An entrepreneurial Arab generation

How Qatar’s Silatech is helping an entrepreneurial generation of young Arabs achieve their business dreams across the Middle East and North Africa

26-year old Bashir worked in a nut shop in Sana’a, Yemen, but dreamed of opening a small business of his own. A Youth Fund loan from Silatech partner Al Amal Microfinance Bank allowed him to start and expand his own spice shop. Silatech works with Al Amal Microfinance Bank and other financial institutions throughout the region to design youth-focused financial products and services for young Arabs such as Bashir.

Silatech’s mission is to connect young Arabs,18 to 30 years old with employment and enterprise opportunities. Its commitment is to mobilise interest, investment, knowledge, resources and action to drive large-scale comprehensive employment and enterprise development programmes. Erika Widen writes about the challenges Silatech faces, and their innovative initiatives to ensure that the Arab youth can pursue their small business aims.

Silatech is a Qatari social enterprise that derives its name from the Arabic word ‘Silah’, meaning ‘your connection’. It was established in 2008 by Her Highness Sheikha Moza bint Nasser in order to address the growing need to create jobs and economic opportunities for the young Arab generation. The Middle East and North Africa (MENA) has the highest unemployment rate in the world. In the Gulf region alone unemployment rates among young nationals exceed 35 percent.

Recent revolutions in some Arab countries have slowed the progress of Silatech’s initiatives in the region.

KIVA ARAB YOUTH

In one of its most recent initiatives, in March 2012, Silatech partnered with Kiva (a United States based micro-lending platform) to launch Kiva Arab Youth. The online non-profit allows anyone to donate or lend US$25 (QR91) to an entrepreneur.

Since Kiva Arab Youth launched, more than 1100 youth businesses in Palestine, Lebanon, Iraq, Jordan and Yemen have been founded. In total, more than 35,000 lenders around the world have provided US$1.5 million (QR5.4 million) in loans to fund these businesses. To double the impact for borrowers, Silatech is funding a total of US$375,000 (QR1.3 million) in matching loans and is working to increase the amount. Loans funded through Kiva have a 98 percent repayment rate and as the loans are repaid, Kiva recycles the matching funds in order to finance more loans for young Arab business owners. (See box out overleaf.)

These young Arabs include Lebanese Hussein, an 18-year-old living with his parents. He discovered a talent for painting at a young age, and uses it as a means of providing for his family. He needs a loan of US$1000 (QR3640) to buy supplies for and hopes his profile on the Kiva Arab Youth website will enable him to do so.

 However, Hussein’s creative business is the exception rather than the norm. According to Justin Sykes, director of microenterprise at Silatech, the largest sub-sectors for which Kiwa Arab Youth borrowers are applying and requesting funding are for street food businesses and small stores in particular. Within the retail sector there are a large numbers of youth, requesting loans to start-up, expand, and or improve their stores.

When a young entrepreneur has received a loan to start-up their business, Kiva Arab Youth often offers further non-financial support services, such as business management training, mentorship, and assistance in finding new markets for their products and services, to help them grow their businesses.

Justin Sykes, director of microenterprise of Silatech explains some of Silatech’s challenges in targeting the region’s youth.

CHALLENGES AND ATTITUDES

Kiva Arab Youth aside, for the past four years Silatech has been involved in a number of workshops and initiatives throughout Arab countries, and has faced a number of challenges. Sykes explains further, “The main challenge but also a source of opportunity has been the political and economic instability that the region has faced in 2011 to 2012.”

Sykes adds that the recent revolutions, changes in government, and open conflicts in some countries have slowed the progress of Silatech’s initiatives, while others have been completely put on hold. “Our microfinance field partners have had to adjust their lending volume and amounts, but as countries have stabilised their activities have ramped up again. Significant opportunities now exist with countries having come through the Arab Spring.”

Sykes says that on one hand governments, whether they are new ones trying to demonstrate a quick impact or old ones showing that they are responding to the requirements of the people, are much more open to initiatives that target the youth. On the other hand he feels that there is also an increase in the interest and level of support from the international community in the youth agenda. Both factors are supportive to Silatech’s work and impact in the field of youth economic opportunities. “The challenge is not only within many institutions in the MENA, but globally, is one of the entrenched negative attitudes towards young people and their potential,” says Sykes, “This is particularly problematic when it comes to perceptions of financial institutions towards the viability of youth as clients. Young people are typically viewed as irresponsible and therefore a poor investment. Silatech’s work is to convince financial institutions that this is not the case by presenting concrete evidence, sometimes using these institutions’ own client data.”

Dr. Nader Kabbani, director of research and policy of Silatech tells TheEDGE, “The situation [adding to worsening youth employment] has persisted for more than twenty years and to date, policies and programmes introduced across the region to address the youth employment challenge have proven to be largely unsuccessful. Silatech works with partners across the region to design and implement innovative solutions aimed at generating economic opportunities for young people.”

In July 2012, Silatech organised a workshop on youth employment outcomes in the Gulf. “The aim of the workshop was to delve deeper into the realities of youth employment in the region and to take stock of what has been done and what has been learned,” continues Kabbani,“The workshop offered an opportunity for nearly twenty academics from across the world to share their most recent research into the youth employment challenge, and for other conference participants, both scholars and practitioners, who attended the workshop to provide their own feedback and insights.”

28-year old Abed is an auto mechanic in Jenin, Palestine, who dreamed of starting his own repair shop, but could not afford the startup costs. After taking a loan through the Silatech-UNRWA ‘Mubadarati’ fund, Abed now owns and manages his own workshop. Photography by Nabil Darwish

ENTERPRISE ACCESS

Microfinance is fundamental as a financial service to entrepreneurs and small business, who mostly lack access to banking due to high transactional costs serving these client categories. Among Silatech’s aims is to ease financing for young entrepreneurs in order to facilitate them to start and grow enterprises. Once Silatech has successfully changed the mind set of financial institutions towards the youth to be seen as viable clients, then they partner with them to create and implement an enterprise support service.

Currently Silatech is working with Foundation Banque Populaire for MicoCredit (FBPMC), and Al Barid Bank in Morocco to create and launch the Bodour youth loan product, meaning “seed” in Arabic. It will be a youth loan that will open access to financing young entrepreneurs in the country. “Morocco is the second largest microfinance market in the MENA after Egypt. Their conducive policy environment and the presence of strong and capable financial partners are eager to target the youth sector,” says Sykes, “this made it an obvious choice to explore programme opportunities.”

Both partnerships are in their design phase with staff training, product design and youth focus groups testing still underway. It is expected that both partners will unveil their youth focused products by the end of 2012. Another loan initiative is the Mubadarati loan programme in partnership with the United Nations Relief and Works Agency (UNRWA) for young Palestinian entrepreneurs in the Levant region. “The Mubadarati loan programme is currently in its pilot phase,” says Sykes, “with approximately 30 youth run start up businesses fully funded since its launch in summer 2012.”

Sykes explains that there are certainly unique problems those young entrepreneurs in Palestine face due to the political insecurity, limited mobility, security closures, and difficulties in importing and exporting goods, as well as limited purchasing power in the economy. However, despite these challenges, he continues, “The youth are proving that with access to this unique start-up loan product that they are managing to start and grow viable businesses, which both meet the needs of their communities and provide viable livelihoods for them and their families.”

Partnerships with socially conscious fund managers like TunInvest allow Silatech to invest in sustainable, high quality jobs. With funding from TunInvest, the Clinique Internationale Hannibale (CIH) has created around 400 jobs, provides a model for paramedical employment, and offers health services for the region. Photography by Aziz Tnani

CAREER GUIDANCE

Silatech also has career guidance programmes in Qatar, Syria, Egypt and Palestine. Dr. Rachel Awad, senior programme manager of Silatech says, “Our career guidance programmes emerged out of growing realisation that career guidance in the Arab world is a fledgling concept, and that the capacity to delivery career guidance services to the region’s youth remains extremely underdeveloped.”

Awad explains that without access to career guidance programmes, young people lack the self-awareness, exposure, and the labour market information required to make informed career decisions. This leads to a number of employment challenges, including poor decision-making, a gap between youth skills and labour market requirements, and an overall mismatch between individuals and jobs.

According to Awad, where guidance services do exist, the service provider suffers from a lack of valid and reliable tools. “The provision of career guidance services in North America and Europe for example generally include the administration of psychometric assessments,” says Awad, “ The feedback from [these] provides key tools in the career decision making process. These scientific tools used to support career guidance in much of the world have not been available in the region until now.”

Silatech has thus developed its Tamheed TM initiative for career guidance in the Arab region. It has partnered with a British assessment company called MindMill to develop a set of tools and resources to support the provision of quality career guidance services for the Arab youth. Tamheed TM includes psychometric assessments, a framework for local institutions to provide career advising services, and a comprehensive training programme for career advisors.

“With proper guidance, young people are making career decisions that are based on their own skills and ambitions as well as the labour market realities in their own communities,” concludes Awad.

1.6 the percentage of Internet penetration in non-GCC Arab countries

MOBILE EMPLOYABILITY FOR ARAB YOUTH

An innovative platform service Silatech is currently working on is to provide mobile employability services to the Tunisian youth. According to Jo Aggarwal, director of access to skills and employment of Silatech there is a 75 percent mobile penetration in non-Gulf Cooperation Council (GCC) countries and only 1.6 percent Internet penetration, meaning that mobile remains as the sole access for most of the region’s youth. “Tunisiana, our partners in Tunisia received an overwhelming response for their mobile English language practice service launched earlier this year,” says Aggarwal, “with more than 500,000 subscribers. Young Arabs today live on their mobile, so if we want to reach them we need to develop services on this platform.” Aggarwal explains that the mobile platform will be able to offer the rural youth personalised connections to job opportunities, training and microenterprise support. In addition to ensure that grant funded projects implemented with local partners disburse funds efficiently and inclusively. “We are hoping to launch this service in the end of 2012 as a part of a larger strategic initiative that uses appropriate technology to bridge the opportunity divide for the marginalised youth,” adds Aggarwal.

FOR REFERENCE 

www.silatech.com

www.kiva.org/arabyouth