done it before, it is not a given that we can do it again.