Article by our Digital Learning and Youth Leadership Program Lead, Hamza Arsbi
The COVID-19 crisis shocked economies across the world. For the MENA region, it was a call to action for many in government, corporate, and entrepreneurship sectors to speed up the digital transformation. However, there are a number of systemic challenges that are hindering the digital revolution, including a shortage of digital skills in some countries, a lack of internet freedom, limited technology-oriented policies, as well as research and development investments.
The Core Challenges
1- Limited Government Support for SMEs
The support provided by governments in the region to help the economy rebound from the COVID-19 crisis has not prioritized SMEs. Leaving entrepreneurs to fend for themselves. The Dubai Chamber of Commerce has projected that around 70% of companies based in the Middle East’s business hub could file for bankruptcy due to COVID-19.
This is why governments are urged to examine stimulus packages or other alternatives such as rent freezes, loan support, and tax deductions.
2- The Lack of a Supportive Ecosystem
Sebastian Castelier at Al-Monitor reported that bank credit to SMEs in the Gulf region was already the lowest in the world before the crisis. As bankruptcies increase, banks are expected to limit lending to struggling businesses. This can be eased if governments step in to guarantee loans.
Luckily, there are some non-bank organizations stepping in to support as well. For example, the Sharjah Entrepreneurship Center launched a $272,000 startup solidarity fund to “enable high-potential startups to extend their cash runways.”
3- Loss of International Talent
A challenge faced in most MENA countries outside of the Gulf states now is reaching even those larger economies. With governments focusing aid for their countries’ nationals, deprioritizing foreign workers, it is feared that around 3.5 million expats could lose their jobs across the Gulf. This loss means a major economic shift as Gulf countries have always relied on international experts, professionals, and workers to grow their businesses. Finding ways to maintain the know-how and expertise of vital foreign nationals could be a key to an economic rebound.
As the world begins to enter the post-pandemic era with all its changes, the MENA region is also entering a post-oil era of economic growth. This era depends on entrepreneurship and SMEs to strengthen innovation and the international competitiveness of economies. Realizing this and building a supportive ecosystem will ensure economic growth.