MIT Enterprise Forum Arab Pan Arab (MITEF) released its first annual report assessing the impact of their Arab Startup Competition (ASC) on the Arab region. (For reference on the competition, click here)
The report, done with the support of their knowledge partner global consultancy firm Roland Berger, studies the impact of the ASC on the Arab region by examining all their semi-finalists teams’ performance across the 12 editions of the competition. It also introduces the Arab Entrepreneurship Maturity Index (AEMI) which evaluates the ecosystem of 14 Arab countries, taking into account criteria such as infrastructure, financing, business operations and setup, distribution of information and communication tech, know-how and human capital.
“More than 14,000 jobs created, 51% of competition participants with leading roles are women, 415 million dollars contribution to the Arab World’s GDP,” says MITEF Pan Arab’s chair Hala Fadel in the announcement.
The MENA region in flux
The number of startups recorded in the MENA has tripled over the past five years, with GCC countries ranking highest in business growth. New investment dynamics have come to rise in 2018, placing the fintech industry in the lead with 18% of total deals, followed by the e-commerce industry with a total of 11%.
However, it is worth noting that over third of the funding came from investors outside the region. For example, Property Finder (based in Dubai) received around 120 million dollars in November 2018 from General Atlantic (global growth equity based in NewYork), putting the UAE in the lead with 30% of closed deals in MENA. Egypt ranks second, recording 22% of closed deals.
The AEMI provides an overall view on the Arab ecosystem, highlighting the likeliness and ease of setting up business for each country in MENA. Each country is assessed per dimension – strengths and weaknesses – on a total score of 5.
The figures show that the Gulf Cooperation Council (GCC) countries rank highest with the UAE attaining a score of 3.8/5 (4.3 for local infrastructure, 3.3 for human capital, 3.4 for know-how, 3.6 for financing, 4.4 for business setup, and 3.7 for business operations). Lebanon ranks ninth with a total score of 2.9(3 for local infrastructure, 3.3 for human capital, 2.4 for know-how, 3.4 for financing, 3.1 for business setup, and 2.4 for business operations).
However, Lebanon scores second in number of emerging entrepreneurial hubs with 10.4% of ASC applicants holding the Lebanese nationality, ranking second after Egypt (31.5%) and ahead of Saudi Arabia (9.5%)
Dr. Bijan Azad, associate professor and director of Darwazah Center for Innovation Management and Entrepreneurship at AUB says in the announcement: “We are building elements of the Lebanese entrepreneurship environment which now functions largely as a landscape of standalone activities. Transforming this into a thriving ecosystem, we need enhanced coordination and awareness among ecosystem activities which target growth of innovation-driven enterprises.”
Regardless of the notable growth of businesses, the MENA region still lags behind in comparison to global standards. The report calls for further contribution by the private sector, urging Lebanese companies to enhance their support to rising startups, provide council and streamline their services and policies for a better ecosystem and infrastructure.