Tag Archives: entrepreneurship ecosystem

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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Startup Rising: Entrepreneurship Ecosystems in the Middle East & North Africa

Jordanian entrepreneur and investor Fadi Ghandour. (Photo: 500 Startups)

Jordanian entrepreneur and investor Fadi Ghandour. (Photo: 500 Startups)

In 1981, Fadi Ghandour returned to Jordan shortly after graduating from George Washington University in Washington, DC. He took a job at a rental car company in Amman, but at twenty-two, Ghandour was restless. His family was in the airline business – his father Ali Ghandour founded Royal Jordanian in 1962 – but Fadi could not wait to let his own passion for entrepreneurship take flight. In 1982, Fadi started Aramex and offered to deliver packages in the Middle East on behalf of global courier services – Airborne Express, Emery, and Federal Express.

As a neutral handler for these competing global players, Fadi and his partner Bill Kingson learned from the very best on how to grow their company. Over the next thirty years, Aramex navigated a region marred by political risks and labyrinthine bureaucracy, and grew to become the largest and most respected courier company in the Middle East and North Africa (MENA) region. Now, Aramex has more than 10,000 employees in over 60 countries with a reported $17.5 million in profits in the second quarter of 2012.

In his new book Startup Rising, author Christopher Shroeder describes Fadi Ghandour as “the [entrepreneurship] ecosystem builder” in the Middle East. Indeed, Fadi was a pioneer who saw opportunities in unexplored markets. Back then, there was no private equity or venture capital.

When the Internet and email were introduced, Fadi became the first to invest in the first all-Arabic portal Maktoob in the region, because “there is no wasta in the internet” – wasta being the Arabic word for the system of elite connections in politics and business that is prevalent in emerging markets such as the Middle East. Because of technological breakthroughs such as the Internet, entrepreneurs were able to commercialize their ideas before regulations caught up. In 2008, Yahoo! Bought Maktoob for $175 million.

Startup Rising is perhaps the first major portrait of the startup scene in a region that is often deeply misunderstood. It is inspiring and personal. (Shroeder, an internet entrepreneur himself, has befriended many entrepreneurs featured in this book through the Young Presidents Organization). It describes the desire of young people to have social impact through their business ventures. It also tells the story of how businesspeople have used technology, such as mobile phones, social networking websites, and solar panels, to work around cultural barriers and institutional challenges.

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Are Entrepreneurs Born or Made? Lessons from Eddie Murphy

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By Maggie Bohlander and Ricky Chen

With every holiday season, we have witnessed that annual ritual of families and friends gathering to watch those heartwarming yuletide films, Love Actually, It’s a Wonderful Life, and A Charlie Brown Christmas. One that may not get so much play time is John Landis’s Trading Places, a dark 1983 social comedy starring Eddie Murphy, Jamie Lee Curtis, and Dan Aykroyd.

In the film, two ageing millionaires, the Duke brothers, engage in a bet over whether — given the right environment and upbringing — any disadvantaged person can blend in as a member of America’s upper echelon. Or whether, on the other hand, given the wrong circumstances, a member of the 1 percent can fall off the social ladder as easily as the disadvantaged can climb it. This is the timeless debate: nature vs. nurture.

The same debate plays out in entrepreneurship. Are entrepreneurs born or are they made? Why do some countries boast many startups and small- and medium-sized businesses while others do not?

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Unlocking Entrepreneurial Potential in Developing Countries

Govinda explains the merits of a high-end cookstove to a potential customer.

Govinda explains the merits of a high-end cookstove to a potential customer. (Photo: Think Africa Press.)

The adjective “unskilled,” like many words favored by economists, can be highly misleading. Trying to survive on the streets in a Kenyan slum, for example, takes a lot of skills — just not ones that are easy for the market to value and reward.

Take Alex Govinda, for example: as a homeless youth in Kwangware, on the outskirts of Nairobi, he had to hustle every day just make enough money to eat, collecting and selling scraps — and sometimes stealing shoes or mobile phones, too. Now he is an expert salesperson, using his skills to hawk high-quality goods to his neighbors and earning a decent living in the process, thanks to a unique arrangement set up by an American NGO called LivelyHoods.

Govinda’s situation — and the solution LivelyHoods came up with to solve it — are a perfect illustration of the institutional forces holding millions of poor people around the world back to from reaching their true potential.

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Building Entrepreneurship Ecosystems

Entrepreneurship plays a key role in every economy on earth, whether they are sanctioned or not (even in North Korea!) By innovating, providing jobs and creating wealth, the businesses that these entrepreneurs build play a huge role in the development of the economy.

But what makes some places more successful than others in encouraging start-up and risk-takers? Well, it has everything to do with the “entrepreneurship ecosystem.”

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