How GCC countries are spurring entrepreneurship

Downtown Dubai. Changes in Gulf Cooperation Council (GCC) countries are happening at a rapid pace as states seek to develop the business environment as part of a drive to diversify away from hydrocarbons. (Shutterstock)
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Updated 23 December 2019

How GCC countries are spurring entrepreneurship

  • GCC countries are seeking to diversify their economies away from oil by growing entrepreneurship ecosystems
  • Success will be measured by the creation and growth of start-ups and SMEs in the years to come

ABU DHABI: In recent years, Gulf Cooperation Council (GCC) member countries have been trying to build robust entrepreneurship ecosystems as part of a common drive to diversify their economies away from hydrocarbons.

In practical terms, this means putting in place venture-friendly markets, friendly policies, funding vehicles, a stimulating culture and a range of support mechanisms.

But creating such an ecosystem is a complex process requiring careful planning and patience. Without universities, corporations, risk capitals and entrepreneurs to act as stakeholders, big ambitions will stay just that.

 

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The success of each country will be measured by the creation and growth of startups and small and medium-sized enterprises in the coming years.

The Saudi government in 2016 released Vision 2030, a comprehensive plan for long-term economic growth that aims to move the Kingdom away from state-led growth toward more open market policies. 

The objective is to foster entrepreneurship and allow the private sector to play a leading role in economic development and job creation.

The results so far of the efforts of Saudi Arabia and its neighbors were among the topics of discussion at the recent SALT Conference in Abu Dhabi.

“What I’ve witnessed in the past few months is significant,” said Abdulrahman Tarabzouni, CEO and managing director of Saudi Technology Ventures.




Abdulrahman Tarabzouni. (Supplied)

“You have societal, economic and regulatory changes. The pace and volume of what’s going on in the country is exhilarating.”

Although the changes being introduced across Saudi Arabia have been welcomed by entrepreneurs, they come with their own challenges. 

Tarabzouni said that one has to constantly change and be dynamic enough to embrace and keep up with changes.

“That’s where it becomes interesting because you have the new economy, and a lot of these entrepreneurs are well positioned to take advantage of many of these changes,” he added.

“Capital is coming in, foreign direct investment is steadily increasing, and a lot of large institutions and corporates are putting money to work in Saudi Arabia, even though venture investment was previously considered a risky asset class.”

Tarabzouni said while talent is starting to come in, attracting and integrating them within the ecosystem is still a challenge. 

He singled out Saudi Arabia for praise for its recent decision to open and pave the way for naturalization of top talent in different fields from all over the world.

“This is significant,” he said. “This is a country that’s literally telling the world, ‘I’m here, and I want to open up to anyone who’s going to be part of my transformation story and be a part of my platform’.”




Areije Alshakar. (Supplied)

Besides Saudi Arabia, Bahrain is one of the options people can look at, said Areije Alshakar, director and fund manager at Alwaha Venture Capital Fund of Funds in Bahrain.

“Each country in the GCC offers great opportunities for funds and startups. Bahrain has the right amount of population, the right size and the ability to access decision-makers,” she told the SALT Conference.

“We operate like a team so, ultimately, if you’re a startup looking to penetrate the region, Bahrain is a good testbed to expand in other markets as well because it has a good ecosystem.”

Oman is also emerging at the top of the list, said Abdullah Al-Shaksy, co-founder and CEO of Phaze Ventures, which specializes in energy disruption and logistics. 




Abdullah Al-Shaksy. (Supplied)

He added that the sultanate is going through a major transformation, similar to the one underway in Saudi Arabia, despite being a smaller market that does not get as much coverage.

“We have a very young demographic and a lot of educated young talent. And for the first time, that talent is now moving away from the state sector and into the entrepreneurship sphere,” he said.

“We finally have all the basic building blocks of the ecosystem, our accelerator programs and three venture funds, (which will be) almost four next year.”

Al-Shaksy said that the Oman developments happened in the last three years, in tandem with regulatory reforms and increased corporate interest and participation in ventures and technology investments.

“That has all come together to make Oman a bit of a dark horse in the race,” he said. “We’ve done four deals in Oman. All four are companies that operationalized in the last two years, and their average annual revenues are $10 million. All four companies are now expanding outside, and one of them acquired a company in Kuwait.”

Al-Shaksy said that the transformations have a lot to do with the talents that had hitherto remained untapped because they used to be drawn toward the government sector, but are now empowered to create their own opportunities.

Overall, the GCC region holds a lot of promise and is currently undervalued, underestimated and greatly misunderstood, said Fahad Al-Sharekh, co-founder and general partner of Kuwait’s Techinvest Corp. 




Fahad Al-Sharekh. (Supplied)

“We have a lot of potential and added value that we can bring to any asset class,” he said. “This is the reason many international investors want to come in and set up funds in the region. But it’s still in its infancy and growing, and (still) not enough.”

Al-Sharekh said that the most important building block of the infrastructure of a technology ecosystem is the human talent that makes up the workforce, which these days is likely to consist of coders, programers, software engineers and architects.

“We unfortunately don’t have this (building block) in the region (to the extent needed), because there aren’t enough schools and programs that teach coding,” he added. 

“That’s the impediment, but with more attention, the next thing (governments) will do is try to expedite education initiatives in coding, which will lead to more innovation, ideation and not just mimicking.”

That being said, opportunities in the region are tremendous, with the panelists at the SALT Conference saying the surface has barely been scratched. 

Tarabzouni pointed out that the gross domestic product (GDP) of the Middle East and North Africa (MENA) is $6 trillion, compared to $30 trillion for the US.

The US has 150 unicorns — a tech startup that reaches a $1 billion market value — compared with 25 in the Middle East. 

“But the region only had one Careem to date, so there are (still) 24 missing unicorns that the region, from a GDP and economic-activity perspective, can absorb,” Tarabzouni said.

“It goes back to this circular argument of needing capital but also talent and open markets. Plus you need to fix fragmentation and get the MENA collective bloc to act as a single market for entrepreneurs to be able to address.”

On the upside, Tarabzouni said, changes in the GCC are happening at an incredible pace, and governments’ interest in helping spur entrepreneurial activity and talent inclusion is amazing.

“A lot of this is government-backed, but this industry is all about really long feedback cycles,” he added. 

“But these companies take 10-15 years to create value, and you need patient investors, so I’m optimistic.”

The hope is that going forward, entities from the GCC’s private and public sectors will design and implement initiatives to speed up the evolution of the bloc’s entrepreneurship ecosystem.


Coronavirus: 16 killed in Iran, 95 infected

Workers disinfect Qom’s Masumeh shrine, which is visited by a large number of people, to prevent the spread of the coronavirus. (AFP)
Updated 26 February 2020

Coronavirus: 16 killed in Iran, 95 infected

  • Six Saudi women recovering in Bahrain as Kingdom warns against travel to Italy and Japan

DUBAI: Two more people infected with the new coronavirus have died, taking the toll in Iran to 16, a Health Ministry official told state TV on Tuesday.

Iran has the highest number of deaths from coronavirus outside China, where the virus emerged late last year.
“Among those who had been suspected of the virus, 35 have been confirmed and two died of the coronavirus infection,” said Health Ministry spokesman Kianoush Jahanpour. He said 95 people had been infected across Iran.
The Health Ministry urged Iranians to stay at home.
Iran said on Monday 900 cases were suspected, dismissing claims by a lawmaker from Qom who said 50 people had died in the city, the epicenter of the new coronavirus outbreak.
Iran, which confirmed its first two deaths last week in Qom, has yet to say how many people it has quarantined, but the semi-official Mehr news agency said 320 people had been hospitalized.
Iraj Harirchi, Iran’s deputy health minister, has tested positive for the coronavirus and is now under quarantine.
Six Arab countries have reported their first cases of coronavirus, with those infected all having links to Iran. Kuwait said the number of infected people there had risen to eight.
Bahrain’s Health Ministry said 15 more people, including six Saudi women, had tested positive for the virus after returning from Iran via Dubai and Sharjah. The new cases were carried by Bahraini and Saudi nationals who arrived at Bahrain International Airport from Iran via Dubai or Sharjah.
The Saudi Ministry of Health said that it was coordinating with Bahraini health officials for the treatment of the Saudi women who had visited Iran. They will remain in Bahrain until they are fully recovered. The Kingdom has advised citizens and residents to avoid traveling to Italy and Japan.
Iranian authorities have ordered the nationwide cancellation of concerts and soccer matches and the closure of schools and universities in many provinces.
The head of Qom’s Medical Science University, Mohammad Reza Ghadir, expressed concern over “the spread of those people infected by the virus across the city,” adding the Health Ministry had banned releasing figures linked to the coronavirus.
Many Iranians took to social media to accuse authorities of concealing the facts.
Rouhani called for calm, saying the outbreak was no worse than other epidemics that Iran has weathered.
The sight of Iranians wearing masks and gloves is now common in much of the country.
Sales of masks, disinfectant gels and disposable gloves have soared in Tehran and other cities, with officials vowing to prevent hoarding and shortages by boosting production.
Iran has shut schools, universities and cultural centers until the end of the week in an effort to stop the spread of coronavirus.
The UAE has banned all flights to and from Iran. The UAE, home to long-haul carriers Emirates and Etihad, remains a key international transit route for Iran’s 80 million people.
Emirates, the government-owned carrier based in Dubai, flies daily to Tehran. Its low-cost sister airline, FlyDubai, flies to multiple Iranian cities, as does the Sharjah-based low-cost carrier Air Arabia.
The announcement came after Bahrain said it would suspend all flights from Dubai and Sharjah.
Kuwait raised the number of its infected cases to eight, after earlier raising the number to five. It said the three latest cases involved Kuwaiti citizens just back from Iran, without giving more details. The five previously reported cases were passengers returning on a flight from the Iranian city of Mashhad, where Iran’s government has not yet announced a single case of the virus.
Kuwait had halted transport links with Iran over the weekend and said it was evacuating its citizens from Iran.
An Iraqi family of four who returned from a visit to Iran tested positive for the coronavirus, the first Iraqis known to have caught the disease.
The four cases in Kirkuk province brought Iraq’s total to five after it reported its first case on Monday, an Iranian theology student in Najaf. Iraq is deeply concerned about its exposure to the Iranian outbreak, as it has deep cultural and religious ties with its neighbor and typically receives millions of Iranians each year.
The Iraqi government, which has already banned all travel from China and Iran, added Italy, Thailand, South Korea, Singapore and Japan to its travel ban list on Tuesday. Returning Iraqi citizens are exempt, as are diplomats.
Populist Shiite cleric Moqtada Al-Sadr suspended a call for his followers to hold a “million-man” protest, saying he had decide to forbid the events “for your health and life, for they are more important to me than anything else.”
“I had called for million-man protests and sit-ins against sectarian power-sharing and today I forbid you from them for your health and life, for they are more important to me than anything else,” he said in a statement. It was not immediately clear how the government’s call on citizens to avoid public gatherings would affect the strength of anti-government protests, and the response of security forces.
A Turkish Airlines plane flying from Iran was diverted to Ankara on Tuesday at the Turkish Health Ministry’s request and an aviation news website said one passenger was suspected of being infected by coronavirus.
Turkey’s Demiroren news agency broadcast video showing ambulances lined up beside the plane, with several personnel wearing white protective suits on the tarmac.
The plane was flying from Tehran and had been scheduled to land in Istanbul. Turkey shut its borders to Iran on Sunday and cut flights due to the spread of the virus in that country.
Oman’s Khasab port has suspended the import and export of goods to and from Iran from Feb. 26.