Article by our Digital Learning and Youth Leadership Program Lead, Hamza Arsbi
Digital entrepreneurship has seen a rise in the Middle East and North Africa (MENA) region, recognized for its potential as one of the most connected regions in the world, geographically, it enjoys a privileged location, and its young and increasingly educated population have embraced digital activity, in 2017, research revealed that 88% of the Middle East’s population were online daily, and 94% of the population owned smartphone device, with 38% of the population actively engaging with social media platforms, these rates were largely attributed to the youthful populations in the region, with 60% of the MENA region’s population falling under the age of 30, and 30% falling between the ages 15-29.
The high levels of engagement with global content and the lack of local content and utilization of digital tools by local entrepreneurs and small and medium enterprises (SMEs), highlighted the potential for investment in digitizing several sectors as well as the need to engage with and empower local businesses and efforts. Analyses conducted at this time also pointed policymakers and global investors to the social and economic gains of encouraging women-led businesses and providing capital and training for young entrepreneurs to bypass some key identified barriers in engagement such as fear of risk-taking, lack of confidence or knowledge required. For example, in 2017, Facebook announced the launch of #shemeansbusiness in Dubai which aimed at training women entrepreneurs, women-owned and led businesses to utilize Facebook and Instagram for their business, this was a move targeted to increase women’s engagement in digital business and spaces, as it normalized women’s involvement in these platforms beyond the cultural stigma associated with social media sites.
The effects of such digital development strategies were considered widely influential, digital spaces were filling up with creative entrepreneurs eager to harness the economic potential from music to art, auctions to e-commerce, currently, there are millions of regional home-based businesses utilizing Facebook and Instagram connect to reach their customers, propelling the region into success in artificial intelligence, arts and entertainment, education and training, and travel and social networking. Embracing digital entrepreneurship allowed the creation of more inclusive digital spaces, leading to tangible economic growth as well as influencing political involvement and social change within societies in the region.
Although the region has benefited from the rise of digital entrepreneurship, certain challenges emerged as a result of the accelerated growth. Firstly, digital start-ups have low barriers to entry, have fluid boundaries, and do not require expensive equipment, there are also more funding opportunities as they are primarily funded by venture capital and have the utility of crowdfunding. The expansion of digital opportunities and digital spaces has created a competitive eco-system in which services or products are constantly changing and evolving, this creates issues regarding stability, and the ability of entrepreneurs to plan and sustain business strategies, leaving employee roles as ambiguous and undefined, with no clear tasks assigned to employees. Success in digital start-ups requires specific skills and talents such as digital literacy and the ability to maintain innovative services or products, however, due to the high volume of competition, success is rarely sustainable.
Institutional barriers also impact engagement in digital entrepreneurship, while countries such as the UAE and Saudi Arabia have successfully integrated digital entrepreneurship and digital development into their policies, others remain stagnant with challenges related to instability and lack of infrastructure and related education, moreover, there remains a struggle between governing and embracing digital business and spaces. While there are theoretically multiple funding opportunities for digital entrepreneurs to take advantage of, these opportunities are not always available with transparency and are often available to entrepreneurs who are capable of navigating legislation, for example, while crowdfunding is becoming an important staple in digital business, banks might not allow customers the option to access funds obtained through crowdfunding platforms.
As an attempt to grow and encourage digital business and entrepreneurship, policymakers partner with global investors as the investors look to grow their business in the region, this often hinders local entrepreneurship efforts as global well-established companies introduce their products or services in the region, often gaining them a monopoly on the market due to the experience and resources they possess which are not available to local entrepreneurs.
The MENA region enjoys different advantages that would allow it to diversify and grow economically through digital entrepreneurship if utilized successfully, however, in order to reach this potential radical reforms may be required to ensure balanced scaling and inclusive growth, it is important to recognize and address the barriers to growth and maintain engagement and support for local entrepreneurs if potential socio-economic benefits are to be maximized.
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