Setting up a business is exciting, but it requires level-headed planning. To be successful you need to consider the logistics performance of the country in question, along with its reputation, ease of company setup process, simplicity of doing business, and opportunities for future growth. So, when you’re looking at where to locate in the Middle East and North Africa (MENA) region, it’s important to weigh up the pros and cons of the different regions. If you’re considering this part of the world, here are four tips to improve your chances of finding the right place for your MENA business:
1. The best location for logistics A quick look at the World Bank Logistics Performance Index (LPI) helps define all the logistical considerations in six points: customs, infrastructure, ease of shipping, tracking and tracing, timeliness, as well as logistic services. These factors are important for all businesses and vital if you will be importing and/or exporting. Why the UAE has got logistics covered: In that World Bank Logistics Performance Index, the one MENA country that stands head and shoulders above all the rest is the UAE. It ranks 1st in the GCC and MENA. Globally it’s listed 11th, ahead of the United States and Switzerland. In terms of specifics, the UAE is placed 5th in the world for international shipments and 4th for timeliness. Meaning you can expect to have your deliveries reach their destinations by the deadline.
And it’s important not just to stop at Dubai when it comes to thinking about locations for your new MENA business. Investigate the other emirates that boast excellent logistical networks as well as ample warehousing space at a lower cost. Setting up in Ras al Khaimah, for example, is the perfect jumping-off point to do business across the UAE, the Gulf and entire MENA region, and it’s less than an hour’s drive to Dubai.
2. Finding an easy setup process Here we have to consider procedures, time, cost and minimum capital required to start a company. Different countries in the MENA region take different approaches to helping new businesses achieve this. There are a huge number of options, so it’s important to locate your company in a top-level business hub that can offer you a tailor-made solution. The UAE is always going to score highly when it comes to easy setup. Look for a hub within the UAE that gives you flexibility, allowing you to choose whether you want to set up on the mainland or in a free zone.
Why the UAE has the easiest setup process: In the World Bank’s Doing Business 2019 report, the UAE was ranked 25th in the world for starting a business, with a score of 94.06 out of 100. The MENA average was 82, with only one other regional country, Bahrain (89.57), breaching the top 100. Why? Well, the UAE was deemed to have hugely streamlined procedures and greatly reduced setup times. It’s worth looking outside of Dubai and Abu Dhabi as well– Ras al Khaimah has put in place a highly-simplified and fast-tracked business setup process. So, look for a hub that offers this level of service, and get your company off to a strong start. It’s about costs as well: Choosing the right location can mean halving your setup costs.
3. The importance of a good reputation The MENA country you set up in will be a reflection of your business. Set up in one that is well respected for business equality and fairness and this rubs off on the organization itself. It also affects how you are perceived by companies in the MENA (and wider) region with which you do business.
Why the UAE’s reputation speaks well for your business: The UAE has a great reputation for business for a number of reasons. It’s politically stable, has a strong economy, and offers state-of-the-art infrastructure. Its laws prohibit monopoly and encourage competition, while maintaining intellectual property rights and trademarks. No surprise then that it’s probably the major international business hub of the Middle East. Even if you do business outside of the UAE, being based there puts you in great standing with the MENA region.
4. Having the room to expand Whatever the size of your business right now, you’re probably aiming to grow. This means you need to keep options open because what might be the best choice now, especially in terms of location and suppliers, may change in the future. You need a location that offers flexibility. One that has good access to other markets and one that lets you expand your offering. For example, you could be attracted by the easy setup process and zero taxation offered by many UAE free zones, but perhaps one day you will want to do business directly with the mainland. Finding the right hub that allows that type of flexibility will be a vital part of your decision-making. So, it’s important to think about your immediate requirements, and how those requirements might change down the road.
Why the UAE helps your company grow: On top the strong economy and great transport links, choosing the right business hub in the UAE brings peace of mind that you are set up for years to come. You haven’t just taken an ‘off the shelf’ solution but got one that truly reflects the kind of business you want to run today, and tomorrow.
Question your way to success
When setting up in the MENA region, you need to make an informed decision rather than a leap of faith. You can improve your chances of success by asking the right questions about your business needs and the locations on offer. The UAE ticks the right boxes– the question, then, is making sure you pick the right economic zone and the right location within it.
Opinions expressed by Entrepreneur contributors are their own.
In MENA’s Maturing Ecosystem dated September 3, 2019, author Chloe DOMAT says that “as the region’s digital startups and fintechs grow and prosper, they must learn to scale, despite a highly fragmented economy.”
Once again this year, the digital economy of the Middle East and North Africa is set to break records. The first half saw $471 million in total funding and 238 deals, according to the latest report from Magnitt, a Dubai-based entrepreneurs’ network. That’s a 66% increase over the dollar volume in the first half of 2018 and 28% more deals.
Digital startups barely existed in the MENA region a decade ago. Now, fintech is a thriving sector embracing hundreds of new companies, jobs and investors. As the ecosystem expands with tens of newcomers each year, funding tickets get bigger and bigger.
“If we look back a few years, a deal at $2 million or $3 million would have made the headlines; today, we have multiple $10 million-plus deals,” says Omar Christidis, founder and CEO of Arabnet, a Beirut-based events and research company specializing in the region’s digital economy. “This is an indicator of the increasing maturity of the market.”
Major deals so far this year have included a $100 million capital injection in Dubai-based Emerging Markets Property Group (EMPG); a $65 million Series A round for Yellow Door Energy, also in Dubai; and $42 million for Egypt’s Swvl, a transportation app.
There is still a disconnect, however, between the growing demand for funds at all levels and the capital currently available to satisfy it, industry insiders say. Money is expected to keep pouring in, as an increasing number of international institutions enter the region. Big names like Endeavor Catalyst (US), Vostok New Ventures (Sweden), MSA Capital (China), Global Founders Capital (Germany) and Kingsway Capital (UK) already make up a third of the Middle East’s investor list.
Aiming to attract even more foreign capital, countries including Bahrain, Saudi Arabia and the United Arab Emirates (UAE) have also started establishing funds of funds.
Funding ($ Mil.)
Yellow Door Energy
For the first time, numbers of local companies are successfully reaching the end of the startup lifecycle and exiting through mergers or acquisitions. In March, Uber bought Careem, a Dubai-based ride-hailing application, for $3.1 billion, in a deal that marked the region’s first unicorn exit.
The pace has only picked up. At least 15 Middle Eastern startups have performed exits since January, including digital fashion platform Namshi, sold to Dubai’s Emaar Malls in February; the purchase by Majid al Futtaim, a Dubai-based shopping mall and retail operator, of Saudi Arabian online grocery store Wadi in May; and EMPG’s purchase of Jumia House, a property portal for Morocco, Algeria and Tunisia, in June.
These exits leave a new generation of former staff members with a lot of means. After Careem’s exit, 75 ex-staffers cashed out over $1 million each. That financial capital, as well as the beneficiaries’ acquired knowledge and expertise, will allow a number of them to start new business ventures.
The Imperative to Scale
While tech companies grow larger, entrepreneurs face new challenges.
“As mature startups move to larger funding rounds and raise interest for acquisitions, they need to scale operations, whether vertically with new business lines or geographically,” says Philip Bahoshy, CEO and founder of Magnitt.
Navigating across the region’s approximately 22 countries, each with its own complexities, is not easy, however. From Morocco to Iraq, Arab states differ dramatically from one another in size, population, wealth, laws, digital infrastructure and business culture.
“Seeing the MENA region as one big market is to a certain extent a misrepresentation because our markets are superfragmented,” says Christidis. “A company that wants to grow from Lebanon into Jordan into Iraq into Kuwait into Saudi Arabia has to enter five separate markets.”
The UAE is clearly driving the game. In the first half of 2019, the Emirates received 66% of the money invested in all MENA startups and captured 26% of the deals, according to the Magnitt report. Dubai has by far the most developed ecosystem, with a concentration of global firms’ regional headquarters, major funding institutions and accelerators.
The UAE, and Dubai itself, have worked to build an advantage. In 2017, the UAE became one of the first countries in the world to appoint a minister of artificial intelligence. Dubai’s Crown Prince Hamdan bin Mohammed bin Rashid al Maktoum has promised that the government will go 100% paperless by 2021.
“The UAE has been leading from the front,” says Amol Bahuguna, head of payments and cash management at Commercial Bank of Dubai (CBD), which just launched a new e-invoicing service. “Everything that has to do with the government is going digital. You have a real top-down approach to innovation and things move fast.”
Much will hinge on how the UAE, and Dubai in particular, manage their response to the current economic slowdown. Recent government data show that real estate, financial services and tourism—the pillars of the economy—are in a slump. In 2018, Dubai also recorded its biggest net loss of jobs since the global financial crisis.
The Emirates have competition, too, from Saudi Arabia, the biggest emerging market in the region with over 34 million people and high purchasing power. The authorities there are keen to diversify their oil-based economy, including promotion of the digital sector.
Riyadh set up a fund of funds to attract foreign investors to support startups. Saudi authorities will invest dollar-for-dollar as a limited partner in any new fund that commits to investing in the kingdom. They have also promised to streamline the licensing process for foreign startups so that they can settle in Saudi Arabia easily.
New Saudi-based funds such as Saudi Telecom’s $500 million ST Ventures, Vision Ventures and Hala Ventures, that have emerged in the past three years, are becoming large players in the regional venture capital game, leading $10 million-plus investment rounds.
On the other side of the MENA map, North Africa is also showing strong digital growth potential. Morocco, Tunisia and Egypt are investing heavily in the development of their own high-tech ecosystems, aiming to become the bridge to Europe and the gateway to sub-Saharan Africa. Tunisia recently passed laws supporting tech innovation; and in September, Tunis will welcome Afric’Up, a large pan-African startup-pitch competition.
Fintech’s “Gold Mine”
Although it hardly shows in this year’s top deals, fintech remains the fastest growing sector within MENA digital economy. In the first half of this year, fintech accounted for 17% of all deals, up 9% from 2018. Interestingly, almost 90% of the total $24 million funding went to early stage startups, underscoring that the sector is still in its infancy.
The data also reveals enormous potential. Arab countries are home to over 380 million people, half of them under age 26. Financial inclusion is among the lowest in the world, with only 52% of men and 35% of women owning a bank account as of 2017. The vast majority of those with bank accounts, however, own a mobile phone (86% of men and 75% of women).
By mid-2018, the whole MENA region, including North Africa, had 381 million unique mobile subscribers, according to GSMA Intelligence, a mobile industry trade body. Smartphones accounted for 52% of all connections and are expected to grow to 74% by 2025.
“These figures highlight the tremendous opportunity,” says Nameer Khan, founding board member of the newly established UAE-based MENA Fintech Association. “The region is literally a gold mine.” The lure for fintech investors and entrepreneurs is the chance to enter an untapped market in which hundreds of millions of users could leapfrog from the cash economy to the digital.
Fintech subsectors widely thought to hold growth potential include insuretech, robo-advisory wealth management and sharia-compliant services. But payment services, not surprisingly, stand out prominently for both the number of startups and the value of deals. Mobile payment, money transfer and lending platforms remain the main focus; while more-sophisticated technologies such as blockchain, the cloud and artificial intelligence still lag.
Egypt’s Fawry is one of the biggest success stories in payments. Launched in 2008, the company raised $122 million; its initial public offering on August 8 sold 36% of its share capital for $97 million. Also attracting notice in the sector are PayTabs, a Saudi Arabian online payment facility that announced in August that it had raised $20 million to support its expansion in the region and into Southeast Asia, India, Africa and Europe; and the Dubai-based peer-to-peer lending platform Beehive, with a total capital injection of $15.5 million as of March 4.
The payment landscape looks to change rapidly, however, as larger players seek their share of the fintech market. Careem, for instance, claims over 30 million users in the region and is currently rolling out its Careem Pay e-wallet. If the service succeeds, Uber-owned Careem could become one of the biggest MENA fintechs.
Digital Banking Multiples
Banks and financial institutions view the fintech surge as an opportunity to outsource innovation and digitization. From simple online banking and mobile applications to investment platforms and e-wallets, most MENA lenders are seeking partnerships with startups. Some have even rolled out fully fledged, branchless digital neobanks, including Emirates NBD’s Liv., Mashreq Neo, and Gulf International Bank’s Meem.
These operate under a conventional lender’s license, however. Since they were developed by traditional banks, they are not industry disruptors, like startups Revolut and N26; rather, they act like new-business verticals, intended to seduce tech-savvy youth and target the unbanked. For a digital banking startup to seriously challenge the major players would be a monumental task.
“Banks in the Middle East are very large; what we are seeing recently is market consolidation, so they are getting even bigger,” says Arabnet’s Christidis. “I don’t think any of the startups really want to take them on, head to head. I’m not sure either that there would be investors ready to bankroll that kind of an investment. Furthermore, I question what kind of industry lobbying bite the banks would put on if they really started seeing that kind of thing emerge.” Christidis believes only an already established player from outside the region would have the financial muscle to give it a chance to compete.
Such a competitor might come from outside the financial sector entirely, however. Abu Dhabi Global Market, a key Emirati financial center, announced in July that it is ready to issue digital-banking licenses to nonbanking firms “with innovative value propositions.”
As this suggests, while the MENA digital economy is developing faster than ever, legal and regulatory frameworks need to adapt for growth to be sustained. Procedures to register a company, licensing and liability laws in case of business failure or bankruptcy are among the key differentiators governments will have to consider as they look to make themselves more competitive.
“Governments are showing concerted interest in building digital ecosystems for their countries,” says Magnitt CEO and founder Bahoshy. “There are still challenges to be overcome, but we can expect success stories to be more frequent, have higher value and have more impact in the coming years.”
Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world.
Moving from childhood into adolescence can be a very challenging time for kids. Not only are social norms changing, but their ability to adapt to their quickly evolving environments is being developed. Schools change, responsibilities change, and their lives become different from day to day. Throughout this time, maturing happens, and it aids in their ability to critically think, react to situations, and become more independent.
But is there a way to develop these skills sooner to help them mature, and ultimately, cope better? In a nutshell, yes. Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world. Creativity, problem-solving, and emotional intelligence are just a few of these skills that can be gained through early teaching and long-term practice. For kids that practice entrepreneurial thinking, in difficult situations, they are able to problem solve effectively by analyzing long-term ramifications. This kind of processing comes with so many benefits that will bode well for kids from childhood all the way into adulthood.
1. Positive habit-forming Entrepreneurial thinking is not just an activity, but rather a lens through which all situations are viewed. This is also known as a “positive habit.” Instead of going down another path, the child has to make a conscious decision to change their perspective. By making these daily decisions, kids become more aware of the benefits that come along with forming positive habits and find them easier to engage in a variety of life aspects.
2. Emotional support When a child is able to effectively problem solve, and see the fruit of their efforts, positive feelings and increased self-worth follow. This internal confidence leads to kids feeling emotionally supported, and it has a great effect on their ability to take criticism and grow without fear of failure.
3. Behavior Most of the time, bad behavior comes from the inability to control one’s emotions and/ or the inability to communicate. Practicing entrepreneurial thinking solves both of those inhibitors by giving the child the tools to be able to look at the problem from a big-picture and emotionally intelligent perspective. All of the attributes that are gained from teaching entrepreneurial thinking tend to lead to better behavior, emotional health, and positive habits by giving kids the tools to not only cope, but thrive. Equipping them early helps kids navigate the landscape of their lives so that they can face obstacles with creativity and without fear. Difficult situations, new experiences and issues that arise are all the more easily handled and learned from by learning and practicing entrepreneurial thinking young.