Against All Odds: VC & entrepreneurship forge ahead

MENA Outlook Quarterly

Florence Eid-Oakden, Ph.D, Chief Economist Charlene Rahall, Robin Mills, Mingqiao Zhao, Atousa Tahmasebi, Moussa Saab, Analysts

This study has been prepared based on industry data sourced from EMPEA, the global industry association for private capital in emerging markets, and data obtained from other sources. EMPEA’s coverage includes PE, private credit and infrastructure and real assets. Part I was published in our Q3 2016 MENA Outlook.

The International Finance Corporation (IFC), partnered with us in Part I, through thought leadership, with a Special Feature dialogue from Mouayed Makhlouf, IFC MENA Regional Director. We also featured a confidence survey of General Partners conducted by the MENA Private Equity Association in collaboration with Deloitte, published in 2016.

This quarter, we partner with the Abraaj Group, Oasis500, Endeavor Jordan, Berytech, WAMDA and the Mowgli Foundation to delve deeper into PE and VC in the region. Included are Special Feature insights with:

  • “The outlook for exit activity in MENA”, with Mustafa Abdel-Wadood, Abraaj.
  • “How optimistic are prospects for entrepreneurship in MENA”, with Fadi Ghandour, WAMDA Capital.
  • “How Endeavor Jordan supports female entrepreneurship in MENA?”, with Ali Al-Husry.
  • “The obstacles holding back growth in the entrepreneurial scene in MENA & the role of Mowgli’s mentoring”, with Kathleen Bury.

We share some insights here:

  • As demand for healthcare continues to rise, and as long as public funding may lag behind due to budget constraints, we expect growing private sector participation in the health sector.
  • Besides lowering public spending, recent government polices in support of the education sector provide opportunities for PE investors to fill the funding gap.
  • The tightening of government budgets this year due to lower oil revenues, combined with the continued need for infrastructure development and improvement in healthcare and education across the MENA region mean that PPP schemes are becoming more popular.
  • The MENA region has witnessed a rise in new funding institutions in the past 5 years, with the number of investors increasing ten-fold since 2010.
  • Data from Mowgli shows that Lebanon has generated the highest Return on Mentoring Investment since 2008 while Jordan has achieved the highest number of new jobs created after the mentoring year at an average of 8.1 compared to the region's average (3.3).
  • Since 2001, Berytech in Lebanon, has supported over 3,200 entrepreneurs, created more than 100 startups, distributed over USD 500K in grants, and invested over USD 70M in startups and SMEs. This process has created over 1,600 jobs.
  • The success of the ICT sector in Jordan is fuelled by the new generation of tech entrepreneurs like the shareholders of Oasis500 who continue to reinvest their success into other startups.
  • Insights from a WAMDA survey of entrepreneurs also shows that “talent crunch”, particularly finding and retaining the right employees, is the main challenge cited by MENA entrepreneurs despite an increasing number of support initiatives.

The MENA Outlook publication presents Arabia Monitor’s insights on global markets, outlines and analyses regional future trends and defining themes, and then focuses on individual country macroeconomic views. Each publication is laid out in a concise bullet point format and features a Special Feature interview with regional leaders including central bank governors, ministers and executives.

To access the full report, please click here.