Russia-Ukraine crisis poses a serious threat to Egypt

Russia-Ukraine crisis poses a serious threat to Egypt

The top featured image of Reuters is not only for illustration but meant to draw some attention to one of the most important cause of this traumatic situation of Egypt as well as that of many countries in the MENA region. Russia-Ukraine crisis poses a serious threat to Egypt, that with an over-population still on the rise, has a limited but diminishing arable lands area. Building on farmland coupled a certain lack of control of all real estate developments bear on the lower social classes; those supposed to be at the forefront of food production.


Russia-Ukraine crisis poses a serious threat to Egypt – the world’s largest wheat importer

By Kibrom Abay, The International Food Policy Research Institute (IFPRI) ; Clemens Breisinger, The International Food Policy Research Institute (IFPRI) ; David Laborde Debucquet, The International Food Policy Research Institute (IFPRI) ; Joseph Glauber, The International Food Policy Research Institute (IFPRI) , and Lina Alaaeldin Abdelfattah, The International Food Policy Research Institute (IFPRI)

Russia-Ukraine crisis poses a serious threat to Egypt
Egyptian Prime Minister Mostafa Madbouly pledged to keep food prices in the fair range amid the ongoing conflict between Russia and Ukraine. Photo by Ahmed Gomaa/Xinhua via Getty Images

Russia’s invasion of Ukraine could create a global food security crisis. It is disrupting agricultural production and trade from one of the world’s major exporting regions. This threatens to drive rising food prices still higher and create scarcity, especially for regions most dependent on exports from Russia and Ukraine.

Particularly affected is the Middle East and North Africa – or MENA – region. These Arab countries consume the highest wheat per capita, about 128 kg of wheat per capita, which is twice the world average. More than half of this comes from Russia and Ukraine.

As agricultural and food security experts, we have explored the impacts of the war on the wheat market, focusing on Egypt.

Wheat is a key food item for Egypt, representing between 35% and 39% of caloric intake per person in the last few years. And wheat imports usually account for about 62% of total wheat use in the country.

Despite the government’s efforts following the global food crisis in 2007 to 2008 to diversify sources of cereal imports, the vast majority of cereal imports, between 57% and 60%, come from Russia and Ukraine.

A number of key policy actions are needed that will reduce dependence on Russia and Ukraine in the short term. This will help Egypt’s agriculture and food system to become fairer and more resilient – an absolute necessity in the context of looming threats from climate change, water scarcity and conflict.

Black Sea import disruptions

Egypt is the world’s largest importer of wheat. It imports a total of 12 to 13 million tons every year. With a population of 105 million, growing at a rate of 1.9% a year, Egypt has become increasingly dependent on imports to meet food needs.

Imports of cereal crops have been steadily increasing over the last three decades at a rate higher than that of domestic production.

Egypt’s wheat market and trade regime is largely controlled by government agencies. The General Authority for Supply Commodities, operating under the Ministry of Supply and Internal Trade, usually handles about half of the total wheat imported, while private trading companies handle the other half.

Government agencies are already feeling the impact of the war, which has led to recent cancellation of tenders due to lack of offers, in particular from Ukraine and Russia.

Still, there is no fear of shortage in the coming weeks. In early February, Egyptian MoSit Minister Aly Moselhy said that the country held sufficient inventory to cover five months of consumption. But the outlook beyond that is less clear.

With the abrupt closure of Ukraine ports and current maritime trade in the Black Sea – wheat is transported across the Black Sea – Egypt will have to find new suppliers if Ukraine is unable to export wheat this year and if sanctions against Russia impede food trade indirectly.

Such opportunities are, unfortunately for Egypt, limited.

Limited options

Currently, wheat producers in South America – Argentina in particular – have larger than usual surpluses from the last harvest available to export. Overall, however, it will be difficult to expand the global wheat supply in the short run. About 95% of the wheat produced in the European Union and about 85% of that in the United States is planted in the fall, leaving those regions little room for expanding production in the near term.

In addition, wheat competes with crops such as maize, soybeans, rapeseed, and cotton, all of which are also seeing record high prices. In combination with record-high fertiliser prices (also exacerbated by the Russia-Ukraine conflict), farmers in some regions may favour less fertiliser-intensive crops, such as soybeans.

About 20% of world wheat exports come from the Southern Hemisphere (primarily Argentina and Australia) which typically ship from December through March.

In addition, Canada and Kazakhstan are large producers that harvest in the fall. Over the coming year and beyond, their exports may be able to make up much of the deficit created by the loss from Ukraine production, but at a higher cost due to longer shipping routes and increased transportation costs triggered by higher oil prices.

Rising prices

Rising global wheat prices hit a 10-year high at US$523 per ton on March 7. This is a serious problem for the Egyptian government’s budget and a potential threat to consumer purchasing power.

Even just before the outbreak of the Russia-Ukraine war, prices of commodities in Egypt were increasing. The war has started adding further pressure and consumers are feeling these impacts.

Some countries have already imposed export restrictions in response to rising prices. These trends, coupled with disruptions in Russia’s and Ukraine’s exports, will likely add further upward pressures on prices going forward. Even under the most optimistic assumptions, global wheat prices will remain high throughout 2022 and the trend is likely to persist through 2023, given limits on expanding production.

The Egyptian government has been spending about US$3 billion annually for wheat imports. The recent price increase could nearly double that to US$5.7 billion. This, in turn, threatens Egypt’s Baladi bread subsidy program. This program provides millions of people with 150 loaves of subsidised bread per month. About 90% of the production cost is borne by the government at an annual cost of US$3.24 billion. The program requires about 9 million tons of wheat annually about half of the total wheat consumption in Egypt and three-quarters of Egypt’s wheat imports.

Policy options

In the short term, Egypt needs to diversify its food import sources.

The government is actively exploring this option, while also increasing planned procurement from domestic sources by 38% over last year’s figure. The government has just announced a new and relatively higher buying price for domestic wheat from farmers.

In addition, the government has decided to ban exports of staple foods, including wheat, for three months to limit pressure on existing reserves.

In the long term, Egypt needs to explore options for reducing the gap between domestic supply and demand. Here are some of its options.

Boosting domestic wheat production will be challenging, as Egyptian farmers are already achieving high yields, relying on high input and water use. While there are some opportunities to expand arable land, modernise farming systems and improve water management practices, the country’s principal focus should be to adapt the farming system to address imminent water shortages and climate change threats and increase resilience, rather than unsustainably expanding production.

Reducing the high consumption and waste of bread has significant potential. Egyptians on average consume about 145 kg of wheat per capita annually – double the global average.

Improve the efficiency and targeting of the Tamween food subsidy program. This provides beneficiaries with ration cards for various foods. The program absorbs a large share of imported wheat and vegetable oils. Reforming it could reduce inefficiencies in the wheat sector and the cost of running the program.

In conclusion, the Russia-Ukraine war poses a big challenge to global food security and particularly difficult obstacles for Egypt. The short-term and long-term impacts will of course depend on how the war unfolds and affects exports from Russia and Ukraine over the coming months and years. Impacts on Egypt will also depend on other countries’ responses to global price hikes and cereal shortages.

Egypt can mitigate some of these impacts with short-term actions as outlined above, but major global shocks like the Russia-Ukraine war are also reminders of the need of longer-term reforms and solutions.

Kibrom Abay, Research Fellow, The International Food Policy Research Institute (IFPRI) ; Clemens Breisinger, Senior Research Fellow, The International Food Policy Research Institute (IFPRI) ; David Laborde Debucquet, Senior Research Fellow, The International Food Policy Research Institute (IFPRI) ; Joseph Glauber, Senior Research Fellow, The International Food Policy Research Institute (IFPRI) , and Lina Alaaeldin Abdelfattah, Senior Research Assistant, The International Food Policy Research Institute (IFPRI)

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Fintech offers transformative change for financial services

Fintech offers transformative change for financial services

Arab News published article by JARMO T. KOTILAINE is an eye-opener on the currently trendy of the ongoing rush towards another type of gold. Digital this time and not good old solid bars. Does Fintech offer transformative change for financial services? Would the MENA Region be the next Fintech hub? Would it be sustainable? Let us find out.

Transformative change for financial services through Fintech

Fintech has become one of the catchwords of our time, shorthand for creative innovation and potentially transformative change in the way financial services are provided. It has spawned a multitude of start-ups and pushed many incumbent financial institutions to review their operating models.

The restrictions on economic activity during COVID-19 further validated and popularized many of these new ideas, as more and more people resorted to home delivery, touchless payments, and other solutions that reduced physical contact.

Technological change proved effective in driving the growth of disruptive innovators, protecting — or even increasing — the margins of banks, and allowing many companies to generate profits at a time when their survival was threatened.

To what extent, though, have we truly unleashed the transformative potential of fintech? Better payment systems and digitalized transactions are important, but ultimately represent the application of digital technology to something that was happening already.

A very different situation occurred in some developing countries where the rise of fintech has become a potent tool for financial inclusion as new providers have levered widely available mobile telecommunications technology to compensate for the shortcomings of formal financial intermediation in a widely accessible, low-cost manner.

Of course, some of this has been seen in the Gulf, in the form, for instance, of new mechanisms for the remittance payments of unbanked laborers.

How could fintech deliver even more? The true promise of technology stems from its ability to lower costs and boost transparency. Meaningful progress in these areas can deliver substantial benefits in terms of increasing access to finance and of doing so more cheaply.

Many countries have now capitalized on open banking to foster more competition among lenders. Technology can be used to allow customers to compare services and products between banks. This is pushing service providers to compete on price and quality.

Technology can also make it easier to structure complex transactions and products which can not only reduce their prices but also helps broaden the range of available solutions.

Digitalization is reducing the cost and time of on-boarding new bank customers. By decentralizing financial service provision, technology is enabling more business ventures and projects to raise capital through novel mechanisms such as crowdfunding.

Transparency is an issue of particular importance and potential. Perhaps the most profound change delivered by digital technology stems from the ease with which data can be collected and analyzed. This matters because informational asymmetries have been among the main factors restricting access to capital.

Central banks have used sometimes cumbersome regulatory and reporting requirements as a way of addressing the problem. Risk managers at banks are often forced to cite limited or unverifiable information as an argument for restricting access to credit or for pushing up their cost.

In principle, technology could be used to obviate some of the tasks currently pursued through regulation and supervision by making it easier to gain access to all the relevant data more accurately and swiftly. It should also make it easier and faster for customers to build reliable credit profiles which could be used to assess their eligibility for different products.

Again, open banking is being used by more and more lenders to access customer data and evaluate their financial history through hard data rather than assumption or generalization on the basis of potentially inaccurate or misleading applications.

Easy access analytics can help customers make more informed and efficient decisions. For instance, more investment platforms now provide access to a wide-range of investment options on a global scale, along with analytics on their performance and risks. They have reduced the costs of trading and dramatically boosted the speed of execution. Such platforms can also be used to build financial literacy, for instance through tools for financial projections or scenarios.

Of course, technology cannot overcome human myopia and wishful thinking. The way forward must be to build ways that properly account for data privacy and security. Today, though, the technological toolkit is more versatile than ever.

Progress is already helping us reimagine financial service provision, but much more is both needed and possible. Virtually every independent assessment of the financial services sector in the Gulf comments on constraints on access to capital, which in turn limit financial inclusion, economic diversification, and business growth.

Making the most of the opportunities presented by technology is thus not only a business opportunity but a chance to drive the economic paradigm shift, whose success, in large part, hinges on financial services. With governments repositioning themselves, the core task of financial institutions, the pooling and efficient allocation of capital, will matter more than ever. Doing it faster, more accurately, and for more customers will be an important driver of success.

• Jarmo Kotilaine is an economist and strategist focusing on the Gulf region. He writes on issues ranging from economic development to changes within the corporate sector.

What is COP26? Here’s how global climate negotiations work

What is COP26? Here’s how global climate negotiations work

This article republished from The Conversation is by Shelley Inglis, University of Dayton, Ohio, USA. It looks at the forthcoming international gathering of Glasgow on Climate Change and on the potential confrontations from a practical point of view and elaborates in its own way on What is COP26? Here’s how global climate negotiations work.

The image above is about U.N. climate summits that bring together representatives of almost every country. UNFCCC

What is COP26? Here’s how global climate negotiations work and what’s expected from the Glasgow summit

Over two weeks in November, world leaders and national negotiators will meet in Scotland to discuss what to do about climate change. It’s a complex process that can be hard to make sense of from the outside, but it’s how international law and institutions help solve problems that no single country can fix on its own.

I worked for the United Nations for several years as a law and policy adviser and have been involved in international negotiations. Here’s what’s happening behind closed doors and why people are concerned that COP26 might not meet its goals.

What is COP26?

In 1992, countries agreed to an international treaty called the United Nations Framework Convention on Climate Change (UNFCCC), which set ground rules and expectations for global cooperation on combating climate change. It was the first time the majority of nations formally recognized the need to control greenhouse gas emissions, which cause global warming that drives climate change.

That treaty has since been updated, including in 2015 when nations signed the Paris climate agreement. That agreement set the goal of limiting global warming to “well below” 2 degrees Celsius (3.6 F), and preferably to 1.5 C (2.7 F), to avoid catastrophic climate change.

COP26 stands for the 26th Conference of Parties to the UNFCCC. The “parties” are the 196 countries that ratified the treaty plus the European Union. The United Kingdom, partnering with Italy, is hosting COP26 in Glasgow, Scotland, from Oct. 31 through Nov. 12, 2021, after a one-year postponement due to the COVID-19 pandemic.

Why are world leaders so focused on climate change?

The U.N. Intergovernmental Panel on Climate Change’s latest report, released in August 2021, warns in its strongest terms yet that human activities have unequivocally warmed the planet, and that climate change is now widespread, rapid and intensifying.

The IPCC’s scientists explain how climate change has been fueling extreme weather events and flooding, severe heat waves and droughts, loss and extinction of species, and the melting of ice sheets and rising of sea levels. U.N. Secretary-General António Guterres called the report a “code red for humanity.”

Enough greenhouse gas emissions are already in the atmosphere, and they stay there long enough, that even under the most ambitious scenario of countries quickly reducing their emissions, the world will experience rising temperatures through at least mid-century.

However, there remains a narrow window of opportunity. If countries can cut global emissions to “net zero” by 2050, that could bring warming back to under 1.5 C in the second half of the 21st century. How to get closer to that course is what leaders and negotiators are discussing.

What is COP26? Here’s how global climate negotiations work
Guterres standing at a podium with #TimeForAction on the screen behind him
U.N. Secretary-General António Guterres called the latest climate science findings a ‘code red for humanity.’ UNFCCC

What happens at COP26?

During the first days of the conference, around 120 heads of state, like U.S. President Joe Biden, and their representatives will gather to demonstrate their political commitment to slowing climate change.

Once the heads of state depart, country delegations, often led by ministers of environment, engage in days of negotiations, events and exchanges to adopt their positions, make new pledges and join new initiatives. These interactions are based on months of prior discussions, policy papers and proposals prepared by groups of states, U.N. staff and other experts.

Nongovernmental organizations and business leaders also attend the conference, and COP26 has a public side with sessions focused on topics such as the impact of climate change on small island states, forests or agriculture, as well as exhibitions and other events.

The meeting ends with an outcome text that all countries agree to. Guterres publicly expressed disappointment with the COP25 outcome, and there are signs of trouble heading into COP26.

What is COP26? Here’s how global climate negotiations work
Greta Thunberg raises an eyebrow during a session at COP25
Celebrities like youth climate activist Greta Thunberg add public pressure on world leaders. UNFCCC

What is COP26 expected to accomplish?

Countries are required under the Paris Agreement to update their national climate action plans every five years, including at COP26. This year, they’re expected to have ambitious targets through 2030. These are known as nationally determined contributions, or NDCs.

The Paris Agreement requires countries to report their NDCs, but it allows them leeway in determining how they reduce their greenhouse gas emissions. The initial set of emission reduction targets in 2015 was far too weak to limit global warming to 1.5 degrees Celsius.

One key goal of COP26 is to ratchet up these targets to reach net zero carbon emissions by the middle of the century.

Another aim of COP26 is to increase climate finance to help poorer countries transition to clean energy and adapt to climate change. This is an important issue of justice for many developing countries whose people bear the largest burden from climate change but have contributed least to it. Wealthy countries promised in 2009 to contribute $100 billion a year by 2020 to help developing nations, a goal that has not been reached. The U.S., U.K. and EU, among the largest historic greenhouse emitters, are increasing their financial commitments, and banks, businesses, insurers and private investors are being asked to do more.

Other objectives include phasing out coal use and generating solutions that preserve, restore or regenerate natural carbon sinks, such as forests.

Another challenge that has derailed past COPs is agreeing on implementing a carbon trading system outlined in the Paris Agreement.

What is COP26? Here’s how global climate negotiations work
A man stands in a street market smoking, with cooling towers for a power plant behind him.
Chinese street vendors sell vegetables outside a state-owned coal-fired power plant in 2017. Kevin Frayer/Getty Images

Are countries on track to meet the international climate goals?

The U.N. warned in September 2021 that countries’ revised targets were too weak and would leave the world on pace to warm 2.7 C (4.9 F) by the end of the century. However, governments are also facing another challenge this fall that could affect how they respond: Energy supply shortages have left Europe and China with price spikes for natural gas, coal and oil.

China – the world’s largest emitter – has not yet submitted its NDC. Major fossil fuel producers such as Saudi Arabia, Russia and Australia seem unwilling to strengthen their commitments. India – a critical player as the second-largest consumer, producer and importer of coal globally – has also not yet committed.

Other developing nations such as Indonesia, Malaysia, South Africa and Mexico are important. So is Brazil, which, under Javier Bolsonaro’s watch, has increased deforestation of the Amazon – the world’s largest rainforest and crucial for biodiversity and removing carbon dioxide from the atmosphere.

What happens if COP26 doesn’t meet its goals?

Many insiders believe that COP26 won’t reach its goal of having strong enough commitments from countries to cut global greenhouse gas emissions 45% by 2030. That means the world won’t be on a smooth course for reaching net-zero emissions by 2050 and the goal of keeping warming under 1.5 C.

But organizers maintain that keeping warming under 1.5 C is still possible. Former Secretary of State John Kerry, who has been leading the U.S. negotiations, remains hopeful that enough countries will create momentum for others to strengthen their reduction targets by 2025.

What is COP26? Here’s how global climate negotiations work
Line chart showing pledges and current policies far from a trajectory that could meet the 1.5C goal.
The world is not on track to meet the Paris goal. Climate Action Tracker

The cost of failure is astronomical. Studies have shown that the difference between 1.5 and 2 degrees Celsius can mean the submersion of small island states, the death of coral reefs, extreme heatwaves, flooding and wildfires, and pervasive crop failure.

That translates into many premature deaths, more mass migration, major economic losses, large swaths of unlivable land and violent conflict over resources and food – what the U.N. secretary-general has called “a hellish future.”

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Shelley Inglis, Executive Director, University of Dayton Human Rights Center, University of Dayton

Read the original article.

The Conversation

How one country responded to disappointing Doing Business scores

How one country responded to disappointing Doing Business scores

The following story is about how one country responded to disappointing Doing Business scores to reform its rules and regulations for its own benefit. Would discontinuation of this instrument mean its non-availability to others?

The above image is for illustration and is of iStock.

How one country responded to disappointing Doing Business scores

How one country responded to disappointing Doing Business scores

By Akhtar Mahmood 8 October 2021

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On September 16, 2021, the World Bank discontinued the Doing Business (DB) report, one of its flagship diagnostic products. This action follows what the World Bank called “a series of reviews and audits of the report and its methodology.”

The DB report, published each year since 2004, was one of the World Bank’s most influential reports in recent years. Every autumn, people around the world would wait eagerly and, in some cases, with some trepidation, for its release. Over time, the reports increasingly attracted the attention of heads of governments who wanted to see their countries do well in the rankings.

When the DB report came out in 2015, the Indian government was disappointed. Soon after taking office in 2014, Prime Minister Modi announced his government’s intention to bring India’s ranking into the top 50 within a few years. Several reforms were carried out in the following months, which the Indian government hoped would put India on a trajectory of rapid annual improvements in the ranking. The 2015 report (officially called “Doing Business in 2016”, since the World Bank always gave the report a forward-looking title) indicated only a modest improvement in India’s rank, from 142 to 130.

The World Bank explained to the Indian government that while several reforms may have been enacted on paper, Indian businesses did not report feeling an impact on the ground. Some responded, “What reforms?”, while others heard about the reforms but had not seen improvement on the ground. The reforms could not be officially recognized until the private sector reported real improvements. The World Bank suggested that the government put in place feedback loops to provide real-time information from businesses on whether the reforms were being well implemented. The government, instead of whining further about the scores, started working on such feedback loops. For several regulatory reforms covered by the DB indicators, it started surveying businesses on whether they felt any reform impact on the ground.

From February 2016 to May 2017, the government carried out a series of business-to-government (B2G) feedback exercises and focus group discussions (FGDs) on how much the businesses were aware of the enacted reforms and their views on the quality of reform implementation. Nine B2G feedback exercises were carried out. Topics covered construction permits (three surveys each in Delhi and Mumbai), starting a business (two surveys), and trading across borders.

The exercises revealed several implementation gaps, some major and some minor. An example is construction permitting. A business survey carried out in Delhi in March 2016 revealed the following implementation issues: a) significant lack of agency coordination—architects still need to obtain approvals from up to 10 different agencies; b) some facilities for online payment were not properly implemented and certain fees were still paid manually; c) very low awareness of the online system among users; d) no way to track the status of an application; e) information lacking on documentary and other requirements. In other words, the reforms had not gone far enough to have impact on the ground.

This feedback exercise helped generate several recommendations to address the deficiencies. These were provided to the Municipal Corporation of Delhi (MCD), and most were acted upon. Follow-up feedback exercises in October 2016 and February 2017 validated these actions while generating additional recommendations for further improvement. A similar effort was made in Mumbai.

The impact of these efforts can be seen in the trends in India’s performance on the “Dealing with Construction Permits” indicator. In the Doing Business in 2016 report, India’s ranked 183 on this indicator. Thirty-three procedures were involved taking 191 days according to the indicators. Two years later, the number of days had come down to 144 with a modest improvement in the rank to 180. The more substantial improvements came the following year when the DB report published in October 2018 indicated a reduction in the number of procedures and days required to 18 and 95 respectively. Still a long way to go but enough to propel India’s ranking on this indicator to 52. While all this improvement cannot be attributed to the feedback exercises alone, it is possible to trace a substantial part of this improvement to actions taken as a result of these exercises.

The Indian government also recognized that the DB indicators did not cover many regulatory interfaces that created problems for businesses and that the indicator measures were based on conditions in just two cities, i.e., New Delhi and Mumbai. Thus, in parallel to its efforts on the DB front, the Indian government embarked on an ambitious regulatory reform program at the state-level covering all states and union territories in the country. A long list of regulatory reforms was identified covering several regulatory areas, and state governments were instructed to carry out the reforms. Called the Business Reforms Action Plan, the program started in 2015.

Progress was monitored through annual indicators that ranked states according to their performance on implementing the reforms. The first such indicators, published in 2015, did not take into account business feedback. However, seeing the usefulness of the feedback exercises carried out as part of the DB program, the government changed the state-level reform indicators in 2018 by making a substantial part of the indicator scores dependent on business feedback.

The powerful demonstration effect of such feedback exercises had touched individual state governments too. In 2018, four state governments, Chhattisgarh, Jharkhand, Orissa, and Rajasthan, expressed an interest in knowing why there was poor uptake of self-certification and third-party certification options provided in business inspection reforms carried out by these states. At their request, the World Bank carried out an independent feedback exercise that could help design corrective actions to improve uptake.

The Indian experience from 2016 onward is a good example of what the DB indicators can lead to if governments use them well. First, the government refocused its attention from reforms on paper to reforms on the ground. Second, it recognized the importance of consulting with the private sector, which knows best where the shoe pinched, and designed corrective actions based on the feedback. This iterative process helped improve reform implementation quality. Third, the government recognized that while the DB indicators were useful, they were not adequate to diagnose the myriad of regulatory issues that businesses all over India faced. Thus, the government embarked on a more comprehensive, state-level, reform program, and, inspired by the power of indicators, underpinned this program by a set of performance indicators. Finally, once the pioneering DB-related feedback exercises proved useful, they created a demonstration effect, first within the central government, which replicated such exercises for the state-level reform program, and then on individual state governments.

BROOKINGS

Akhtar Mahmood, Former Lead Private Sector Specialist – World Bank Group

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The anxiety list for MENA entrepreneurs is long, as is the one curing it

The anxiety list for MENA entrepreneurs is long, as is the one curing it

Hadi Khatib on AMEInfo of 18 September 2021 came up with this deep statement on the anxiety list for MENA entrepreneurs that is long, as is the one curing it

The anxiety list for MENA entrepreneurs is long, as is the one curing it

A research report on the mental health challenges and wellbeing of entrepreneurs due to COVID-19 in the MENA region revealed anxiety has several facets in the minds of these leaders. But all of these insecurities have cures.

  • 55% of startup founders said that raising investment has caused the most stress.
  • More than 95% of entrepreneurs view co-founders as family members and/or friends.
  • Research finds that entrepreneurs are happier than people in jobs.

EMPWR, a UAE-based digital media agency dedicated to mental health and an exclusive mental health partner for WAMDA and Microsoft for startups, published a research report on the mental health challenges and wellbeing of entrepreneurs due to COVID-19 in the MENA region.

he anxiety list for MENA entrepreneurs is long, as is the one curing it

The research indicated that startup founders undergo higher levels of stress than the rest of the region, with twice the likelihood of developing depression issues.

55% of startup founders said that raising investment has caused the most stress; the pandemic was the second most-cited reason cited by 33.7% of respondents.   44.2% spend at least 2 hours a week trying to de-stress. 

he anxiety list for MENA entrepreneurs is long, as is the one curing it

Other insights, uncovered by the report, include:

  • A good relationship between co-founders can help startups navigate the pandemic-hit market. More than 95% of entrepreneurs view co-founders as family members and/or friends
  • Many entrepreneurs live well below their means to fund their ventures, leading to stress that is detrimental to their health

With only 2% of healthcare budgets in the MENA region currently spent on addressing mental health, the impact of the COVID-19 pandemic on young entrepreneurs and achievers could lead to an economic burden of $1 trillion, by 2030, according to the report.

he anxiety list for MENA entrepreneurs is long, as is the one curing it

EMPWR’s MENA partners shared special offers on their mental health services for the region’s entrepreneur community.

From Saudi Arabia:

Labayh is offering the technology ecosystem a 20% discount on their online mental health services for 2 months. Promo code: empwr, with the offer valid until October 29.

From Egypt:

O7 Therapy are offering 50% off their online mental health services, for 50 Entrepreneurs in the MENA region. Promo code: Entrepreneur50, valid until December 1, 2021.

From the UAE:

My Wellbeing Lab is offering 20 one-on-one coaching sessions to entrepreneurs that wish to be coached and helped; alongside unlimited access for any entrepreneur to their “Discovery Lab”, a platform that gives entrepreneurs and leaders insights into their mental wellbeing as well as their teams. Promo code: MWL21.

Takalam is offering 10% off for 3 months. Promo code: Impact.

Mindtales is offering the MENA ecosystem 50% off their services for one month. Their App can be downloaded here.

H.A.D Consultants is offering 20 one on one coaching sessions to entrepreneurs. Promo code: HAD_SME01.

From Oman:

Nafas, a meditation app focused on reducing stress, anxiety, and help with insomnia, is offering access to its platform. Register as a user via this link to redeem benefits. 

Entrepreneurs’ mixed emotions

Entrepreneurs must grapple with uncertainty and being personally responsible for any decision they make. They likely have the longest working hours of any occupational group and need to rapidly develop expertise across all areas of management while managing day-to-day business.

Yet despite all this, research finds that entrepreneurs are happier than people in jobs.

To understand this, a comprehensive and systematic review of 144 empirical studies of this topic, covering 50 years revealed:

1. It’s not all about pay

Work on the economics of entrepreneurship traditionally assumed that entrepreneurs bear all the stresses and uncertainties in the hope that over the long term they can expect high financial rewards for their effort. It’s false.

2. Highly stressful, but…

High workload and work intensity, as well as financial problems facing their business, are at the top of the entrepreneurs’ stress list.

But some stressors have an upside. While they require more effort in the here and now, they may lead to positive consequences such as business growth in the long term. Some entrepreneurs appear to interpret their long working hours as a challenge and therefore turn them into a positive signal.

he anxiety list for MENA entrepreneurs is long, as is the one curing it

3. Autonomy is both good and bad

The autonomy that comes with being an entrepreneur can be a double-edged sword. Entrepreneurs can make decisions about when and what they work on – and with whom they work. But recent research into how entrepreneurs experience their autonomy suggests that, at times, they struggle profoundly with it. The sheer number of decisions to make and the uncertainty about what is the best way forward can be overwhelming.

4. An addictive mix

The evidence review confirms that, by any stretch of imagination, entrepreneurs’ work is highly demanding and challenging. This, along with the positive aspects of being their own boss coupled with an often competitive personality, can lead entrepreneurs to be so engaged with their work that it can become obsessive.

So the most critical skill of entrepreneurs is perhaps how they are able to manage themselves and allow time for recovery.  

Stress management tips for entrepreneurs

Identify what the actual source of your stress is. Is it tight deadlines, procurement issues, raising capital, managing investors’ expectations, building a talented team, or delay in landing the first sale for your new startup business?

Even if numbering more than a few, break them down because unmanageable tasks look simpler when broken down into smaller segments. Then, list down how you plan to successfully tackle each issue. Meanwhile, exercising multiple times a week has been rated as one of the best tactics for managing stress.  

Another technique for handling stress is to take a break. Rest as much as you can before going back to continue with the tasks.  It’s also a good idea to reach out to friends, family, and social networks because they are likely to understand what you’re going through and offer words of wisdom and courage.

Stay away from energy-sapping junk food. Eating healthy keeps you fueled for the next challenge. Finally, get enough sleep, and power naps. Sleep helps your body and mind recover.   

Hadi Khatib is a business editor with more than 15 years of experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about them. He can be reached at:  hadi.khatib@thewickfirm.com

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