x Abu Dhabi, UAEWednesday 24 January 2018

Spirit of entrepreneurship percolates across region

Striking out with your own enterprise takes no small measure of courage, commitment and tenacity. There are many people across the Middle East willing to take a leap of faith and turn their vision into a reality amid challenges.

Khalid Al Shekaili built his business, Popular Popcorn, with a little help from the UAE's Khalifa Fund for young Emirati entrepreneurs. Satish Kumar / The National
Khalid Al Shekaili built his business, Popular Popcorn, with a little help from the UAE's Khalifa Fund for young Emirati entrepreneurs. Satish Kumar / The National
The UAE continues to seek to diversify its economy away from a reliance on oil and gas. And one way it is seeking to achieve this is through the cultivation of a spirit of entrepreneurship.

Across the Middle East, economies are facing rising unemployment. A report published by the International Labour Organisation (ILO) in May found 28.3 per cent of the population between the ages of 15 and 24 in the region were out of work, the highest percentage of any area in the world, followed by North Africa with 23.7 per cent.

And not surprisingly, more and more of the region's young populations are seeking to chart their own economic destinies, giving them the confidence to strike out on their own, rather than follow the paths their parents have taken.

A survey released by the regional jobs portal bayt.com in October found starting a business or working on a self-employed basis was the first choice of 38 per cent of respondents across 14 countries in the Middle East, indicating that the spirit of entrepreneurship is flourishing within the region.

Of the 14 countries surveyed by bayt.com, the entrepreneurial spirit is most evident in the UAE. Some 47 per cent of those surveyed said being self-employed or starting their own business was their first preference, compared with 48 per cent who preferred to do a job with a third-party private sector or state employer.

In many ways such a finding is unsurprising, as the country has long been regarded as an easy place to establish a business, with a cosmopolitan population and an economy that has bounced back in the past 18 months.

In the World Bank's most recent Doing Business report, looking at a range of issues determining the best countries in which to do business and published last month, the UAE climbed three places to 23rd in the world and the highest in the Middle East.

The country's high overall ranking, however, is offset by lower scores in areas such as ease of getting credit, protecting investors, enforcing contracts and resolving insolvency, all of which are of vital importance for those starting up new businesses.

Meanwhile, a survey released last month by the Global Entrepreneurship Monitor found that while nearly 80 per cent of Emiratis perceived entrepreneurship as a good career choice, only 50 per cent of respondents believed they had the necessary skills and knowledge to start a business.

Government bodies in this country have responded to such challenges by launching a series of initiatives to encourage entrepreneurs - both Emirati and non-nationals - by providing funding, expertise, mentoring and networking opportunities.

In Dubai, the Government set up Dubai SME in 2002 as a vehicle to nurture the spirit of entrepreneurship in the emirate by providing advice and expertise to those looking to start and develop small businesses.

In Abu Dhabi, the Government launched the Khalifa Fund in 2007 with the aim of supporting young Emirati entrepreneurs, especially those from Abu Dhabi.

In addition to financial support, the fund also provides training and development for would-be entrepreneurs looking to take their business ideas to the next level.

One such company to benefit from the Khalifa Fund's services is Popular Popcorn, a gourmet snack firm founded by Khalid Al Shekaili in 2009. The company approached the fund in 2011, after receiving its first major contract with Etihad Airways.

"We submitted our business plan, they saw the contracts we had in place and saw that we were a serious businesses, so granted us Dh2.4 million to build a small factory," says Mr Al Shekaili.

In addition to the grant, the fund also provided crucial advice on marketing its product and enabled the company to attend international exhibitions at a subsidised rate, enabling Popular Popcorn to expand awareness of its brand.

Despite such initiatives, some feel more could be done to help would-be entrepreneurs in this country, especially in the crucial early years of a company's life where survival is a struggle.

For Mark Carroll, a British expatriate who started Kcal Healthy Fast Food in 2010, one of the big challenges was the multitude of fees required to start a new business in Dubai.

"You have company registration fees, visa and sponsorship fees, medical fees, the list goes on and on. And the price is the same whether you're a successful business elsewhere opening an office in Dubai, or a start-up business beginning from scratch," he says.

Without some assistance with such costs in the early stages, many otherwise promising businesses are failing to get off the ground, says Mr Carroll.

"What would be great would be an initiative whereby there is some leeway with some of the initial fees involved in establishing a company as an entrepreneur, or a credit line that can ease the burden in the initial months," he says.

In addition to set-up fees, fledgling entrepreneurs also have to contend with rising commercial rents, in Dubai especially.

Start-ups are also squeezed by the fact that as the emirate's property sector recovers from the downturn of 2008, landlords are increasingly demanding a payment of 12 months' rent up front.

For Samer Atiani and Ahmed Moor, the co-founders of the micro-financing start up Liwwa.com, the cost of setting up in the UAE was too high, leading them to begin operations in Jordan.

"Amman is an exciting and wonderful place to be, and it makes more sense for us as a start-up due to the managable costs of living, but also because it's a mature place for start-ups," says Mr Moor.

But he and his partner are still keen to enter the market in this country.

"The UAE is a place we're very excited about and we'd love to be there at some stage," he says.

"It was just a challenge for us when it came to the subject of start-up costs. Every dollar you can't spend on your business especially in the start-up stage, diminishes your chances of success.