WASHINGTON // In the United States, the dominant media narrative about the Middle East is one of conflict and overwhelming fear.
But while ISIL extremists have attracted thousands of disillusioned young Arabs to their cause by offering a warped sense of empowerment, there has been little attention paid to the region’s burgeoning technology entrepreneurship industry.
That sector is now beginning to unlock the potential of the Middle East’s biggest challenge — or biggest asset — its large numbers of young people, according to a former Silicon valley CEO.
The Mena region has an overwhelmingly young population — over half under the age of 25 — and double the global average of youth unemployment, according to a 2014 World Economic Forum report. It also has one of the highest penetration rates of mobile phones in the world, and mastery of the latest technology can be seen in the sophisticated level of ISIL propaganda.
But young people are also figuring out how to use and develop technology in ways that have led to a boom in small start-ups, particularly those using mobile technology.
“I have yet to find [an economist] who can tell me how much … large businesses in these regions let alone government jobs are going to scratch the surface of the [employment] problem,” said Christopher Schroeder, the author of a 2013 book Startup Rising: The Entrepreneurial Revolution Remaking the Middle East.
“But now all of a sudden when people are wired they can begin to take economic opportunities into their hands in ways we’ve already seen all over the world” in emerging markets.
Yahoo’s Maktoob was one of the first big tech ventures in the region, which spun off the first Arabic-language e-commerce sites, Dubai-based Souq.com. The site was recently valued at over a billion dollars.
These successes have inspired start-ups in cities like Cairo and Amman, and now Dubai is becoming a regional hub for young tech workers from across the region, where the increased concentration of talent is key condition to creating a regional Silicon Valley.
A shift in culture has also taken place since he began looking at the region four years ago, Mr Schroeder said. “Success breeds success … all of a sudden parents look at their kids and say, ‘Hey, this doesn’t look so bad’,” as a career choice.
While it is “absurd” to think that technology alone can solve the region’s many immediate challenges, Mr Schroeder said that 15 per cent of the over 1,000 start-ups he has seen involve educational tools. Nafham, an Egyptian online education site, uploaded 20,000 free lecture videos in Arabic that have been viewed 2.5 million times in the nine months since it began, Mr Schroeder said.
He added that while it will not address the huge lack of quality public education in Arab societies, such businesses are “complimentary” and “can make the next decade of the Arab world a very different thing than the last decade”.
A quarter of the start-ups he has seen in the Middle East are run by women, he said. “In Silicon Valley, if there were ten per cent women in any category I’d be shocked.”
Just as tech investors have been drawn to other emerging market success stories, US investors are beginning to pay more attention to the Middle East.
However, he said, the scale of political instability and uncertainty is a major impediment.
“In the last six or nine months I’ve had more Silicon Valley people asking me what’s happening in the Middle East than at any time since I wrote this,” he said.
“When I wrote this book they thought I was insane.”
While the US is still a world leader in innovation and technology, the country’s firms have been tentative in their engagement, partly due to concerns about sharing technology.
Middle Eastern entrepreneurs may turn instead to China for technologies, Mr Shroeder said, noting the example of Ali Baba, which he said is the first major tech company built without any western technology. The region is “perfectly situated” for emerging market to emerging market technologies, he said.
Still, Mr Schroeder hopes Silicon Valley collaborates with Middle East tech entrepreneurs, who he said understand the regional market better. “They’re mobile first, they’re thinking in different ways. Silicon Valley has its expertise, and I think the real opportunity is a co-authorship,” he added.
While the rule of law and enforcement of contracts has been a concern for US venture capital investors, Mr Schroeder praised the laws passed by the UAE over the past year aimed at making the country an attractive base for technology businesses.
“In the last 18 months in the UAE, it is unlike anything I’ve seen in the Arab world,” Mr Shroeder said. “I think we’re going to look back to the UAE and what its done over [the] past year and say it’s been a model in terms of what a state can do in terms of supporting” a fertile environment for start-ups.
In the wake of the Arab Spring, regional governments have tended to become less likely to implement policies aimed at supporting tech innovation, he added, calling this approach a mistake.
“I spent some time articulating how empowering this new generation is a necessity. Even an existential necessity, but many regimes when they think technology they think what we would call First Amendment stuff, that you’re opening them up to riots, opening them up to protests, you’re opening [people] up to say things they don’t want them to say,” Mr Schroeder said.
The venture investor was speaking at the UAE Embassy in Washington on Wednesday at an event co-sponsored by the Harvard Business School. The UAE’s Ambassador Yousef Al Otaiba, noted that 2015 has been designated by the UAE as a year of innovation, with the aim of fostering the technology entrepreneurship industry in the country.
“We put open and progressive policies in place to stimulate growth, we welcome business people from around the world, we encourage diversification away from oil… and most importantly we involve women fully in all areas of society,” Mr Al Otaiba said.
foreign.desk@thenational.ae
