Rising levels of investment in regional technology start-ups has made them more attractive to big corporations looking to collaborate, a key driver for job creation, according to organisers of Dubai’s Expo 2020.
At a summit in Dubai yesterday, companies both old and new were urged to find more ways to engage and help to tackle the Middle East and North Africa’s unprecedented jobs crisis. Tens of millions of new jobs are forecast to be needed by 2020 to meet a growing labour force in the region.
According to the World Bank, start-ups are one of the main engines of job creation in the Mena region; “in Lebanon, about 177 per cent of net job creation from 2005 to 2010 was generated by micro start-ups; in Tunisia, small start-ups created 580,000 jobs from 1996 to 2010, 92 per cent of all net job creation”.
The IMF’s update for the Middle East and Central Asia, released last month, projects that growth this year will be about 3 per cent as oil prices continue to languish at less than half their 2014 high of over US$110 per barrel.
“It is crucial that all countries step up their efforts to design and implement reforms to boost economic prospects, create jobs and improve inclusiveness of growth, before they run out of time,” IMF Middle East and Central Asia department director Masood Ahmed said at the report’s launch in Dubai.
Regional entrepreneurship accelerator Wamda, Expo 2020 organisers and more than 400 representatives of businesses of all sizes gathered together yesterday “to identify opportunities for collaboration and growth” to support job creation.
Since September, Expo 2020 Dubai has been formally reaching out to the regional business community to engage them and draw on their expertise to help ensure a lasting legacy for the fair, which is expected to be visited 25 million times over the course of six months, mainly by people from outside the UAE.
Reem Al Hashimy, UAE Minister of State for International Cooperation and director general of Bureau Expo Dubai 2020, said that the Collaborative Entrepreneurship Summit Initiative aims to create new networking opportunities between corporate executives and start-ups.
“By bringing the concept of collaborative entrepreneurship to the region, we are clearly demonstrating just how powerful Expo 2020 Dubai can be in convening diverse audiences to tackle the challenges of tomorrow,” she said.
A 2013 Wamda Research Lab survey of over 700 Mena entrepreneurs showed that only 10 per cent had formed a partnership with a large company, but 40 per cent said such partnerships are important for scaling up their businesses. However, most engagement by bigger businesses with start-ups has been CSR-focused and activity in this regard has not been particularly frequent until recently, in the past 18 months, according to a joint study earlier this year on collaborative entrepreneurship by Expo 2020 and Wamda. Corporations can help to foster a culture of innovation through partnering with start-ups that are inherently agile and focused on new products and ideas.
Habib Haddad, Wamda’s cofounder and chief executive said that the push for greater engagement comes at the right time as start-ups from the region are now attracting serious international and regional investments.
Fresh funding announced by the online retailer Souq.com in February moved the region a step-closer to having its first “unicorn” – a tech start-up company that reaches a US$1 billion market value as determined by private or public investment.
Investors including New York-based Tiger Global Management, Standard Chartered Private Equity and South Africa’s Naspers put Dh1bn into Souq.
Large corporations in the region including broadcaster MBC Group, logistics firm Aramex and Saudi Telecom (STC) offer successful examples of collaboration with start-ups either through acquisitions and investment or partnerships, according to Expo 2020 and Wamda.