By Rami Shamma and Stephen Rosenlund
From the start of Lebanon’s celebration of Global Entrepreneurship Week, the Development for People and Nature Association (DPNA), with the support of CIPE, has been actively advancing the tenets of entrepreneurship across various segments of Lebanese society.
DPNA and CIPE have been implementing an entrepreneurship education project in Lebanon since 2006 under the Entrance to Enterprise / Fostering Free Enterprise in Youth banners. Within the past two years, DPNA has worked closely with the Ministry of Education’s Center for Educational Research and Development (CERD) to make high-quality entrepreneurship education available to all high school students in Lebanon. Most recently, and in conjunction with GEW 2013, DPNA has worked with the ministry to roll out a national strategy for Life-Long Entrepreneurial Learning that will reach children and adults at all levels of education. This approach also supports and encourages civil society organizations, along with public and private sector institutions, to nurture the entrepreneurial spirit within Lebanese society.
Last year Leen Sadder of Beruit, Lebanon had an idea to create an organic and biodegradable alternative to Western-style teeth cleansing. Called Miswak, this twig of the Salvadora persica tree has been used for teeth cleaning throughout the Middle East and Asia for millennia. Leen recognized the sustainability of eliminating both the toothbrush and paste and its application for the developing world. She created a crowdfunding campaign on Lebanon-based crowdfunding platform Zoomaal and within weeks raised over $18,000 from 301 backers — 104 percent of her target — along with 4,400 likes on Facebook and 573 tweets. This bought her money, market validation, and media attention. She is now in production. This idea that would never have seen “likes” or funding from banks or venture capitalists. Enter the alternative world of startup and small business financing, called crowdfunding.
Crowdfunding is a simple but transformative concept. An entrepreneur proposes a business, charitable, or creative project on a crowdfunding website. If convinced, tens, hundreds or even thousands of individuals commit relatively small amounts of capital to support the idea. Taken together, these contributions may be significant enough to turn the idea into a commercial reality. This industry is still in its infancy, but it topped $3 billion in transactions in 2012 and may top $5 billion by the end of this year.
Like many Arab Spring countries, Tunisia is experiencing a “youth bulge,” but neither that nor the lingering effects of the European financial crisis can entirely explain Tunisia’s high rate of youth unemployment. Youth unemployment in Tunisia is the result of structural issues in its education system and its labor market, as well as an ingrained understanding of “employment” based on decades of social and political development.
While talks between Tunisia’s political parties dominate the headlines, the emotional political debates going on right now belie troubling economic conditions that could prove just as debilitating to the country’s democratic transition.
Today, the unemployment rate in Tunisia among young people with a university degree is 30 percent, more than twice the 2005 rate of 14 percent. The spike in overall unemployment (now at 17 percent) is partly explained by the larger political and economic situation. Since Tunisia’s 2011 revolution, the economy has had a hard time regaining its pre-Arab spring growth rates. Al Qaeda’s presence in North Africa has grown in the last few years. Instability in neighboring Libya has only added to anxiety over the security situation in Tunisia, a country traditionally boasting healthy tourism revenues. Finally, demand for Tunisian exports has dried up in the European Union, Tunisia’s most important trade partner. These are well-known elements of Tunisia’s post-revolution narrative.
That’s just part of the equation, though. The European market may right itself, the Tunisian government may reassert its ability to secure the country, but Tunisia will still face the nagging issue of high unemployment among its young graduates. That 30 percent unemployment rate among recent graduates isn’t a result of just cyclical unemployment—from regional and global fluctuations—but structural unemployment.
According to the most recent Global Competitiveness Index from the World Economic Forum, the Tunisian labor market has failed to efficiently marshal its young talent to create jobs and growth. A seemingly concise diagnosis, but, when unpacked, it reveals a few phenomena that have combined for the perfect storm of youth unemployment: a gap between labor supply and demand, a prohibitively rigid labor market, and lingering cultural assumptions about self-employment and entrepreneurship.
At the beginning of the film Under the Same Sun, Nizar, a Palestinian businessman, looks at the smashed windshield on his car and reads a note that says, “We hope this makes things clear for you.” A newspaper has just exposed his business relations with an Israeli, and he faces public outrage over his perceived betrayal of the boycott of Israeli goods.
His brother tells him that you cannot trust Israelis—after all, his other brother was shot by an Israeli soldier during the first Intifada. His landlord cannot let him continue to lease office space for fear of vandalism. The news also causes familial rifts for Shaul, the Israeli businessman—his sister and brother-in-law who live in a West Bank settlement refuse to speak to him. His Israeli business partner will not work with Palestinians; he didn’t trust them even before “the incident” that killed his son.
The story is fictional. Search for Common Ground brought together Israeli and Palestinian directors, producers, and actors to create a mockumentary about an Israeli and a Palestinian who start a joint venture company to bring solar energy to Palestinian villages in the West Bank. Shaul is motivated by profit and sees Palestine as a viable market to enter. Nizar wants to help his community achieve energy independence, so it will no longer have to rely on purchasing Israeli generators.
Sanctions on Iranian oil exports have strained the country’s already fragile economy.
Because of sanctions and a host of other fundamental issues, the newly-elected Iranian government faces serious economic challenges — including a shrinking economy, double-digit inflation, and high unemployment — that it will need to overcome in order to fulfill the high hopes for reform that led to its unexpected victory at the polls in June.
With the latest round of P5+1 talks coming to a close last week, and a new round scheduled in early November, the state of negotiations between Iran and the West have been closely followed for any signs of a sanctions deal and what terms that deal might include. But whatever happens with the sanctions, Iran’s underlying economic problems urgently need to be addressed.
Last week, the Center for International Private Enterprise (CIPE) hosted Bijan Khajehpour, Managing Director of Atieh International, for a discussion on the economic challenges facing new Iranian President Hassan Rouhani. The event provided CIPE staff and guests with a look inside the Rouhani administration, the economic challenges facing Iran, and policy recommendations that could help overcome these challenges.
Wamda’s Mix n’ Mentor event in Riyadh brought together CEOs and entrepreneurs.
At a recent conference in Saudi Arabia, I overheard a conversation between two business leaders about their daughters’ marriage prospects. As the father of three daughters, I was curious to hear what they had to say. “Definitely not,” one of the businessmen said, “I am not going to let my daughter marry an entrepreneur. If he doesn’t have a stable job or predictable income, I ask you, how will he be able to support my daughter?” The other, in his traditional white thobe, nodded in agreement.
In 2011, a group of researchers conducted a survey on entrepreneurship in the MENA region and cited “non-acceptance from family members, lack of prestige, high level of competition, and fear of failure” as the top four barriers to starting a business (see Figure 1). In a region where schools and parents prioritize rote memorization over creativity, job security over entrepreneurship, and stability over risk-taking, young people naturally refrain from treading off the beaten path and launching new companies. Furthermore, other social factors, such as the lack of marriage prospects, explain why young Arabs aspire to be government employees and dream of job security.
CIPE’s greatest strengths come from its partners. I am privileged to work every day with courageous individuals and organizations across the Middle East (and the world), who share our democratic values and want to help their communities achieve new freedoms and opportunity. Among them is the Development for People and Nature Association (DPNA) of Lebanon, with whom CIPE has been partnered since 2006. I wrote recently about our work with DPNA, in the midst of challenging times, on CIPE’s Community of Young Entrepreneurs Blog.
Yesterday, DPNA celebrated ten years since its establishment. CIPE is honored to have played a role in DPNA’s work over much of its history. DPNA is a highly ambitious and dynamic organization. Its programs range from environmental initiatives, to humanitarian assistance, to reforming the entrepreneurship ecosystem – the field in which our cooperation is focused.
With CIPE’s support, DPNA is helping Lebanon’s youth turn their entrepreneurial ambitions into reality and become productive members of civil society through various education, training, and mentorship initiatives. As part of a national coalition to reform the Lebanese educational system, DPNA is ensuring that the principles of entrepreneurship are included in curricula at all levels of school. These are impressive feats for a small NGO from southern Lebanon.
On behalf of all of us at CIPE, congratulations to our friends at DPNA on this tremendous milestone, and best wishes for another ten years of even greater success!
Stephen Rosenlund is Program Officer for the Middle East & North Africa & CIPE.