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 / Spring 2014 / Issue 74(originally published by Booz & Company)


Corporate Social Responsibility’s New Role in the Middle East

Another new corporate-sponsored accelerator is Turn8, a yearlong program supported by DP World, one of the largest marine terminal operators in the world, which is owned by the Dubai government. Turn8 identifies candidates for the accelerator during a global series of pitch events, incubates those startups for several months, and then brings them on a road show. Given the accelerator’s sponsor, it’s no surprise the startups focus on sectors that support marine port operation, including transportation, logistics, the environment, health and safety, and travel.

Like many other such initiatives, Turn8 is not a selfless program. It benefits both parties. “We realized that change is happening so quickly around us and that we’ve got to be part of it,” said Yousif Al Mutawa, DP World’s chief information officer, according to an article in Wamda, a website devoted to news about small business and entrepreneurship in the MENA region. “There’s a big drive from the leadership to foster the [entrepreneurship] ecosystem in UAE.”

The momentum behind these CSR initiatives and new business models is not coming just from local companies in the Middle East. Some well-known multinationals are throwing their own weight behind the movement. For example, Google for Entrepreneurs is supporting the Library Giza, a community space in the Cairo suburb of Giza designed to offer testing, support, and training for startups that focus on Web technology.

The Library Giza will offer a collection of devices that startups can use to test their products and services. It will also host meet-up groups; training sessions; and classes on topics such as technical development and design, business planning, management and operations, and business model development. The co-working space will sponsor talks and mentorship sessions with industry experts and provide programs targeted to specific vertical markets, including mobile apps, e-commerce, health, education, and gaming.

“The Library Giza will generate ideas, jobs, and energy for the new Egypt and help harness that energy and untapped potential of the Egyptian youth,” said Wael Fakharany, Google’s regional manager in Egypt and North Africa, in a statement posted by Wamda.

Creating Financing Options

Beyond education and training, some established companies are beginning to provide more investment support to SMEs. In a speech at the Global Entrepreneurship Summit in Dubai in late 2012, Fadi Ghandour, founder and then CEO of Aramex, noted that SMEs face severe impediments when trying to access capital from banks—including high interest rates and crippling collateral demands—leaving them with few financing options. According to the 2012 World Bank report on SMEs for job creation in the Arab world, only 20 percent of SMEs have a loan or line of credit, and SME lending accounts for only 8 percent of total loans made in the Arab world, the lowest ratio globally.

Ghandour’s proposed actions for companies include establishing angel investment networks (by city, country, and sector); investing in and supporting venture capital funds, private equity funds, and other investment tools; partnering with banks to develop SME-friendly debt services; and investing in micro-venture funds and microfinance institutions. Some of these activities will, ideally, result in profit, but the core driver is creating and sustaining a legitimately friendly environment through which entrepreneurship can flourish in the region.

In a similar vein, the Abdul Latif Jameel Community Initiatives has committed to supporting the MIT Arab Business Plan Competition for the next five years to ensure the initiative’s sustainability. The competition received 1,852 applications from 13 Arab countries. It requires entrepreneurs to work in teams and to present their business ideas to some of the Middle East’s leading decision makers. The shortlisted teams compete for startup seed grants of $60,000 as well as mentoring support from successful business leaders and consultants.

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