Going it alone

Entrepreneurship could be a partial answer to the GCC’s vast youth unemployment crisis, says Qais Al-Khonji – but only if more is done to smooth the path for startups

Gulf economies are evolving. From Saudi Arabia’s sweeping reforms, to my native Oman, where plans are in play to halve the country’s dependence on oil by 2020, the push for diversified economic growth leads every regional agenda.

But just as critical as the rush for economic growth is the task of fixing our youth unemployment crisis. Across the GCC, growing numbers of young Arabs are struggling to secure a job, and find their place in society. The region’s future depends on accelerating job creation – and it’s my belief that entrepreneurship forms part of the answer.

Around the world, innovative startups are an engine of growth. In the right hands, they are a tool to slash unemployment, to spur job creation, and to deliver opportunity to our best and brightest graduates. But we all – both private and public sector – must do more to smooth the path, and help entrepreneurs to move ahead.

If the GCC is to be a hub for startups, the process begins with government policies. Encouragement in the form of funds offering seed or startup capital, and an effort to strip out the red tape and difficulties that can plague the commercial environment will be key to fostering a culture of entrepreneurship. Streamlined licensing and one-stop startup shops could act as a spur.

In Oman, we are conservative in how we look at a business’ ratio of expatriate workers to locals. That can constrain any startup that requires employees with certain skillsets – ones that may not be readily available in the local market. It is a chicken and egg situation. Easing these regulations, where necessary, could help to spark new and scalable businesses in previously untapped industry sectors – which in turn could lead to significantly greater employment of nationals.

Governments might also consider offering incentives to public sector staff toying with the idea of going it alone. Sabbaticals would allow employees to dip a toe in the market, and try to build a business without forfeiting their job. In this way, budding entrepreneurs could be given a chance to prove themselves and create a potentially successful business. Targeting state employees could also open gaps in the existing labour market, for new graduates to fill.

"Arguments rage over whether entrepreneurs are born or made: for me, I believe it is a skillset that can, and must, be taught"Not all startups are created equal. Mass job creation won’t happen by encouraging young Arabs to open businesses in the food and beverage or lifestyle sectors. There is great appeal in these cash-led, easy to understand operations, which require minimal seed funding. But their capacity for scale is strictly limited.

To create new ventures with the potential to grow rapidly, we must encourage entrepreneurs to look to sectors such as oil and gas, manufacturing or fast-moving technologies – whether that means disrupting the status quo with new ideas, or helping to make established companies more innovative and competitive.

The drawbacks to such operations include securing the capital needed to begin, and the longer timescales required before seeing a return on investment. Encouraging banks to extend lending to SMEs, or forming state-backed funds to aid entrepreneurs, are both ways of loosening credit lines to these potentially critical businesses.

Perhaps the biggest challenge, however, is that of creating entrepreneurs in the first place. Arguments rage over whether entrepreneurs are born or made: for me, I believe it is a skillset that can, and must, be taught. Graduates in the GCC typically weigh two options when they enter the labour market: whether to join the private sector, or the public sector. We must help them see that there is a third option – but this will require a shakeup of the region’s education sector, to put entrepreneurship firmly on the curricula.

The right time to raise the subject of entrepreneurship is not at university; it is at school. During the final three years of high school, I would like to see students in Oman and other GCC countries learn about launching and running their own businesses. From financial skills, to operational management, to marketing, this subject would ensure graduates leave school with a basic understanding of business. The course could integrate with core subjects already in the curriculum and culminate in a small project, or even a trial startup business, or offer students the potential to intern within existing companies.

Even as we educate our youth about the potential of entrepreneurship they also need to learn to overcome significant hurdles. Our economies are monopolised by large, family brands, and it gives entrepreneurs very little space to grow. If you are limited to certain levels of capital, bigger players will always have the money to buy whatever you bought, or take your agency through the power of their name and stature.

Lack of payment is another issue. Carrying the cost of doing business with large organisations can hurt a small business’ cash flow and shrink its lifespan. Entrepreneurship is not an easy path.

It is for this reason that we must instill confidence and ambition in our youth. They are faced with a labour market where the pace of job creation does not match the need for employment; where the oil price is in flux and the social contracts that have long been in place in the GCC are shifting. It is a time of change – but also one where we have the opportunity to create a truly bright, sustainable future for the generations to come. High-growth entrepreneurship will be a vital piece of this process. I hope we can all do our part.

About the writer

Qais Al-Khonji is an Omani businessman and entrepreneur. He is the founder of Qais United and Genesis International, and a vocal advocate for Omani entrepreneurs and SMEs. He was named ‘Social Entrepreneur of the Year’ for Oman in 2015 by Business Worldwide magazine