With a vast amount of natural resources and increasing oil prices, the Middle East is a goldmine for start-up businesses and foreign direct investment (FDI). According to Ernst & Young, the number of FDI projects in the Middle East increased by 7.8% in 2011 and it boasts many attractions for entrepreneurs including one of the youngest and wealthiest populations in the world, solid economic foundations supported by government policy and investments, and a large expat community. If you are someone who is ambitious, talented and has the ideas, energy and patience to build an empire from scratch, you should consider taking advantage of the numerous opportunities in the construction, real estate, travel and hospitality and mining sectors in the Middle East.
Emerging markets such as Egypt and Jordan in particular are proving successful. Reuters reported that a start-up competition sponsored by Google and Ebda2 for entrepreneurs in Egypt attracted 4,200 applicants. With more than 2.3 million Egyptians working in the technology sector, over 35 million active internet users and over 90 million mobile users, there is great potential for start-up businesses in the ICT sector in Egypt.
Similarly, the ICT sector in Jordan has grown at an average of 25% per annum and contributes to 14% of the country’s GDP. The blooming ICT sector has also caused ripple effects to other sectors such as manufacturing, health and financial services. The number of female entrepreneurs is additionally increasing in Jordan. Randa Ayoubi, the Founder and CEO of Rubicon Group Holding, won Ernst and Young’s Jordan Entrepreneur of the Year in 2011; Randa started the business from scratch 18 years ago and the company is now one of the industry’s well-known digital content production houses in Jordan.
Finance for Entrepreneurs
Entrepreneurs can face some barriers to growth in the Middle East and one challenge can be raising capital. Approaching friends and family is usually the first choice. If entrepreneurs require additional capital, other financing options include securing funding from financial institutions, venture capitalist or angel investors. In order to impress potential investors, entrepreneurs need a well-written business plan that describes the business objectives, products and services, revenues, and the marketing strategies to meet the goals and targets. In Jordan, entrepreneurs can also approach Endeavour Jordan, a global non-profit organisation that provides strategic advice, mentorship and access to key networks for entrepreneurs. In Egypt, the Global Entrepreneurship Program (GEP), a U.S. department-led initiative designed to promote entrepreneurship around the world, has organised exchanges between investors, entrepreneurs and government leaders in the U.S. and Egypt.
Managing finances is also a challenge for those expanding a business in the Middle East. You will need to need to have the right financial management tool in place to make any business successful. Many international banks and financial institutions have set up regional offices and subsidiaries in the Middle East to increase their market share and serve their customers better. Therefore, if you bank with international banks like HSBC in Egypt and Jordan, they offer asset risk management services that include a current account, credit and debit cards, loans and access to a money market fund.
Encouraging entrepreneurship in the Middle East will be a challenge for governments in the region. It requires a combination of social, educational and policy changes to create an attractive climate for entrepreneurs. With an increasing educated young workforce and high youth unemployment rate, the Egyptian and Jordan governments face an important task. They need to diversify their economies to more export-oriented, high-tech and knowledge-driven sectors so as to create more and better paying jobs. Recognising the private sector as the engine of economic growth and job creation, the Egyptian and Jordan governments have introduced many incentives to create an attractive investment climate for FDI, eliminating barriers for start-up businesses. For instance, in the free zones in Jordan, investors and entrepreneurs are exempted from income tax on profits from goods exported out of the country, tax on profits for goods sold within the free zone and in the domestic market, and tax on buildings and real estate construction within the free zone.
The economic growth in the Middle East is remarkable and despite the challenges, entrepreneurs should not miss out on the opportunities to set up businesses there, particularly in emerging markets.