Posts Tagged ‘Arab World’

In this Insights at the Edge of Government Analysis Flash, we look at the impact of the sharing economy on the short-term rental market in the MENA. Based on the number of Airbnb hosts across the region, Turkey, Morocco, and the UAE are the biggest regional markets for online platforms that link property owners with short-term lessees. However, the total number of Airbnb hosts in the entire MENA region is similar in size to the number of Airbnb hosts in London alone. The MENA is a key potential expansion market where sensible sharing economy regulation and partnerships between cities and technology companies can mean significant benefits for local communities and businesses that promote large scale national economic opportunity generation.

Airbnb has ≈ 40,000 hosts in the broader MENA

In this Insights at the Edge of Government Analysis Flash, we look at the unprecedented level of economic opportunities for MENA youth created by ridesharing companies. In Egypt, Pakistan, and Saudi Arabia alone, ridesharing firms have catalyzed 200,000+ economic opportunities. These opportunities, which have been created over the last 4 years, now exceed the workforce of the largest regional public sector employers as well as the expected job creation impact of many of the region’s in progress mega projects.

In previous blog posts, we have written about how sensible regulation of the sharing economy has the potential to contribute significantly to the MENA’s socio-economic development. Some countries, like Saudi Arabia, are getting sharing economy regulation right, while other MENA countries remain focused on more traditional policies to attract inward foreign direct investment flows for mega projects to create high skill, high wage jobs in knowledge-based industries and protect industry incumbents. Based on this analysis, technology-driven business models in the sharing economy have the potential to be a key tool for MENA governments to complement active labor market policies and large scale national economic opportunity generation strategies.

MENA ridesharing firms provide 300,000+ youth economic opportunities

In a brief interview for Computer Weekly, Tahseen Consulting’s Wes Schwalje talks about the future of IoT and the need for regional stakeholders to get a lot more serious about personal data privacy and connected device security.

Computer Weekly: Which GCC sectors could benefit most from IoT – and why?

Schwalje: Due to the concentration of economic activity in the GCC in a handful of sectors such as the extractive industries, manufacturing, government services, construction, and utilities we will likely see a concerted effort to disrupt and digitally transform these traditional industries with IoT. Specific sub sectors of focus will likely be oil and gas, petrochemicals, aviation, and, pharmaceuticals as well as government services such as healthcare, education, and utilities. In these traditional sectors, industry incumbents will either take on new roles or be displaced by new industry structures due to digital disruption. A good example of this adaptation in the private sector to avoid digital disruption is Mashreq Bank’s recent announcement about its new digital only spin-off unit. In terms of government services, several GCC governments are deploying IoT as part of smart city initiatives to enhance government service provision, we are seeing interesting connected healthcare pilots emerging like telehealth systems in Saudi Arabia, and there is a significant push to leverage IoT to address transport challenges regionally. At the same time, increasing economic diversification in the GCC, driven primarily by growth in the services sector, is likely to lead to innovative IoT applications in emerging services sectors such as transport and logistics, telecommunications, financial services, and tourism. In the very near future, IoT will become a key aspect of GCC economic diversification strategies and ultimately global and regional competitiveness.

Computer Weekly: How might life in the GCC look different in ten years, due to IoT technology?

Schwalje: The data gained from IoT is the foundation for a range of emerging technologies such as machine learning, robotics, automation, 3D printing, artificial intelligence, and augmented. For this reason, we will see a significant uptake of IoT over the next decade. Data is quickly becoming vital to the profitability and success of GCC businesses as well as enhanced efficiency and effectiveness of government service delivery. In terms of specific applications of IoT, we are likely to see smart asset monitoring, employee tracking, energy consumption monitoring, product usage and monitoring, business process automation, smart security, and wide area control systems. While the potential of IoT in the GCC is promising, more effective, consumer-oriented laws and regulations on data in the GCC and throughout the Arab World are needed to address how data can be obtained and used, how long data can be kept, and limits on access by third or other government related-parties. A modern, harmonized GCC data protection framework is a critical requirement to maximize the benefits of the IoT.

Tahseen Consulting recently explored how the telecom industry in the Arab World is supporting technology-driven startups and small and medium sized businesses. We interviewed executives and innovation leaders at 55 telecom companies to get their perspectives on how companies are supporting technology entrepreneurship and what can be improved. Here are our results.

Telecom Industry Support for Technology Entrepreneurship in the Arab World

ميريام نجم: كيف تطور دور المرأة الخليجية في مجال ريادة الأعمال في خلال السنوات العشر الماضية؟

وليد العرادي: ساهم التطور الكبير الذي شهدته المرأة منذ عام 2000 على الصعيد التعليمي والاجتماعي في زيادة مشاركة المرأة في الاقتصاد الخليجي مما نمى مهاراتها وزاد من قدرتها على الاستفادة من الفرص المتاحة في السوق المحلي حيث انضم ما يزيد على 1.5 مليون مرأة إلى سوق العمل بين عامي 2001 و 2010. وبينما اقتصرت مشاركة المرأة في الماضي على الوظائف الحكومية وريادة الأعمال المرتبطة بالمشاريع الصغيرة المنبثقة من المنزل، استطاعت المرأة تطويع المهارات المكتسبة من مشاركتها في سوق العمل وتسخير التقنيات المتوفرة مثل الشبكة المعلوماتية لتوسيع نطاق مشاركتها في ريادة الأعمال لتشمل المجالات المرتبطة باقتصاد المعرفة كالتعليم والصحة على سبيل المثال.

وتشير الإحصاءات إلى أن مشاركة المرأة في ريادة الأعمال يزيد من التنويع الاقتصادي ويساهم بشكل إيجابي على الأداء الاقتصادي للدول حيث أن المرأة هي أكثر ميلا لإعادة استثمار دخلها في المشاريع التي تفيد المجتمع بشكل عام والأطفال بشكل خاص. وأدركت الحكومات ومؤسسات المجتمع المدني النفع العام المنبثق عن زيادة نسبة النساء في ريادة الأعمال حيث ظهرت في الآونة الأخيرة عدة مبادرات وبرامج لتمكين رائدات الأعمال وتفعيل دورهن في القطاع الخاص والمساهمة في استدامة أعمالهن كبرنامج صوغة التابع لصندوق خليفة لتطوير المشاريع في الإمارات ومركز روضة لريادة الأعمال والابتكار في قطر وبرنامج سند في عمان بالإضافة إلى مجالس سيدات الأعمال في عدة مدن خليجية. وسعت هذه المبادرات لتقديم الاستشارات وخدمات الاحتضان في حاضنات الأعمال وتنظيم المؤتمرات والندوات لنشر الوعي حول ريادة الأعمال مما سيساهم في رفع عدد رائدات الأعمال في المستقبل.

ميريام نجم: هل من عوائق اقتصادية تقف في وجه تطوّر دور سيدات الأعمال الخليجيات؟

وليد العرادي: على الرغم من التطور الذي شهدته المرأة في الخليج في مجال ريادة الأعمال إلا أنها ما زالت تواجه عدة تحديات مثلها مثل الرجل. ولكن توجد هناك عقبات اقتصادية واجتماعية خاصة بالمرأة. فعلى سبيل المثال يصعب على المرأة الحصول على تمويل مصرفي في قطر بدون الحصول على ضمانات مالية من أحد أقاربها. وتشير دراسة أعدت مؤخرا في السعودية أن 82% من النساء يعتمدن على مدخراتهن الشخصية لتمويل الأعمال نظرا لصعوبة استقطاب رأس المال عبر شركات الاستثمار في الملكية الخاصة أو البنوك الاستثمارية. كما تشير الدراسة إلى الصعوبات التي تواجهها المرأة في تعاملاتها التجارية بدون الاعتماد على الأقارب من الذكور لأسباب اجتماعية. وفي الإمارات العربية المتحدة أظهرت الاستطلاعات أن غالبية رائدات الأعمال اللواتي قمن بإغلاق شركاتهن قمن بذلك لأسباب عائلية. ويشير ذلك إلى وجود بعض الضغوطات الاجتماعية على المرأة ما يمنعها في بعض الأحيان من الانخراط في مجال ريادة الأعمال.

ميريام نجم: ما هي نسبة السيدات في مجال ملكية المشروعات الصغيرة والمتوسطة في الإمارات وقطر؟

وليد العرادي: تمتلك النساء 13% من إجمالي الشركات الخاصة في العالم العربي. وتعد هذه النسبة منخفضة مقارنة بالمعدلات المسجلة في أنحاء أخرى من العالم مثل أوروبا وآسيا الوسطى والتي تصل نسبة امتلاك النساء للشركات الخاصة فيها إلى ضعف المعدلات المسجلة في العالم العربي. وقد لا تمثل هذه المعدلات النسب الحقيقية لانخراط المرأة بريادة الأعمال نظرا لاختلاف سبل جمع المعلومات من دولة لأخرى وصعوبة التقاط المعلومات المتعلقة بالمشروعات التي تبدأ من المنزل.

أما بالنسبة لدول مجلس التعاون وبالأخص دولتي قطر والإمارات العربية المتحدة، تشير إحصاءات غرفة تجارة قطر إلى أن 17% من رواد الأعمال في قطر هم من النساء بينما لا تتجاوز نسبة ريادة الأعمال بين النساء 8% في الإمارات حسب إحصاءات المرصد العالمي لريادة الأعمال. والجدير بالذكر أن نسبة ريادة الأعمال بين النساء تنخفض في الإمارات من 8% للمشاريع في مراحلها المبكرة إلى 0.9% للمشاريع القائمة بينما تنخفض هذه النسبة بين الرجال بنسبة أقل (من 12% إلى 7%) ما يشير إلى تدني فرص النجاح بين النساء في ريادة الأعمال. ولا يدل ذلك على تدني قدرة المرأة في إنشاء وإدارة الشركات وإنما يدل على كبر حجم التحديات التي تواجهها وقلة البرامج التي تعنى بمساعدتها على مواجهة تلك التحديات.

ميريام نجم: ما هي المجالات التي تلمع فيها رائدات الأعمال بشكل ملفت وهل ترى طفرة من الشركات الصغيرة في تلك المجالات؟

وليد العرادي: اقتصرت مشاركة رائدات الأعمال في الماضي على المشاريع الصغيرة المنبثقة من المنزل. وركزت تلك المشاريع على الحرفيات والصناعات التقليدية والطبخ. ولكننا لاحظنا في السنوات العشر الأخيرة زيادة ملموسة في المشاريع التي تطلقها النساء في قطاعات التعليم والصحة والثقافة والتجزئة والقطاع الخدمي بشتى مجالاته والريادة الاجتماعية. وتشير دراسة أعدتها مؤخرا منظمة التعاون والتنمية الاقتصادية على أن أنشطة الشركات التي ترأسها رائدات الأعمال تركز بالدرجة الأولى على خدمة الأشخاص بدلا من الكيانات التجارية.

ولا تزال رائدة الأعمال غائبة نوعا ما عن بعض المجالات كالعلوم والتكنولوجيا والهندسة والرياضيات التي تعرف ب STEM وهي ظاهرة ليست بغريبة حيث أن المرأة تمثل نسبة ضئيلة من الطلاب الجامعيين في هذه المجالات وكثير من النساء لا يسعين بالضرورة إلى العمل في المجالات ذات الصلة بعد التخرج.

When it comes to news on socio-economic trends in the Arab World, government and business leaders turn to Trends Magazine. Tahseen Consulting is honored to have its insights on regulating the emergent sharing economy in the Arab World in the publication’s October issue. We have posted the full article below.

Tahseen Consulting’s Chief Operating Officer, Wes Schwalje, spoke with Nikhil Inamdar, a leading voice on key business trends in the region, regarding the evolving role the sharing economy is playing in meeting the region’s youth employment challenge. In a wide-ranging discussion, Schwalje warns of avoiding heavy-handed regulatory approaches that might limit the socio-economic impact pioneering companies in the sharing economy such as Uber and Airbnb can have on the Arab region.

Despite the negative press attention the sharing economy has received, the Arab World has largely shied away from public and government debate over the policy issues that this major growth sector highlights as it disrupts mature industries. As the sharing economy has grown, it has puzzled global policy makers who are faced with the challenge of embracing innovative, digital services which can lower costs and increase convenience for consumers while balancing the continued competitiveness of incumbent industries.

The Rapid Growth of the Sharing Economy in the Arab World

The sharing economy includes a wide range of online platforms that help people share access to assets, resources, time, and skills. While there are a growing number of regional companies that have entered the sector, the dominant players in the Arab World remain well-funded, Silicon Valley-based startups. From Marrakech to Beirut, and many cities in between, sharing economy firms have rapidly scaled their operations across the Arab World due to strong consumer demand. However, regional policymakers, for the most part, have yet to consider how to regulate the sharing economy.

The Importance of Travel and Tourism to Regional Economies and Employment
CountryTravel and Tourism Total Contribution to GDPTravel and Tourism Total Contribution to Employment
UAE8.40%9.20%
KSA7.70%11.10%
Egypt12.80%11.60%
Morocco17.90%16.00%
Lebanon21.10%20.30%
Source: World Travel and Tourism Council

Early Attempts At Regulation

In considering how to regulate the shared economy, Arab policy makers face two options: dismiss new sharing economy platforms by regulating them out of existence and retaining legislation that favors market incumbents or embrace the efficiencies the sharing economy  can bring to increase innovation and harness the growth of the shared economy to promote socio-economic growth.

Dubai is ground zero for how regulation of the sharing economy might unfold across the region. For example, in the run up to Expo 2020, Dubai is attempting to broaden its range of accommodations. One market segment that has surged in the past several years is short-term apartment rentals. Until 2013, when Decree Number 41 was introduced, short-term rentals of holiday homes were largely unregulated. The Decree made it mandatory for operators and owners who lease out their apartments on a short-term basis to attain a license from the Dubai Department of Tourism and Commerce Marketing. (DTCM) In mid-2014, DTCM started accepting license applications from operators and owners. As of July 2015, a total of 37 operators and owners were licensed to rent out holiday homes in Dubai with 800 units registered.

It is unclear how Dubai’s renewed push to register holiday homes and impose fines on offenders who rent their properties without a license will ultimately affect sharing economy players operating in the short term rental sector. The licensing of holiday homes in Dubai is an example of a reactionary public policy response that could potentially erode the supply base of shared economy players in the short term rental sector by imposing a licensing process on landlords. A win-win solution which would have supported the growth of the shared economy as well as maximized government revenues would have potentially been to meet with sharing economy companies and short term rental agents to discuss how the Dubai tourism tax could be collected from intermediaries and paid directly to authorities. In France, Amsterdam, India, and the United States, sharing economy companies work with authorities to do exactly this.

A recent study suggests that the market presence of sharing economy players operating in the short term rental sector negatively impacts hotel room revenues. However, the competitive response from incumbent hotels often results in price reductions by lower-end hotels and hotels not catering to business travelers. In this respect, short term rental sharing economy firms have the potential to lead to lower consumer prices for hotel rooms as well as more flexible accommodation offerings. In so far as, lower accommodation prices can drive tourism numbers even higher, Dubai’s introduction of licensing requirements as a mechanism for regulating the sharing economy may ultimately have the unintended effect of reducing tourism by reinforcing higher accommodation prices.

Across the Arab World, overlaps between regulatory and operational functions of government institutions can result in significant inefficiency. When government entities provide a service, set delivery standards, and monitor compliance with standards, an unintended outcome is often reduced quality of public service delivery and lower service standards. This governance tradition in the Arab World has produced a number of cases in which regulatory agencies, which should be accountable to Ministries and focused on setting standards to ensure high quality public services, have become too involved in commercially motivated, operational functions. Over involvement of government institutions in operational activities has the potential to reduce the growth of the sharing economy and ultimately negatively impact consumer convenience and choice.

In association with the United Arab Emirates’ Smart Government Initiative, government agencies have been called upon to make their services accessible via smart technologies such as smart phones. The Dubai Road and Transport Authority’s (RTA) recent announcement of its e-limo system, which will require private hire vehicle operators to route transactions through its booking and dispatch system, is a potential example of a case where a government entity with a regulatory and policymaking mandate is extending itself too far into an operational role. By introducing their own limo application, which essentially competes with sharing economy transport networking companies and erodes market supply, RTA risks crowding out private sector innovation that can fuel entrepreneurship, private investment, and job creation.

Embracing the Sharing Economy for Regional Socio-economic Development

According to the World Travel and Tourism Council, travel and tourism contributes approximately $283 billion to Arab economies and employs 11 million people. This means that the contribution of the travel and tourism sector to regional gross domestic product is on par with the banking, chemicals, agriculture, and automotive sectors. It is clear that travel and tourism will play a strong role in generating economic growth and employment in the Arab World over the next decade.

The sharing economy, in so far as it is a key driver of travel and tourism, has the potential to contribute significantly to regional socio-economic development. While there have been no rigorous attempts to determine the socio-economic impact of the shared economy in the Arab World, limited data suggest that the sharing economy has a growing importance in driving the travel and tourism sector in the region. For example, 40% of Uber’s riders in Dubai come from outside the country. Statistics such as this indicate that sharing economy trends and penetration rates globally can have a significant impact on economies regionally.

A recent report on the sharing economy workforce in the United States found that 67.5% of sharing economy jobs are occupied by workers in the 18-34 age demographic. The youth employment impact of the sharing economy globally suggests that embracing the sharing economy in the Arab World could play a key role in government socio-economic development programs to address the Arab World’s youth unemployment challenge. This insight has important implications for how Arab governments should approach regulating the shared economy.

The Age of US Sharing Economy Workers
Age% Sharing Economy Workforce
18 - 2438.70%
25 - 3428.80%
35 - 4416.30%
45 - 5411.00%
55 - 644.30%
65 +0.90%
Source: Requests for Startups 2015 1099 Economy Workforce Report

The Future of the Sharing Economy in the Arab World

The future of the sharing economy in the Arab World is heavily dependent on how governments approach sector regulation. Knee jerk approaches to public policy will prevent the likely considerable positive socio-economic development impacts that can be generated by the sharing economy. In the GCC countries, entrepreneurship programs and wage subsidies offer significant potential to attract nationals and private investment to emerging sharing economy sectors that can reduce public sector employment. While in middle income Arab countries, the sharing economy can offer employment options for youth that can be combined with government finance and training programs that eventually lead to business ownership. Where other countries are limiting consumer choice by over-regulation of the shared economy, the Arab World has the opportunity to distinguish itself as a region that embraces the sharing economy through a well-considered public policy response that harnesses the sector’s potential growth for regional socio-economic development.

Unemployment By Age Group in Selected Arab Countries
AgeUAEKSAEgyptMoroccoLebanon
18-2433%52%63%42%45%
25-3432%45%36%40%32%
35-4415%3%1%12%8%
45-5412%0.50%0.06%5%8%
55-648%0.09%NA0.22%4%
65 +NANANA0.22%2%
Source: Latest available statistics from the International Labor Organization

When it comes to news on socio-economic trends in the Arab World, government and business leaders turn to Trends Magazine. Tahseen Consulting is honored to have its insights on emerging trends in Arab philanthropy featured in the publication’s September issue.

Tahseen Consulting’s Chief Operating Officer, Wes Schwalje, spoke with Nikhil Inamdar, a leading voice on key business trends in the region, regarding the region’s transition from charity to strategic philanthropy. In a wide-ranging discussion, Schwalje discusses recently launched large scale philanthropic initiatives, emerging trends in strategic philanthropy, and what the future holds for Arab philanthropy.

Tahseen Consulting's insights on emerging trends in Arab philanthropy are featured in Trends Magazine's September issue

Tahseen Consulting’s insights on emerging trends in Arab philanthropy are featured in Trends Magazine’s September issue.

Nikhil Inamdar: What are the latest trends being witnessed in Arab philanthropy?

Schwalje: The three most transformative trends I see now are as follows:

High Net Worth Individuals Are Playing an Increasing Role: In 2010, Berkshire Hathaway CEO Warren Buffet and Microsoft co-founder Bill Gates established the Giving Pledge to persuade American billionaires to donate at least half their wealth to philanthropy or charitable causes either during their lifetime or after their death. This initiative has since been broadened to include philanthropists globally. In 2012, Tahseen Consulting conducted a study in which we looked at the potential impact of Arab billionaires signing the giving pledge. At the time, we estimated that $24 billion could be mobilized if Arab billionaires signed a pledge to donate their wealth to philanthropy. While many high net worth individuals have a strong tradition of giving informally, we are witnessing more wealthy Arab individuals making large scale philanthropic contributions transparently and publicly. Their motivations are no different from philanthropists in other parts of the world – wanting to give back to those less fortunate, gaining public recognition and social capital, establishing a legacy, and playing a greater role in shaping their country’s or region’s future. The $1.1 billion donation of Abdullah Ahmad Al Ghurair to capitalize a private foundation and Prince Al Waleed bin Talal’s pledge to direct most of his $32 billion in wealth to philanthropy, we are potentially witnessing a new phase of Arab philanthropy. We are likely to see several more of the Arab World’s approximately 36 or so billionaires making sizable pledge to philanthropic initiatives to strategically manage their wealth for the greater good.

The Transition from Charity to Strategic Philanthropy: In the past, charity in the Arab World was motivated by individual, unpublicized initiatives to give back to local communities. Giving was often focused on societal issues affecting local communities like poverty, housing, and heath care. Arab philanthropy historically has been individually motivated acts of kindness that did not typically address the root cause of societal issues. In the late 2000s, we witnessed a significant push in the region to institutionalize charity, philanthropy, and corporate social responsibility to make philanthropic efforts more strategic. This push towards philanthropic investment and strategic philanthropy remains rooted in the region’s religious traditions of Zakat and Waqf. In the early 2000s, many philanthropic efforts could still be characterized as donations to fund program execution by nonprofits. Philanthropists were primarily concerned about programmatic execution commensurate with the size of their donation with little regard for measuring impact and enhancing institutional capacity. A pivotal watershed occurred in 2007 when Sheikh Mohammed donated $10 billion to endow his namesake foundation the Mohammed bin Rashid Al Maktoum Foundation. The scope of this philanthropic gesture catalyzed a number of dialogues in the region about strategic philanthropy. The late 2000s saw the emergence of a number of endowed foundations in the region that began investing resources into nonprofit enterprises in order to increase their capacity to address the root causes of regional development challenges. By 2015, a number of the initiatives launched in the early 2000s and earlier have adopted strategic approaches to philanthropy which involve building internal capacities to deliver programs, developing the institutional capacities of nonprofit partners and grant recipients, pursuing programs with well thought out approaches that address the root causes of development issues, and strong systems of monitoring and evaluation to measure impact and value for money.

Arab Philanthropy is Playing an Increasingly Important Role in Global Development: Many of the region’s philanthropic institutions have become involved in international development and engage regularly with multilateral institutions and bilateral donors. Increasingly large Arab philanthropic initiatives have been able to shape the policies of multilaterals and bilateral institutions through their funding, provide input on program design and development, and contribute funding for scaling up successful initiatives.

Nikhil Inamdar: What distinguishes Arab philanthropy from global philanthropy?

Schwalje: In addition to the relationship between philanthropic giving and religious traditions, a unique aspect of philanthropy in some of the Arab countries is the emergence of hybrid foundations which are funded by government or quasi-governmental funds and private donors. In other regions, public charities generally receive their funding from the public through grants from individuals, government, and private foundations, while private foundation generally receive funds from a single source, such as an individual, family, or corporation. In this respect, the definition of what constitutes a charitable organization and to whom it should be held accountable is not as clear cut as elsewhere. Adding to this confusion is the fact that many of the region’s philanthropists wear multiple hats in business and government.

Nikhil Inamdar: What will need to happen in terms of regulation etc. for this segment to mature like the way it has in Western economies like the US?

Schwalje: In many Arab countries, civil society laws make the registering of philanthropic organizations immensely difficult and can preclude fund raising. Such laws have the potential to negatively influence the development of civil society. Laws which might also serve to motivate individual giving and corporate philanthropy, such as tax deductible charitable giving, are also lacking. Emerging forms of philanthropy, such as venture philanthropy and crowdfunding, currently exist in regulatory grey areas which require regulation to ensure they can thrive in the region.

Nikhil Inamdar: Does philanthropy need to become more organized in terms of impact assessment, audit etc. so as to give the sector a more formal structure?

Schwalje: Several elements are required to Advance Arab Philanthropy:

Mapping Giving Patterns: More effort is needed to map philanthropic giving to determine what entities are giving and to whom in order to identify unmet needs. An interesting initial attempt to map private philanthropic contributions is the UAE’s Annual Foreign Aid Reports which included information on giving by many of the UAE’s philanthropic organizations. More information on giving patterns with promote coordination and reduce overlap of efforts.

A Focus on Improving Delivery Capabilities of Beneficiaries Linked to Funding: In many cases, regional nonprofits lack the capabilities and internal controls to absorb and manage large-scale donor contributions. This has promoted a tendency of Arab philanthropists to work with international organizations over home-grown Arab institutions. Capacity strengthening of Arab donor recipients linked to philanthropic contributions will be required to strengthen the region’s civils society institutions to deliver more effectively on large-scale initiatives and attract larger philanthropic donations.

Improved Capabilities to Analyze Value for Money: Because of the youth of strategic philanthropy in the region, there are several organizational capabilities that philanthropic organizations need to improve. This includes identifying program objectives to determine the strategic intent and envisioned impact of initiatives, examining the ongoing relevance and validity of programs, ensuring efficiency and economy of activities, and assessing the impact of programming.

Founded as a news weekly magazine in 1933, U.S. News and World Report is well known for its analysis of educational institutions in its annual college rankings. Tahseen Consulting is honored to have its work on Arab women studying and working STEM fields in the Arab World featured in two recent article in the U.S. News and World Report.

The State of Higher Education in the Middle East article references a Tahseen Consulting study in which we explored the barriers facing women in entering science, technology, engineering, and mathematics fields in the GCC in an article in Forbes Middle East. The original article is available at http://tahseen.ae/blog/?p=980.

U.S. News’ article More Arab Women Studying STEM features comments by Tahseen Consulting’s Wes Schwalje on competitions as a mechanism of exposing female students to STEM fields.

Beginning in the late Nineties, Qatar launched a comprehensive set of education reforms to more effectively align its education and training system with its macroeconomic policies aimed at advancing towards a knowledge-based economy. However, technical vocational education and training (TVET) has not been a significant focus of educational reforms.

Though the need for more effective TVET systems emerged as early as the 1940s when Qatar started producing and exporting oil, the government has primarily focused on supply side, expansionary educational policies aimed at establishing new TVET institutions. However, many of the TVET governance institutions that prevent underinvestment in skills, provide adequate regulation, and coordinate stakeholders are still in a nascent state.

TVET policies in Qatar have largely proceeded without a clear conceptualization of the scope of TVET and which types of institutions should be included in the TVET policy and which ones should be excluded. TVET faces an identity crisis in which people are unhappy with the name, the image, and reputation. It remains unclear how technological TVET can be, what fields it encompasses, and whether TVET leads to jobs which are considered acceptable to Qataris.

In the presentation below, we highlight some of the issues Qatar will need to address to develop a national TVET strategy which overcomes existing gender issues.

Tahseen Consulting is honored to have its work on skills gaps in the Arab World cited by the Gulf News. We have posted a snippet from the article below. While we agree that more occupation-specific assessments and certifications are needed, there are likely larger employer-level interventions required before such initiatives can really have an impact. We view increasing the resources regional firms devote to workforce investment and development as systemic problems that must be addressed first.

Workforce Investment

While firms tend to focus on paying higher wages for highly demanded skills, macroeconomic trends and rampant market failures of education and training systems suggest longer term approaches to skills formation through continuous, regular on the job training and knowledge transfer are needed (Hall & Lansbury, 2006). Market failures in human capital formation are rampant as education and training institutions struggle to keep pace with economic growth (Lall, 1999). The workforce investment mandate of employers in the 21st century has expanded to include not only training in response to high-performance workplace organization and maintaining skills relevancy in light of competitiveness, but it now also includes the burden of remediating inadequate pre-employment general skills formation due to formal education and training system market and institutional failures. Despite widespread skills shortages and gaps observed in the Arab World, training rates are generally lower as compared to developed knowledge economies with more effective skills formation systems as well as other developing economies such as Brazil, China, and Russia (World Bank, 2010).

Lall (1999) suggests that basic skills, personal attitudes, and competencies developed through formal education and training must be complemented with specific technology-based experience to develop technical skills. Industrial sophistication and competitiveness are derived not from formal education and training but the “practical experience of mastering, adapting, and improving specific technologies” (Lall, 2000, p. 22). Industrialization and skill accumulation are achieved by expansion of the education system alongside the upgrading of the skill intensity of economic activities. For developing countries, this approach reduces the technology gap with advanced countries while raising the demand for higher levels of human capital and concurrently providing the education and training required for economic development (Mayer, 2000). To avoid insufficient individual incentives to engage in skill upgrading, improved performance and productivity gains from skills acquisition are linked with pay when firms exercise wage flexibility (Ashton & Sung, 2002).

The willingness and ability of firms to provide enterprise-based training is rooted in a number of factors. The educational attainment of the workforce and firm managers can serve to reduce investments in firm-level training. Low levels of education amongst a firm’s workforce can raise doubts surrounding the absorption capacity of training while managers with lower levels of education may not perceive a value in providing training. Managerial calculations of the returns to training may be further complicated by informational gaps surrounding technology, future skill requirements, and benefits of training (Lall, 1999). Firms which operate in less competitive, low skill production economies in which short-term strategic planning, little technological upgrading, low rates of capital spending, and an unfavorable economic policy environment for growth are rampant may prevent structured firm-based training.

Lack of internal capacity to provide training can obligate firms to rely upon external private training provision. In cases where the external training sector is underdeveloped and firm sizes are generally small, the inability to achieve scale to minimize training costs and budgetary constraints can serve to reduce the prevalence of firm-based training (Lall, 2000; Ziderman, 2003). This situation is particularly applicable in the Arab World where firm sizes are comparatively small relative to other regions (Schwalje, 2013c). Employee poaching, the tendency of firms to recruit employees with transferrable skills from other firms, may serve to limit firm-based training since training firms incur the cost of employee training only to lose the employee and resulting benefits of the training to another firm. In an environment with high levels of poaching, training firms will reduce training or only offer highly, specific training that is not transferrable to other firms (Acemoglu & Pischke, 1998).

Due to the variety of causes of inadequate enterprise training, policy solutions must be tailored to the root cause. In cases of market failure which deter workforce investment, joint approaches that share the responsibility of skills development between government and business have been effective. Training subsidies allow companies to develop training capacity, but more sustainable, longer-term approaches such as government provided training advisory and technical assistance funded through national training funds and levy-grant schemes are preferred. A notable initiative of this type is the Waqf Fund in Bahrain which trains employees for the Islamic banking sector based on contributions from private financial institutions which are invested in money market instruments and the returns invested in training initiatives. The Human Resources development Fund in Saudi Arabia also works in a similar way. Where the private training sector is weak, the government may fulfill a transitional role to build the capacity of private training providers complemented with public sector provided training. Payroll levy-grant schemes which do not require government financing are effective in limiting poaching. Under such schemes, firms which provide training receive subsidies to fund training initiatives while firms that do not train do not have access to funds since they are more likely to poach employees (Ziderman, 2003).

Tahseen Consulting is honored to have its work on skills gaps in the Arab World cited by the Gulf News.

Workforce Development

Jacobs (2002) identifies workforce development as the cooperation of education and training institutions, the business community, and governments to provide individuals with rewarding employment as well as firms obtaining skills in the quantity and quality they require. High youth unemployment rates and market failures of education and training systems to create general skills suggest an expanded role for the Arab business community towards ensuring alignment between the skills imparted in formal education and training systems and those demanded in the workplace. Apprenticeships or work experience, often compensated at below the market wage rate, in which work experience is integrated into the formal educational structure and classroom learning can ease the school-to-work transition and ensure employability of young graduates (Quintini et al., 2007).

Including employers in curricula design, identifying the skill sets needed by graduates, standards setting, and accreditation can ensure education and training systems evolve alongside changing labor market needs. Through membership in industrial trade associations, businesses can also serve a governance role in the skills formation system (Ackroyd, Batt, Thompson, & Tolbert, 2005). However, in developing countries the oversight role typically played by scholarly, scientific, and professional organizations may be limited due to lack of capacity. Workforce development ensures that the relevance and employability mandate of education and training systems is fulfilled by minimizing informational asymmetries which reduce individual investment in skills acquisition. Early employer involvement in articulating future skills needs also serves to reduce the need for workforce training investment to backfill general skill deficiencies resulting from poor quality education and training systems.