The Middle and North Africa (Mena) region is lagging behind the rest of the world when it comes to starting and running a small business, a report from Global Entrepreneurship Monitor (GEM) indicates.
According to the report, nearly three in four people in Mena see entrepreneurship as a good career choice, and 38 per cent expressed intentions to start a business — both higher than the global average.
But the report noted a significant drop between intentions and action, with only 70 per cent of those expressing the intent to start a business failing to follow through to the early stage.
The Mena region had the lowest rate of established entrepreneurs of all the regions examined by the GEM survey (6.8 per cent of the adult population), and the business continuance rate was higher, at 6.2 per cent.
For every person leaving a business in the Mena region, only 1.7 people were engaged in early-stage entrepreneurial activity — just over half the global average.
The report’s lead author, Ayman Ismail, Abdul Latif Jameel Endowed Chair of Entrepreneurship at the American University in Cairo School of Business, said, “The Mena region has experienced significant economic and social losses from poor economic management and conflicts since the 2011 Arab Spring.
“Our research shows that there is an urgent need to deploy the region’s substantial human, natural, and financial assets more efficiently through adopting economic and social policies that create long-term sustainable and inclusive economic growth.”
Ismail added, “The fact that positive perceptions and intentions to start a business are not turning into business activity is concerning. And even when businesses are started — too many of them close within three years. This suggests that there are key gaps in support being offered to entrepreneurs throughout their lifespan that need to be addressed.”
Most often, entrepreneurs cited lack of profitability or problems accessing finance as concerns. In Jordan and Morocco, these reasons together account for over 70 per cent of business exits.
The report recommended extensive policy shifts to facilitate a more enabling environment for entrepreneurs.
“The opportunity to leverage change exists mostly in the under developed SME sector, as many of the larger organisations in the region have achieved international status and a high degree of competitiveness,” said Mike Herrington, co-author of the report and Executive Director of GEM. “In ten of the twelve entrepreneurship areas considered by GEM to be important to foster entrepreneurship growth in a country the MENA experts report scores below the GEM average.”
He added that the report’s recommendations would help policymakers and business leaders put into place precise, practical and targeted solutions to address each area of concern.
“It is difficult to propose a ‘one solution for all’ approach,” noted Herrington. “However, the research did flag three key areas that would benefit the region overall if given attention: education, the regulatory environment, and strategies to uplift women.”
Other areas needing attention are school-level entrepreneurship education and R&D transfer.