Beyond the Barrel: A Story Banished in Washington

As the Gulf region experiences plunges in oil prices, new goods and services are needed to diversify the economy beyond hydrocarbon production. Now is the time for both government and corporate entrepreneurship responsibility.
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Petrochemical industry facilities in the desert of Bahrain, Middle East
Petrochemical industry facilities in the desert of Bahrain, Middle East

Whether walking cobbled souk paths or marbled ministry halls, the future of Middle East economies is being carried everywhere in the pockets of the region's residents. With processing power greater than what NASA used to put the first man on the moon, today's smartphones have an unparalleled capacity to turn thought into reality.

The news on the region has certainly been saturated with fear and conflict, however, truth be told that very few of these countries are immediately affected by strife and the real issues the region is tackling regard development and climbing up the ladder in global competitiveness.

It has been predicted by 2020, over two-thirds of the region will be internet capable or possess a smart mobile device. Seventy-eight of the generation born between 1977-1997 prefer the Internet to TV. This rise in tech has led to a surge in information accessibility, ushering a new transformative group; "The Participation Generation."

According to Atlantic Council's Middle East Economic Recovery and Revitalization Report by Christopher Schroeder and Sherif Kamal, this Participation Revolution means universal access to the world, having the same knowledge as everyone else at their fingertips despite borders, leading to an influx of idea sharing and digital collaboration.

According to the report, 90 percent of young citizens in the region believe internet access can help them realize their career ambitions and over 40 percent of them aspire to start their own business. Remarkably, information sharing brought by tech has already begun to reshape the mindset of individuals; to create, dream, and innovate beyond, returning back to their rich culture of entrepreneurship.

The Youth, Tech, and Entrepreneurship hearing at The Atlantic Council convened bipartisan by Madeline Albright and Steve Hadley stressed the importance for Middle East governments to encourage skills critical to the 21st Century. This means redesigning laws and education systems that promote critical thinking. With today's technological and communication advancements, there has not been a more advantageous time of individual empowerment and an ability for anyone to change the fate of the future.

I spoke with Christopher Schroeder, Executive in Washington, Venture Investor and Author of Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, on the future of the Middle East, who joined Madeline Albright in convening the discussion.

With vast experience in the field, I asked him if he witnessed any notable changes in attitude towards entrepreneurship. He shared that his greatest exposure to this is the United Arab Emirates: "Which has not only leapt beyond many nations in offering government services utterly enabled by technology, but is walking the talk of encouraging men and women to create businesses and to innovate. When the remarkable Sheikh Mohammed bin Rashid Al Maktoum recently noted that the UAE will celebrate "the last barrel of oil," he sends a huge signal to his country, the region and to the world what is coming."

The United Arab Emirates is aggressively leading the region in fostering an entrepreneurial ecosystem, Schroeder added that this is a clear model oil economies have access to.

Although there have been great leaps in entrepreneurship, there are ways to go. One challenge that Schroeder emphasized was the need for educational systems geared towards the flourishing of new enterprises in the 21st Century.

The 2007 International Bank for Reconstruction and Development Report found that regionally, the Middle East spends a higher percentage of their GDP on schooling than almost any emerging market with similar levels of per capita income. The predicament here is not the quantity allocated, but both the quality and relevant application of the education to 21st Century demands.

An additional challenge pointed out by Schroeder was the rule of law. "On the rule of law, the guide lines are pretty basic -- does policy support the freest movement of people, ideas, goods and services and capital predictably and sustainably?" Schroeder cites the UAE as a prime and aggressive model in the region.

I would like to draw attention to another challenge impeding entrepreneurship to flourish in the region, and that is sponsorship systems.

Having lived abroad in the Gulf for several years, I always admired the job security that governments ensured for their citizens. An example being that most university students are sponsored by a company, in Qatar that may be Exxon, The Ministry of Foreign Affairs, and so on. Upon graduating, the individual must work several years with their sponsor in order for the tuition to be covered.

However, with that, there is a downside, which goes in hand with entrepreneurship. Entrepreneurship requires critical thinking, flexibility in thought, ability to change career paths, and creativity, however if a student goes into university with a sponsor and then upon graduation realizes their heart is set on something else, it is hard for them to change paths at the most pivotal part of their life. As this is a time in their life where they have space to creatively think, and greater ability to pick up on current trends.

Sponsorship is good, however, I would propose greater flexibility within them and other methods around paying off sponsorships if one chooses to switch career paths. Possibly multiple companies can have exchange programs amongst eachother for sponsored citizens seeking to change paths. This not only makes for a happier and ambitious individual but strengthens the company, as it ensures each company has employees who are passionate and driven -not just ones pressured to because their sponsors. As for those who graduate with a sponsor but desire to be an entrepreneur, potentially sponsors can let the individual experiment on his own for a couple years, and if his startup succeeds he can pay the tuition back in increments, and if not, he can simply work for his sponsor after. Government can step in here with a consistent set of laws that would give an individual an opportunity to cultivate his ideas into a reality.

According to the 2012 IMF Regional Economic Outlook: Middle East and Central Asia Report, "More than half of all young people in oil-exporting countries would currently rather work in the public sector than in the private sector, which leads them to seek qualifications geared to public-sector hiring at the expense of skills pertinent to the private sector."

If government reduces employment, innately, more individuals will seek to develop skills relevant to the private sector, thus preparing them for business and entrepreneurial pursuits.

Decision-making and obtaining skill sets one feels useful for his future are essential traits that build an entrepreneurial ecosystem. For the Gulf, small adjustments like this could breathe innovation and capital into economies.

A culture of entrepreneurship is indeed growing, however, governments should continue to look further into the rule of law, educational systems, sponsorship systems and outdated practices in order to make sense of how to tap into their human capital to the fullest; as an entrepreneurial encouraged culture reduces the sensation of complacency. As a society should never be complacent; complacency is not competitive.

Around the Gulf, many initiatives have taken shape and are being brought to the forefront of discussions.

Qatar has QBIC, an incubation center that provides support to entrepreneurs and already existing businesses, and has now recently launched its first tourism specific incubator for startups last month, realizing the importance of shielding the country from oil price fluctuations. The UAE has the Dubai Silicon Oasis Authority, led by a visionary board banking on entrepreneurship as the future of the economy, which provides services from mentoring smaller startups to providing venture capital funding. Additionally, Schroeder's and Kamal's Economy Recovery and Revitalization Report cites UAE's Gyem as an important enterprise "that teaches youth how to solve problems in their communities, and has trained over 2,500 young people in empowerment, innovation, and best practices in social entrepreneurship."

Chairman of Wamda and Founder of Aramex, Fadi Ghandour, who also joined Madeline Albright and Christopher Schroeder at Atlantic Council's hearing, shared that Saudi Arabia is also on board with fostering entrepreneurship:

"Riyadh Valley is the incubator and accelerator of King Saud University in Riyadh. They are investing in human sciences, future technologies, and renewable energies. As well as another recently launched entrepreneurship center called Sheraa at the American University of Sharjah."

These incubators and accelerators have an ultimate goal of promoting economic diversity and helping oil economies transition into knowledge-based economies.

These initiatives will manifest the Participation Generation's ideas into reality, where local brands will be created to improve their countries, and products and services will be developed to allow the region to maintain relevance in this interconnected competitive world.

As the Gulf region experiences plunges in oil prices, new goods and services are needed to diversify the economy beyond hydrocarbon production. Now is the time for both government and corporate entrepreneurship responsibility. We find that governments tend to focus on job creation programs, when in reality, naturally jobs would be the byproduct of succesful startups and new industries twofold.

An energetic entrepreneurial ecosystem is unfolding in the region, and will be the game changer if stakeholders continue to prioritize it on their agendas. With proper care and investment in entrepreneurship, the last barrel of oil will not be mourned, rather celebrated.

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