Tag Archives: arab spring

Entrepreneurship in Egypt and Tunisia After the Arab Spring

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In 2011, both Tunisia and Egypt were rocked by popular protests against economic and political repression that ended in the ouster of their authoritarian governments. Three years later, how much progress have these states made in reforming their economies? And what has happened to the entrepreneurs whose grievances helped fuel these revolutions?

Reforming the Entrepreneurship Ecosystem in Post-Revolutionary Egypt and Tunisia, a report from CIPE and Stanford University’s Center for Democracy, Development, and the Rule of Law (CDDRL), attempts to answer these key questions. With this report, CIPE staff and IACE will engage policymakers and stakeholders in roundtable discussions to formulate policy recommendations in the coming weeks.

Working with CIPE Cairo staff and CIPE partner L’Institut Arabe des Chefs d’Entreprises (IACE) in Tunisia, lead researcher Amr Adly conducted an extensive study of existing literature and over 100 detailed interviews with entrepreneurs in each country to shed light on the obstacles and opportunities that comprise the entrepreneurial ecosystems in these post-revolutionary states.

The survey results paint a small yet detailed portrait of what life is like for the Egyptians and Tunisians trying to make ends meet in countries with increasing unemployment rates, among other worries. Dysfunctional and inaccessible regulatory structures, crony networks solidified by corrupt past regimes, and a lack of access to information for the private sector and policymakers are only a few of the areas for which Adly’s research provides nuance.

Who are the entrepreneurs that can withstand such an unstable environment? The majority of respondents in both countries affirmed that they do not trust formal contract enforcement, managed to start their business largely through self-financing due to a lack of access to loans, and endure high transaction costs as a result of inadequate institutions. They are men and women, younger and older, more or less educated, formally registered or informally operating, risking bankruptcy and/or jail time for a failed venture, running joint or solo endeavors—and they are all citizens for whom their government is not working.

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Arab Spring Grievances Still Not Being Addressed in Yemen

A street vendor in Sana'a, Yemen. (Photo: Rick McCharles)

A street vendor in Sana’a, Yemen. (Photo: Rick McCharles)

More than two years ago, the suicide of a Tunisian street vendor named Mohammed Tarek Bouazizi set off a string of protests that eventually led to regime change and promises of reform throughout the Arab world. Unfortunately, the root causes of Bouazizi’s frustrations have still not been addressed in countries like Yemen.

In 2011, after having his wares confiscated for failing to pay a bribe, Bouazizi succumbed to the pressures of poverty and desperation, committing suicide by self-immolation. This tragic act led to what later became known as the Arab Spring, arguably the greatest geopolitical realignment since the fall of the Berlin Wall.

But the millions of street vendors and others who work in the informal sector have not yet realized the promise of democracy. They remain vulnerable to extortion, harassment, and other forms of abuse. By not addressing the root causes of the Arab Spring, emerging democracies such as Yemen risk losing the popular support and legitimacy that are essential to a thriving democracy.

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Economic Inclusion, Democracy, and the Arab Spring

Examples of some of the informal legal documents used by "extralegal" businesses in the Arab world. (Source: ILD)

Examples of some of the informal legal documents used by “extralegal” businesses in the Arab world. (Source: ILD)

On December 17, 2010, police expropriated the equipment and goods of a fruit seller in Sidi Bouzid, Tunisia. Because of his informal status, the fruit seller had no option of appeal or avenue for official protest. He also had no collateral to secure a loan to buy new equipment, let alone grow his business. With no means of supporting his family of seven, the man now world famous for lighting the first spark of the Arab Spring, Mohammed Bouazizi, committed suicide by self immolation.

Bouazizi’s tragedy stemmed from an affront to his dignity, an absence of justice, and economic disenfranchisement. He was not alone. As the following months unfolded, it became clear just how many businesspersons and citizens across the region shared these same grievances when hundreds of thousands took to the streets to demand political and economic freedom.

Since then over two years have passed and Tunisians, Egyptians, and Libyans have experienced the unprecedented democratic elections and the chance to choose their own leaders. But free and fair elections, even at their best, are only half the battle.

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Index Puts a Spotlight on Corruption

Since 1995, Transparency International’s Corruption Perceptions Index has been putting corruption on the map by scoring the level of public sector corruption in countries around the world. What can we learn from this report — aside from the fact that corruption remains a widespread problem requiring urgent attention?

The top and bottom countries in this year’s index are no surprise: once again, Denmark, New Zealand, and Finland are tied at the top of the list of cleanest countries, while Afghanistan, North Korea, and Somalia share the bottom spot as most corrupt. It is interesting to note the geographic, cultural, and economic diversity of the world’s least corrupt countries. They include some of the wealthiest nations, such as Switzerland and Luxembourg; middle-income countries like Uruguay and Chile; small countries like Iceland and Barbados; and large, diverse societies like the United States.

One thing the least corrupt countries have in common: all but one of the countries in the top 20 is a democracy and is currently rated “Free” by Freedom House; Singapore and the territory of Hong Kong, also in the top 20, are rated “Partly Free.” Thirteen of the top 20 also sit in the top 20 on the World Bank’s Doing Business ranking. The bottom-ranked countries on the transparency index are also considered by Freedom House to be the world’s most undemocratic, and, not coincidentally, are difficult places to do business.

Of course, few observers expected Denmark or North Korea to switch positions this year. But the failure of countries like Egypt, Tunisia, Libya, and Yemen to improve may be more more worrying. In 2011, popular revolts sparked by high levels of corruption (among other factors) led to a change of leadership in each these countries. The mandate for their new, post-Arab Spring regimes was clear: fighting corruption should be a top priority.

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Liberation Technology

(Photo: the New Middle East blog)

We live in a connected world: social media platforms that did not exist a decade ago now boast hundreds of millions of users and mobile phones are commonplace in even the poorest and most remote regions. Are these technologies, which have reshaped daily life for millions, a catalyst for democratic reform, or part of a new digital panopticon through which governments can spy on and control their citizens?

In 2007, when Larry Diamond coined the term “liberation technology,” these questions were largely academic – and were discussed at length in a collection of articles in the Journal of Democracy, recently updated and re-released in a book of the same name. But when democratic revolutions swept the Arab world four years later, spurred on by Facebook and watched around the world in real time on Twitter and YouTube, it seemed that the Internet had finally emerged as a force for positive political change in even the most repressive regimes.

At the same time, authoritarian governments are learning how to fight back, with some of the same tools. In many countries, the Internet has itself become an electronic battleground where repressive regimes are employing increasingly sophisticated strategies for repression and manipulation.

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Sudan’s Arab spring is really hot

Social media provided a continuous flow of updates about the government’s crackdowns on peaceful demonstrators, news about detainees, and maps of the location of the scattered protests. Just as in Egypt, Tunisia, and now Syria, activists in Sudan are using these online tools not only to coordinate their own activities, but also in hopes of drawing the attention of the wider world.

Interestingly, despite the fact that Sudan is a very poor country with nearly half the population under the poverty line, 10 percent still had access to the Internet as of 2008. It is estimated that this proportion has doubled in the last four years, and the country may now have as many as 8 million regular Internet users.

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Delivering Dignity in the Arab World through Political and Economic Reform

Moderator Steve Clemons and panelists Larry Diamond, Michele Dunne, and John D. Sullivan. (Left to right; Photo: Staff)

In the past year since the uprisings in the Arab world, there has been no shortage of debate on the political future of Arab countries. Yet we are all still grappling — in Washington as in the affected countries — with the economic dimensions of this upheaval and their implications for political transition. While the region may be in the early stages of a long transition marked by considerable opportunity, the opportunity can only be sustained if key economic challenges are soon addressed.

On May 15, CIPE had the pleasure to host two experts who possess a strong grasp of the political economy issues at stake: Larry Diamond, Director of Stanford University’s Center on Democracy, Development, and the Rule of Law (CDDRL), and Michele Dunne, Director of the Atlantic Council’s Rafik Hariri Center for the Middle East. Steve Clemons from The Atlantic moderated an insightful discussion, which also featured John Sullivan, CIPE’s Executive Director.

While the uprisings can be interpreted through different lenses, Dunne stated that without the underpinnings of economic reform, the political transitions will face trouble. Former regimes that had been producing economic results ran out of time as they became discredited by human rights abuses and political repression. So in order to win public support for economic reform, honest government is an imperative. Diamond spelled out at least three things the public requires to accept reform: governments must be legitimate (beginning with counter-corruption efforts); they must present a road map for reform; and they must engage people in the reform process.

Although Egypt is widely understood to be a pivotal country, Diamond observed that Tunisia has disproportionate significance as a symbol of democratic transition and a test case for the region, in the way that Portugal once was in 1974. Another interesting comparison raised by Dunne was between Libya and the United Arab Emirates. The contrast between these countries, once at a similar level of development, illustrates the importance of governance to economic prosperity and human development.

Clemons keyed in on the issue of economic informality, especially Hernando De Soto’s study of informal merchants’ concerns in North Africa. Clemons suggested that finding solutions to small and medium entrepreneurs’ specific grievances could provide an entry point to broader reforms. Sullivan cited the barriers that informal businesses continue to face, including the costs of registering a business (equivalent to a poor merchant’s annual income) and the lack of a framework to accommodate bankruptcy, which results in many poor business people being sent to prison.

To address these concerns, Sullivan recommended mobilizing small and medium business owners through associations, as CIPE does by helping the Federation of Economic Development Associations (FEDA) in Egypt. The CDDRL recently published a case study on CIPE’s work with the FEDA, “Economic Reform and Democracy in the MENA Region: A Case Study of CIPE’s Projects in Egypt and Lebanon.”

The bottom line, as I believe all panelists would agree with Diamond, is that “political freedom must be accompanied by economic freedom and sustainability,” and much more must be done to advance dialogue on identifying economic reform solutions. Where should one begin, given the need for far-reaching reform in both economic and political spheres? Begin by listening, as Sullivan advised. Engage citizens in dialogue through associations and other fora, and learn how they themselves conceive of dignity, their interests, and their future.