According to a recent report on Global Youth Entrepreneurship by the Global Entrepreneurship Monitor (GEM) and Youth Business International (YBI), three quarters of the youth in MENA believes that starting a business is a good career choice.
However, less than a third of youth is involved in start-ups. If we look at the key constraints to youth entrepreneurship in MENA, what emerges is a mix of business environment and ‘social’ obstacles. Access to credit is the single largest constraint across the region, as shown by the World Bank’s Doing Business. Another key element is the fear of failure that prevents 35% of youth in the region from starting a business, signaling a risk-averse business culture. Personal/family networks partially overcome poor business climates. Almost 70% of youth firms rely on personal, family, or friends’ funding to start a business. Micro-credit and angel investors targeting youth businesses can help overcome this issue, as recent articles by the World Bank show. The importance of personal networks comes also in the operational activity of the firm, with 80% of new business run by youth having friends or family as their customers. Another aspect that I would like to emphasize is the lack of adequate skills and innovation by youth business in MENA. Thirty percent of youth in the region believes that they have the skills and knowledge required to start a business. Less than a fifth of youth firms indicate that they offer new products in new markets.
MENA youth businesses perform the worst when compared to their peers in other regions. The decision to start a business is in over 40% of the cases influenced by parental models rather than business-related role models. This makes productivity performance and survival rates particularly low.
Therefore, business development services and vocational training targeted to youth is desperately needed in the MENA region.