Tahseen's COO Wes Schwalje talks about how Arab governments can better support startups and SMEs

  • A healthy entrepreneurship ecosystem is essential for Arab startups and SMEs to grow, thrive, and commercialize innovative ideas
  • However, technology infusion rates in SMEs remain low regionally, so Arab nations must find ways to support SMEs that are not solely tech-focused

In this brief interview with a leading publication, Tahseen Consulting’s Wes Schwalje talks about how Arab governments can better support startups and small and medium-sized enterprises. With several Arab capitals vying to be the entrepreneurship hub of the Arab World, the stakes are high and are becoming higher. In many cases, poor digital economy and entrepreneurship polices, continue to stand in the way.

Question: The MENA region is undergoing immense change at the moment – are you an optimist or pessimist and why?

Schwalje: I am very optimistic about the developments we are witnessing in the entrepreneurial ecosystems across the region in both the Gulf Cooperation Council countries and the wider region. In 1997, when we first started seeing countries like Jordan, Morocco, Tunisia, and Egypt referencing knowledge-based economic transformations in their development plans, entrepreneurship has been a priority objective of governments across the Arab World.

The initial push to reinvigorate regional entrepreneurship ecosystems focused on new institutions, policies, and programs to cultivate a healthy risk-taking culture, ease access to finance, implement better regulation, and enable small and medium-sized enterprises to reach international markets.

And now, in 2018, we are starting to see the budding fruits of this foresight. We are seeing M&A activity of young enterprises in our region by well-known global companies, more interest in regional capital markets, unicorn startups being incubated, significantly more interest in regional markets by global technology companies, and critical historical gaps in the entrepreneurship ecosystem, like lack of risk capital, being filled. The view obviously varies by which country you are in, but there is a sense now that the MENA region’s time is now that is collective and widespread.

Question: What part does entrepreneurship play in solving the region’s challenges?                            

Schwalje: For the last 20 years, entrepreneurship has been viewed by regional governments as an enabler of knowledge-based, highly productive, and competitive economies. For this reason, entrepreneurship ecosystem development is being prioritized as a key economic development policy priority in all Arab countries. Many of the Arab economies have what can best be characterized as bazaar economies with significant segments of small and medium-sized businesses in more traditional economic sectors. 

A healthy entrepreneurship ecosystem is essential in order for startups and small and medium-sized enterprises to grow, thrive, and commercialize innovative ideas.

The Arab countries are focused on entrepreneurship and SME support to create jobs and help small businesses grow into profitable companies that can serve as engines for employment and economic development. In many of the Arab Economies, SMEs provide nearly all private sector employment. So a key goal of many Arab countries now is to establish assistance programs that support fledgling ventures in the early, vulnerable stages of their development so that they are able to grow and become engines that sustain growth for long-term development. Over the longer term, nurturing and supporting entrepreneurs is important to the region for creating jobs, economic diversification, boosting innovation, increasing productivity, and commercializing research.

Question: How can governments better galvanize the entrepreneurial talents of their youths?

Schwalje: I would say that one correction many Arab countries need to make in their entrepreneurship policies is to move away from viewing the technology sector as the sole industry worth of support. 

If we look at Global Entrepreneurship Monitor surveys from the region, typically less than 3% of businesses in Arab countries have technology based business models.

Low rates of technology infusion in SMEs are quite consistent across the region. So a key issue that Arab nations need to find an answer to is how to support startups and SMEs that are not technology-focused to also grow and create economic opportunities. In our region, perhaps our view on the types of sectors entrepreneurship polices and programs should focus on has been overly influenced by venture capitalists’ strong interest in the technology sector. There are many regional startups that are viable but not VC-fundable that are very worthy of our attention and support. Because all of the region’s future SMEs, technology-focused or not, begin as fledgling startups that have significant potential to contribute to meeting the Arab region’s youth unemployment challenge, there is a pressing need to identify alternative, more inclusive ways to support them. Supporting technology entrepreneurship is one answer, but it should not be our only answer.