To build an entrepreneurship ecosystem in Yemen

By Adeeb Qasem
Ever since the 2011 uprising, Yemen’s political process has taken priority over all other aspects of development. This seems unreasonable, given that Yemen’s shattered economy constitutes a key challenge to citizens and policy-makers alike. Frustration runs particularly high among Yemen’s youth. Having taken to the streets in 2011, calling for political freedoms and improved economic conditions, they continue to face a high rate of unemployment. In fact, the UN Development Programme (UNDP) has announced that since the 2011 uprising over 50 percent of young Yemenis remain unemployed. Creating job opportunities is imperative to the development of Yemen. One way of improving the country’s dire job market is the creation of business startups—a step that is complicated by Yemen’s unfavorable entrepreneurship environment.

In an interview with the Yemen Times Radio in late 2013, Jamal Al-Mutareb—a businessman and investor who has backed a number of Yemeni startups in the past—explained that many local initiatives are not taken seriously by investors because their potential is exaggerated. While there is a general interest among Yemeni businessmen to invest in local startups, he said, frustration prevails as information provided by Yemeni entrepreneurs is often unreliable.

If past business proposals had been well-presented and well-structured, companies could have been created that would hire unemployed youth, provide needed products and services to local and international markets, and generate profits. With the absence of these success stories, however, few young Yemenis are inspired to establish their own startup business and a spiral of success has yet to be initiated in Yemen.

Innovation is the key driver of economic and social development, and it is critical to realize that local entrepreneurs are the main innovators in communities. To create sustainable economic growth, local entrepreneurs need to be supported and encouraged. To that end, it is necessary to build a vibrant “entrepreneurship ecosystem.”

An entrepreneurship ecosystem describes the existence of government entities, a legal framework, necessary infrastructure and private investors that enable an entrepreneur to turn business ideas into viable companies. A model of an entrepreneurship ecosystem by Booz & Company, a global management consulting firm, pictures the entrepreneurship ecosystem as concentric circles of personal enablers (education, advisors), financial enablers (investors, banks, government programs), business enablers (networks, incubators, services), and environmental enablers (regulations, culture, infrastructure). These supportive structures surround the entrepreneur, who constitutes the center of the model. The building of a vibrant entrepreneurship ecosystem in Yemen will require the involvement of all these stakeholders.

The importance of building such an ecosystem is recognized by more and more governments and international organizations around the world. In a 2010 World Bank report on “Innovation Policy,” the importance of the “local” for economic development was emphasized: “Local communities, even the poorest, have unique knowledge and entrepreneurial potential that can be exploited with sufficient support.”

Entrepreneurs in Yemen

To generate greater attention to entrepreneurship in Yemen, a country facing a myriad of problems, is a challenge in and of itself. Entrepreneurship is not seen as a priority by the government. Rather than being proactive, Yemeni politicians appear to follow a “wait and see” approach. They continue waiting for major issues to resolve themselves before tackling the promotion of entrepreneurship. Political crises, armed clashes, electricity outages, legal system reforms, corruption—these and other problems take priority. Had politicians realized the dire need for economic development and the intertwined nature of Yemen’s many challenges, they would know the importance of a vibrant entrepreneurship ecosystem. Improved economic prospects for Yemen’s youth constitute a crucial part in tackling a number of problems, especially those related to security, education, and poverty.

The challenges faced by entrepreneurs in Yemen, as Jamal Al-Mutareb pointed out in his interview, mainly result from an underdeveloped entrepreneurship ecosystem. There is a lack of well-rounded entrepreneurs in Yemen who understand the market and are able to identify and include local demands in formulating business initiatives. Entrepreneurs who can accurately assess the potential of their startups and understand investors’ interests and expectations are equally rare. There is a lack of supportive governmental policies and regulations that recognize the fragility of startups and their need for special care to grow into fully productive companies. The legal system is not transparent and fails to ensure the rights and duties of all contracting parties, including the protection of copy rights. Importantly, moreover, there is a lack of capital and willing investors in Yemen, which effectively blocks the creation of startups.

Initiatives by potential ecosystem builders are essential for starting more businesses and supporting an increasing number of entrepreneurs. A “multiplier effect” could be created if already successful entrepreneurs chose to support and help other aspiring entrepreneurs. In Dec. 2012 a report was released by the Endeavor Foundation, an international organization focused on high-impact entrepreneurship as a means to catalyze long-term economic growth, about one of its initiatives in Chile. It revealed that over a period of ten years, between 1998 and 2008, 66 entrepreneurs who had been mentored and supported by Endeavor became the corner stone of an entrepreneurship ecosystem in Chile. In 2011, these 66 entrepreneurs had created over 5,800 jobs at their companies and generated close to $400 million in revenues. In addition to creating jobs, they in turn shared their expertise and knowledge by mentoring others and investing in their startups. Endeavor found that compared to other Chilean businessmen, these 66 entrepreneurs were “30 percent more likely to mentor, 50 percent more likely to inspire, and 200 percent more likely to invest in other [startup] companies.” As the example of Chile indicates, ecosystem builders are critical to the creation of job opportunities and general economic improvement. They are crucial in the build-up of a supportive and enabling business environment.

In Yemen, the process of building an entrepreneurship ecosystem could start similarly with a core community of highly motivated entrepreneurs, investors, and government officials who share the vision of a vibrant business environment. One such community is currently emerging through a project initiated by ROWAD, a Yemen Entrepreneurs Foundation. Its “BlockOne” project provides would-be entrepreneurs with an “incubator space,” through which they gain access to business coaching and guidance, office space, networking opportunities, and potential funding opportunities. The BlockOne incubator could create the momentum needed to initiate the building of a business ecosystem in Yemen.

There are a number of additional initiatives focused on promoting and supporting entrepreneurs, an example of which are startup weekend events that are taking place in cities throughout Yemen. Aspiring entrepreneurs with tech-based ideas work for 54 hours to create teams, turn their ideas into beta products, and compete before a panel of judges. Each startup event is organized by different groups, hosting a different set of entrepreneurs. The latest of these events took place on Nov. 20 and was organized by Ahmed Al-Fusail, Rabe Al-Aghbari, and Mohammed Abdulmajeed—entrepreneurship enthusiasts who work as engineers and programmers, launching training initiatives on the side. These startup weekends attract many young programmers, developers, designers, business students and graduates via social media campaigns and university workshops.

Another initiative is the co-work space Maktabi, a business center directed and co-founded by Mustafa Al-Aqel, a leading Yemeni entrepreneur. It accommodates entrepreneurs, freelancers, start-ups, and small companies, offering them free office space, meeting, and training rooms. The Maktabi management also organizes events and seminars related to technology and entrepreneurship. Like Maktabi, the Injaz Foundation, an international NGO focused on finance and entrepreneurial skill-development, aims to contribute to the development of an entrepreneurship ecosystem in Yemen. Its Yemen branch is chaired by Yemeni businesswoman Huda Alsharafi and organizes yearly teaching programs and competitions in a select number of Yemeni schools. The winning schools go on to compete regionally with students from across the Middle East. Last year, students at five schools throughout Yemen were tasked by Injaz business mentors with inventing environmentally-friendly products and creating a company to market it. These initiatives raise hopes that the emergence of a community of entrepreneurs and those interested in supporting them has already begun in Yemen.

To further advance existing initiatives and build a vibrant entrepreneurship ecosystem in Yemen, the country’s youth need to be engaged. Young Yemeni men and women must take part in creating job opportunities for themselves and others.