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.
Aksana Miankova of Belarus celebrates her gold medal win in 2008. (Photo: AP)
Starting this Friday, eyes will be glued to the best athletes from around the world as they compete for the gold at the London 2012 Summer Olympics. At the Olympics, athletes are more or less equal. They all stay in the same buildings, aim for the same prizes, and don their country’s uniforms. At events, they start from the same line and have the same number of chances to win by running, swimming, or biking the same distance.
When athletes return home after an intense, adrenaline-filled two weeks, however, the opportunities available to them vary greatly. Members of the 2008 Belarusian Olympic team, who took home an unprecedented 19 medals including four gold, returned to a country ruled by a repressive dictator. In Belarus, independent media is practically non-existent, human rights activists are routinely persecuted, and it takes 254 days to get electricity for a new business.
The NYT reports that Saudi Arabia is pushing forward with a $500 billion investment to construct six futuristic cities meant to become the country’s 21st century industrial hubs. According to the plan championed by King Abdullah, these steel-and-glass cities currently under construction will emerge as leading manufacturers and exporters of products ranging from plastics to cell phones. The stated purpose is to diversify the Saudi economy away from oil and to combat youth unemployment propelled by the rapid population growth.
Indeed, the Saudi population, now at about 24.5 million, is predicted to reach nearly 40 million by 2025. Creating enough jobs to incorporate all of the new entrants into the labor force is an urgent necessity. But is building new industrial cities really the answer? The Saudi Arabian General Investment Authority estimates that they will add $150 billion to the Saudi GDP by 2020 and create one million new jobs. Yet skepticism toward their ability to address the unemployment crisis is warranted.
First, the continued expansion of the Saudi economy is very much dependent on high prices of oil. They in turn fuel inflation, which reached the highest rate in over a decade (6.5%) last month, making even staple foods such as rice or milk hard to afford for ordinary Saudis. In order to quell growing public discontent, wages are being driven up. Saudi government employees are expected to receive a 30% salary increase and some private companies already declared pay hikes of up to 40% in an attempt to balance the steep rise in consumer prices. This calls the international price competitiveness of the envisioned Saudi industrial expansion into question.