x Abu Dhabi, UAEWednesday 26 July 2017

Startups need critical minds and deep pockets to thrive

Licencing, regulations and banking issues are hampering the success of small and medium businesses in the region.

I can say from personal experience that setting up a business locally isn't easy. Licencing and regulations are frustrating; in one extreme case, a department employee told me what I could and could not put on a sign, effectively governing my marketing campaign.

There seems to be an endless list of requirements, leaving the aspiring entrepreneur questioning whether it's all worth it. In some western countries, it takes between two to five days to open a business in five or fewer steps. This is unheard of in the region, with some cases taking up to nine months just to receive a licence.

It would definitely be worthwhile to set up a local department dedicated to the registration and development of small to medium businesses (SMEs), which would streamline the process and offer a one-stop shop to entrepreneurs.

Abu Dhabi is already working to solve some of these issues, and it is inspiring to see that the need to support entrepreneurship is being met head on.

In 2007, the capital set up the Khalifa Fund for Enterprise Development to act as a catalyst for entrepreneurial development. Not only does the Khalifa Fund provide the all-important seed money to start a business, but it offers consulting services, business idea development, training and government services. The fund now seeks 10 entrepreneurs to turn their plans into reality.

What more could an aspiring entrepreneur ask for? The fund seems to be making all the right moves in promoting entrepreneurship, including the Abu Dhabi Forum on Entrepreneurship, which is just one way it has promoted its mandate.

However, building on these initiatives requires the development of human capital and a business environment that would make an entrepreneurial hub truly blossom.

We need to start at the very beginning and ask whether the education system is nurturing our young generation to become leaders and innovators.

The Canadian technology entrepreneur Leonard Brody has said: "The traditional education system is focused around being smart, and when you think of the great stories of entrepreneurship and the skills that came with them, they had nothing to do with being smart."

To make one point clear, there is definitely nothing wrong with training students who are smart. However, educators at the primary and secondary level need to start spending more time on skills such as critical thinking and innovation to bolster the idea-generating capabilities in children from a young age.

Rather than just asking students to memorise chapters and formulas, teachers should invite them to create something, build on an idea they have, or simply ask: "What do you think?" These exercises will unleash an energy and confidence within students to believe in their dreams and make them a reality.

Higher education also could use a review. The emphasis on entrepreneurship in some Abu Dhabi-based universities is very light, to say the least. By contrast, western universities have degree programmes based on entrepreneurship that cover critical areas such as business planning, venture capital and entrepreneurial finance.

Government offices are taking steps to fix the problem. The Abu Dhabi Council for Economic Development has launched the second phase of its Akoun initiative, organising a competition for Emirati university students to develop business plans and seek funding through the Khalifa Fund. The winner receives Dh50,000, one reason why universities should follow suit and support these government initiatives.

But while the Khalifa Fund is an example of sound financial policy, where are the rest of our financial institutions when it comes to promoting SMEs? Banks seem to have mixed feelings about entrepreneurship, with some refusing start-up finance altogether, while others provide the bare minimum.

So to the banks, I ask a simple question: where's the love? It is often said that SMEs are the backbone of an economy. So practically speaking, entrepreneurs can give these institutions the opportunity to be part of the economic vision of our leadership. They can partner with the potential Mark Zuckerbergs of our country and support innovation and job creation for a better society. My advice to banks is to hop on board and be part of something bigger than just the financial return.

 

Khalid al Ameri is an associate at a development company based in Abu Dhabi