Entrepreneurship and Social Impact in the Middle East — Business as Unusual?
It is a striking feature of the growing startup ecosystems in the Middle East that the lines between “entrepreneurship” and “social entrepreneurship” — that is, entrepreneurship that makes a social impact — often blur. Where conventional wisdom wrings its hands that social and economic problems seem increasingly unsolvable by traditional non-profit and non-governmental organizations whose funding and performance can often be unreliable, a new generation around the region sees these challenges as surmountable by profitable businesses that can self-fund and rapidly accelerate their social impact.
Some of the leading innovators were on display this past month at the first-ever Social Enterprise Week in Dubai, organized by Consult and Coach for a Cause, Community Cinema, Hult Prize and Brand Syrup. Over 300 startups and their backers gathered to share experiences, pitch their efforts and network. The breadth of challenges they have embraced are striking, as are the clear market opportunities and returns they seek.
Following are just a few glimpses into the experience:
Who would have thought that the largest untapped source of fresh water on earth lies beneath Egypt’s deserts? The ability for farmers to grow more food has been limited by the unreliability of diesel fuel delivery to farms wishing to expand their arable land. Enter former oil and gas analyst Ahmed Zahran and his startup KarmSolar, which has partnered with a leading water engineering firm in Princeton, New Jersey, to create solar-powered pumping and storage processes accessible in the desert. He believes that empowering smaller farmers with simple, solar-powered pumping capabilities could be explosive for agriculture throughout the Middle East and Africa. He is up and running in both Egypt and Sudan.
Mental health is one of the most vexing — and least openly discussed — medical challenges around the globe. The stigma often associated with it is particularly sensitive to many of the cultures and societies in the Middle East. An Egyptian business analyst living in Dubai, Ragy Khairy, has started Eshraq as one of the first online counseling and coaching portals in the region. Eshraq facilitates private sessions for a fee and offers public health webinars funded by corporate sponsorship and online advertising. Partnering with a leading Egyptian VC, Innoventures, he plans to scale Eshraq throughout Egypt and the UAE. “I wanted to combine my passion for innovation with giving back,” he told us. “I see our Middle Eastern communities suffering from mental, social and medical problems, yet conservatism, traditionalism and lack of awareness stands between them and seeking professional help. We can help.”
Liquid of Life
Bottled water is extremely popular in the Middle East — over 800 million liters are consumed per year in the UAE alone — which has created a large-scale challenge of how to sustainably dispose of plastic bottles. Not waiting for the nascent recycling industry to take hold in the region, UAE-based entrepreneurs Rukhsana Kausar and Neil Hegarty are seeking to stop the problem at the source. Their company, Liquid of Life, offers a filtration system that replaces plastic water coolers with bottle-free water dispensers. Thirty companies in the Emirates, including Microsoft and Fraser Suites Hotel, have signed on; the company recently turned its first profit and is planning to expand next across the Middle East. Rukhsana notes, “Social entrepreneurs too often miss that to succeed they have to focus on the business as much as the ‘social.’ Change costs, but if you have a great service people want, they’ll pay for it.”
Emiratis Abdulaziz Al Jaziri, Fatma Al Khoori, Mohammad Al Hawi and Noora Al Qassim not only wanted to become ambassadors for their national cuisine, but also thought there was an opportunity for local women with home-based micro businesses to sell their products to a broader market online that they could never before reach. They launched Barzh, combining an online Emirati food ordering service, a cafe and an Emirati food recipe portal. Barzh is an Emirati word used for a parlor, or a formal living room, to receive and entertain guests where people can meet for a discussion or to share a meal. Barzh hopes to link anyone in the region with Emirati cooks and therefore provide additional household income to Emirati home-based business owners, most of whom are women. When asked why they chose to set up the company as a social business, Mohammad noted, “NGOs are great, but they have sustainability issues. Even with short-term support, you never know about funding in the medium-term. We want the business income to continue to help our cause and our culture.”
A strong entrepreneurial ecosystem is developing to help hundreds of similar enterprises. Shared workspaces like Shelter in Dubai and AltCity in Beirut are creating affordable homes and access to technology and infrastructure in the early days of these social entrepreneurs creating their ideas. The Hub will open in Dubai, providing needed acceleration space to social enterprises as it has in over thirty cities around the world.
Business plan competitions specifically tailored to social enterprise startups are bringing them region-wide exposure and much-needed seed capital. Most notable is the Hult Prize, self-branded as an accelerator of social entrepreneurship, and providing one million dollars to more established winning teams. The Business for Acument Pitch Competition, held for the first time last year in Dubai, awards startup prizes of $4,000 to each of two winners. Consult and Coach for a Cause, started by the passionate Medea Nocentini and Baraka Ventures, founded by dynamic partners Rama Chakaki and Mahmoud Abu Wardeh, provides mentoring and coaching to social entrepreneurs.
Can problem-solving at scale really happen through profitable startups? “While there are many challenges faced by social enterprises, we believe that it is possible to run a profitable business while addressing economic and social issues. These businesses can scale and grow to have a major impact in the world,” said Nadine Kettaneh, partner of Willow Impact, a social impact investor based in Dubai.
One thing is certain, none of these social entrepreneurs are waiting for the public sector to figure it out. “I hate the word ‘stability,’” one entrepreneur told us. “It’s not that we don’t value ‘stableness’ in order to build businesses, but our parents’ generation used that word as an excuse for business as usual.” He paused. “We are not going to wait. We can do better.”
Heather Henyon is the founder and managing partner of Balthazar Capital, a Dubai-based microfinance investment advisory firm serving the Arab region. Since starting the region’s first social business, Grameen-Jameel, in 2007, she has been an active mentor and supporter of social enterprises. She can be followed on Twitter @BalCap.
Christopher M. Schroeder is a leading U.S. Internet entrepreneur and venture investor. He is the author of “Startup Rising — The Entrepreneurial Revolution That’s Remaking the Middle East,” to be published August 2013 by Palgrave/MacMillan. He can be followed on Twitter @cmschroed.