Some of the information technology industry’s biggest companies — including Google, Yahoo and Cisco — and some of its more notable young entrepreneurs — such as 22-year-old Maria Mahdaly, founder of Rumman.com — were present at the Middle East North Africa (MENA) ICT forum on October 10 and 11. Throughout the two-day forum, business and political leaders agreed on the potential investment opportunities in the region. But forum participants were quick to point out the challenges faced by entrepreneurs, including stifling regulations, a lack of content for the Arab market and a business culture bent on adapting to current trends rather than innovating new ones.
"It is very important that we start engaging our angel investors," noted Fawaz H. Zu’bi, founder and CEO of Accelerator Technology Holding, an investment firm focusing on MENA technology companies. "We need to make sure that people start believing [in regional technology firms], and then all the questions investors have will start being part of the culture of how we do business."
In the past 10 years, the MENA region has witnessed a surge in demand for information and communication technology (ICT). According to industry estimates cited at the forum, the past decade has seen regional Internet usage increase by more than 1,800%, while 80% of the region’s population now owns a mobile phone. Even the region’s most traditional bureaucracies have embraced such technology, with both the public and private sectors increasingly offering locals ways to do business online and through mobile applications.
With 30% of the MENA region’s population between 15 and 29 years old, the youth is taking the lead in creating new opportunities in these industries by showing interest in not only creating new technology, but also in developing technology relevant for the Arab market, experts said. An example of one such young innovator is Habib Haddad, the Lebanese founder and CEO of Yamli.com, a search engine allowing users to type in Arabic without an Arabic keyboard.
In the Middle East, however, no effort can be successful without the blessing and support of government. Among the sponsors of the forum in Amman were the Information Technology Association of Jordan (known as Int@j), the Jordanian Ministry of Information and Communication Technology, Jordan Export Development and Commercial Centers Corporation and the United States Agency for International Development. Addressing the audience during the opening ceremony was King Abdullah II of Jordan. "Your sector stands as a model of enterprise showing what people can achieve when they work with conviction, passion, focus and ambition," the king told delegates. "In less than a generation, your sector has helped alter the cultural perception of entrepreneurship throughout our country and our region."
Investment Capital Conundrum
In a region with an abundance of oil wealth, it is easy to assume that there would be no shortage of capital available to throw into new business ventures. Yet according to many of the forum’s delegates, investment capital is difficult to acquire, and even harder to retain. "What is fundamentally crippling our region is the attitude of ‘I’m not going to give you anything, because if I do, you are just going to spend it recklessly,’" noted Randa Ayoubi, founder of Amman-based animation company Rubicon. "Arabs throughout the region go to investors needing US$100,000 for an idea, but the investor [says,] ‘You are going to do it with US$20,000.’ This is more crippling for the entrepreneur than not helping at all."
With economists predicting that the region needs to create 90 million jobs in the next decade to keep its young population out of unemployment, investors are looking into projects that can provide quick returns — not to mention jobs, says Ahmed Takatkah, founder of Riyadh-based investment company N2V. "Most investors know that research is a long-term investment," he pointed out. "It’s also a greater risk than a set business plan. With small business plans, we [know what to] expect: If it succeeds, [there will be] a large profit from a small investment."
Ayoubi, a Harvard MBA graduate, says that in addition to liquid capital, MENA’s entrepreneurs need support in learning how to develop robust forecasting techniques, market studies and business models. When she was searching for investors for her company, she observed a hefty amount of risk-aversion. "If we try to avoid failure, we are going to be scared to go forward," she added.
Finding investment capital isn’t the only hurdle in creating a new and innovative business in the Middle East. Panelists called for governments across the region to better facilitate the licensing and registration process for new businesses. "You have to create an environment that encourages creativity," said Mohamed Saeed Harib, creator of Freej, the first Arabic language 3-D animation cartoon. "One of the reasons I could do Freej was because I was based in Dubai Media City [which has preexisting infrastructure and relaxed visa and operational procedures]. It’s a one-stop shop."
The cartoon is centered on four grandmothers in the United Arab Emirates attempting to deal with the metropolis quickly rising around them. It became a hit in the region and was one of the most-watched regional TV shows during Ramadan in 2006, 2007 and 2008. Now the show has licensed merchandise and agreements that allow characters to be used for advertisements and public service announcements — one Freej‘s finger-wagging matriarchs appears in government warnings about surfing the Internet for content considered questionable in the UAE.
The 32-year-old animator attributed the success of Freej to the ease with which he was able to start his business and the funding he received when the show was in development. But it wasn’t the business model that made the show such a hit, Harib pointed out. Rather it was the fact that the content struck a chord with its audience by addressing many timely issues facing residents in the region. Panelists said burgeoning ICT companies need to do the same for the sector to grow in the region.
In Search of Arab Content
In the industry, it’s often estimated — whether true or not – that only 5% of Internet users are Arab and only 1% of content on the web is available in their native language. At the MENA ICT forum, industry leaders addressed this issue. "Look at the Apple store. At last count, there were 90 iPhone applications in Arabic," said Adnan Abu Dayya, executive director of Qatar University’s Wireless Innovations Center. "How many applications are really … targeting the MENA region and the Arabic world? I’m not talking about just putting the Arabic language on English applications. This is a fundamental issue we need to address."
According to panelists, smartphone applications, social networking sites and numerous other websites don’t have enough content that is tailored to the Arab world. Many attribute the shortage to cultural barriers, and the idea that people in the region value privacy more than access to information. But Google’s MENA marketing manager, Wael Ghonim, noted that "If you go online, you will see that Arabs really share. It’s just that we are not good in promoting ourselves. A lot of guys are amazing and barely anyone knows about their content. Thanks to social media, things are improving."
Perhaps one of the most indicative statistics of the region’s desire to contribute to Internet content is its strong presence on Facebook. About 10% of the site’s users come from the MENA region, according to an industry estimate. Yet the site doesn’t have a unique database of Arabic users, as it does in other languages. Mahdaly — the youngest panelist at the forum — has grappled with this challenge. She founded Rumman, a Jeddah-based holding company with interests in new media and publishing focusing on Saudi Arabian youth. Rumman’s social network, Feenak.com, has 30,000 followers. The network allowed Mahdaly to create business ventures with large companies wanting to connect with a niche audience that has the greatest spending power in the region.
"One of the things that made our brand successful is integrating the major social networks into our circle," Mahdaly noted. "We went on the existing networks and gave them another option for something not readily available."
Discussing the US$85 million acquisition of the Arab online portal Maktoob.com by Yahoo in 2009, Hosam El Sokkari, Yahoo’s Middle East head, said the merger was key to the U.S. company’s regional growth plan. "Maktoob has become known for its forums and user-generated conferences," he noted. "That is now an integral part of Yahoo and there is nothing similar to that in the rest of Yahoo. It is specific to the region." He said the content generated from the partnership allowed Yahoo to build upon what Maktoob had already established, including areas for online payments, auctions and gaming. "This is genuine Arabic content formed within the general Arabic context," he added. "It is not imported, and Yahoo did not come to the region to recreate the content that is already available."
Regional governments are also getting into MENA-specific content generation with the introduction of Arabic domain names. During the forum, Jordan’s National Information Technology Center announced the launch of the country’s top-level domain, .alordon. Following similar domain name launches in Egypt and the United Arab Emirates, Baher Esmat, regional manager of the Internet Corporation for Assigned Names and Numbers, said the move will change the way Arab users interact with the Internet. "The face of the Internet has been drastically changing as a result of international domain names," he noted. "It is now bringing communities closer to Internet technologies."