One of the most significant characteristics of an entrepreneur is the ability to deal with ambiguity and risk. Nowhere on earth is this put to the test more than in regions that suffer from socioeconomic and geopolitical instability, and in these regions we see entrepreneurial triumph that should inspire local “opportunity” entrepreneurs worldwide.
Primary survey data collected in Afghanistan as part of a study in 2014 found that there was a negative correlation between perceived danger and entrepreneurial intentions, which is to be expected. However, this negative correlation was slightly less prevalent among highly resilient individuals. The same study found that under similar conditions of perceived danger, such as warzones, individuals could develop entrepreneurial ambitions if they displayed this resilience in the face of adversity and exhibited entrepreneurial self-efficacy.1
Aside from being an important driver of economic development, entrepreneurship is also an instrumental peace-building mechanism. Global peace through commerce can be achieved via accessible entrepreneurial capitalism, a key success factor for entrepreneurship that is lacking in many developing nations and conflict regions. In a study titled Peace through Access to Entrepreneurial Capitalism for All, Michael Strong argues for the support of “indigenous entrepreneurial activity” through education, legal reform, and integration with the global community.2 Strong also cites political scientist Erik Gartzke, who found that economic freedom, which is also a measure of access to entrepreneurial capital, is 50 times more effective than democracy at decreasing conflict. Gartzke additionally found that nations with low economic freedom are 14 times more susceptible to conflict.3
Raymond Gilpin and Steven Koltai, in a study titled Using Entrepreneurship to Promote Stability in Fragile Regions, presented their “Six + Six Model” for conflict-sensitive entrepreneurship. The “Six + Six Model” encompasses an entrepreneurial ecosystem that is based on six criteria: Identify, Train, Connect & Sustain, Fund, Enable, and Celebrate. The model also identifies six partners whose involvement is important to the first six criteria: government, corporations, foundations, universities, NGOs, and investors.4 These criteria and partners in the “Six + Six Model” are key to the development of thriving entrepreneurship in conflict regions.
Contrary to economic stabilization via international aid, entrepreneurship is a “shot in the arm” that creates jobs and income sources in conflict regions using domestic resources. Entrepreneurship lays the foundation for further growth, reducing reliance on aid. Job creation demands skilled workers, and demand for skilled workers means increased skill building leading to a more talented population.5 All these factors reduce poverty, which helps avoid and curtail conflict and instability.
This piece will explore three examples of how entrepreneurship is prevailing in conflict regions, how the resilience of “opportunity” entrepreneurs in these regions is putting up a strong fight against conflict, and how their integration with the global community has played a key role in entrepreneurial development.
Lebanon
In Lebanon, a geopolitically and socioeconomically unstable country plagued by regional crises and conflict with Syria, entrepreneur Christine Sfeir is on a mission to have ten operating restaurants across the Middle East before eventually expanding to North America. At age 22, Sfeir convinced Dunkin’ Donuts to allow her to operate their Lebanese franchise. She later launched Lebanese cuisine brand Semsom, and expanded into Saudi Arabia, Qatar, and Kuwait, with all eyes on India as the next expansion market.
Sfeir argues that the turmoil in her region makes individuals more flexible and adaptable, ready to take on change at any moment. The challenge: instability means the inability to make plans for the future. “We only make plans for next month,” Sfeir states in an interview with the BBC.6 Expanding her brand by opening new restaurants throughout Lebanon and abroad in more stable regions allows her to better plan for a sustainable future.
While global expansion so early on may seem premature for young, local ventures, it is actually a strategy that can bring on growth and stability for startup businesses in these unstable markets. Success abroad can translate to success locally, and integration with the global business community is crucial for entrepreneurial development.
Syria
In Syria, entrepreneurship remains strong despite an over 3-year long civil war. Entrepreneurs are actively looking towards other countries to help bring stability to their Syrian ventures in hopes of returning to Syria with a foundation for growth.
In February 2014, over one hundred Syrian entrepreneurs met for Startup Weekend in Damascus. Startup Weekend is a weekend where entrepreneurs gather and collaborate for 54 hours, forming teams to create businesses while receiving mentorship from startup experts. What made Startup Weekend in Damascus different from most Startup Weekends around the world was that it happened in the middle of a civil war. As the Wall Street Journal reported, many mentors had to give their advice online from other parts of the world.7 Syria’s civil war has been going on for more than three years now, with no real signs of ending. However, amidst conflict and civil war rose 400 entrepreneurs who applied to the event. As a result, 42 business ideas were created and then refined to just 19 teams. The winning team, T3D (3D Printing), won $1,000 and one-month in Jordan’s Oasis 500 incubator. The success of this weekend highlighted the resilience of the people of Syria, particularly the entrepreneurs who are putting conflict aside to solve real issues for the betterment of their country.
Existing entrepreneurs in Syria have also proven fearless and resilient. However, for their businesses (which are mostly tech-based) to survive, Syrian entrepreneurs have had to venture outside of Syria to places such as Dubai, Beirut, and Cairo to hedge risk and to find the stability they need to move forward. What is remarkable about this concept of expansion for stability, or just simply looking to operate in nearby markets, is that these new regions for Syrian entrepreneurs are not entirely stable themselves. Beirut (Lebanon), as we covered earlier, has its own conflicts. Cairo (Egypt) also has its own risks, and has suffered from instability that has been broadcast in the media around the world for years. Yet, Egypt has opened its doors to many Syrian entrepreneurs and has helped 50,000 resettle in Cairo, which in turn will create half a million jobs for Egyptians.
Giving Syrian entrepreneurs who are very eager to return home the opportunity to grow and scale their businesses will give them what they need for when they do return to Syria and do their part to build (or rebuild) a better homeland. This inspiring showcase of collaboration between countries in the name of entrepreneurship is a model for the rest of the world in working together for a better and more stable future.
Gaza
The Gaza-Israel conflict, a part of the Palestine-Israel conflict that has been going on since the mid 20th century, escalated just over one year ago when Israel launched Operation Protective Edge. As part of a conflict zone, Gaza suffers from limited access to electricity (and therefore internet), limited trade, blockades, and high unemployment. However, as many of our other examples have shown, entrepreneurship and resilient entrepreneurs have found a way to prevail.
Lauren Peate, a TechCrunch contributor and startup mentor, recently visited Gaza and discovered what she referred to as “some of the most motivated people” she had ever met.8 During her visit, Peate also became familiar with Gaza Sky Geek, the first startup accelerator in Gaza, where she serves as a mentor. Gaza Sky Geek was founded in 2011, and is one of the main organizers of Startup Weekend in Gaza. In 2013, Gaza Sky Geek began connecting its startups to the global community and attracting investors from around the world.
The decision to bring their teams global was a strategic one, similar to what we saw in Lebanon and in Syria. Many Gazans have no experience in international markets due to blockades limiting their ability to go abroad. Gaza Sky Geek, understanding the importance of connecting Gazan entrepreneurs with the global community to allow them to think beyond their local market, began bringing in international mentors like Peate.
Iliana Montauk, a Google employee and startup mentor, also moved to Gaza in 2013 and found the same drive and resilience Peate experienced. Montauk also witnessed eagerness from the Israeli tech sector to support their work in Gaza. However, this support proved challenging in the current conflict. Shikhar Ghosh, an entrepreneurship professor at Harvard Business School, sees potential for a collaborative tech ecosystem through the development of products targeted towards Arab communities and a rising middle class in the Palestine territories.9 This regional collaboration could one day bring economic stability through entrepreneurial capitalism in an era of conflict.
Nigeria
The Federal Republic of Nigeria, or simply referred to as Nigeria, is the unfortunate birthplace of the Boko Haram insurgency. The Boko Haram insurgency began in 2009 as an armed rebellion against the Nigerian government, and since has spread to the surrounding Central and West African states of Niger, Chad, and Cameroon. The highly unstable region suffers from glaring human rights issues.
Entrepreneurship is crucial to Nigeria’s economic growth, and through entrepreneurial capitalism and economic prosperity, Nigeria can move a bit closer towards stabilization and peace. It is estimated that 45-60% of Nigeria’s urban labor force work for small businesses. Another study found that half of Nigeria’s employment and industrial output comes from SMEs (small- and medium-sized enterprises).10
Terrorism and political corruption have made launching, growing, and sustaining businesses in Nigeria difficult for locals. However, as we have seen in the previous stories, entrepreneurship has still found a way to prevail in this conflict zone. These entrepreneurs are not waiting on change, and are instead gaining momentum through aggressive innovation and calm stoicism. The resilience of entrepreneurs in Nigeria is well evident even as recent as this summer when five Nigerian startups attended the Massachusetts Institute of Technology’s (MIT) MITx Global Entrepreneurship Bootcamp. The acceptance rate of this highly selective program is .08%.11
Bus Stop, a startup founded by Emmanuel Adegboye from Lagos, Nigeria, solves the problem of chaotic public transportation, something that over 25 million Africans rely on, by identifying patterns in public transport and demystifying the model to make it easier for locals to navigate around cities. Another startup called Slatecube, founded by Chris Kwekowe from Lagos, Nigeria, is a skill-building platform that allows individuals to learn skills, practice them, and then use them in jobs. Other startups from Nigeria are focusing on industries such as agriculture and healthcare. The clear pattern here is that Nigerian entrepreneurs are rising from the conflict to innovate and create solutions to challenges that, if solved, can directly improve the quality of life.
Egypt
It is no surprise that Egypt too has suffered from socioeconomic and geopolitical instability, as their violent protests and uprisings have made international headlines since the start of the Egyptian Crisis with the Egyptian Revolution in 2011. An unstable government, which has changed hands multiple times in the past 3-4 years, violent protests, and the rise of the Sinai insurgency all led to economic downturn with an increase in unemployment and decline in investor confidence. Although things are getting back on track with a projected GDP growth of 3% this year, many of the risks discussed still hinder its Egypt’s future and its prosperity.
Yet, amidst years of unrest, Egypt has become one of the fastest growing hubs for entrepreneurship in the world. This distinction can be attributed to a young, talented, tech-savvy population, rapid growth in web and mobile penetration, and strategic location.12 Endeavor Egypt found that Egypt’s tech industry is growing at an average of 30% per year, a growth rate similar to New York.13
Egyptian startup Instabug launched as the streets of Cairo flooded with violent protests against the government. Instabug, co-founded by Omar Gabr and Moataz Soliman, saw a future for their app, which finds bugs in software, after it successfully launched in beta. However, the future of their country and the home base of their business did not look as promising.14 However, despite conflict and unrest, Egypt’s entrepreneurs pressed-on, like many of the other entpreneurs we have discussed in conflict zones. Around ten startup incubators have launched throughout the country, along with competitions and accelerators.
Many Egyptian entrepreneurs looked to international markets to recover from the negative effects of conflict and to find a path to growth. As we saw with Christine Sfeir in Lebanon, global expansion helped her stabilize her business, gain knowledge, insight, and experience in international markets, and provide more security to her foundation in Lebanon. Egypt’s Omar Gabr of Instabug left for the United States to secure funding for his app but with hopes of soon returning to Cairo. One of Egypt’s biggest weaknesses in entrepreneurship is a lack of mentors. Entrepreneurs like Gabr have the unique ability to return as mentors, armed with international experience in global markets.
The threat of spontaneous unrest has hindered the startup ecosystem in Egypt, making investors very wary. However, while investors may steer away from unpredictability and ambiguity, some of the best entrepreneurs walk right into it. It is this resilience that has put Egypt on the map as a global entrepreneurial hub.
References
1Bullough, A., Renko, M. and Myatt, T. (2014), Danger Zone Entrepreneurs: The Importance of Resilience and Self-Efficacy for Entrepreneurial Intentions. Entrepreneurship Theory and Practice, 38: 473–499. doi: 10.1111/etap.12006
2Strong, Michael (2009), Peace through Access to Entrepreneurial Capitalism for All, 3 FLOW, Inc.
3Gartzke, E., Gwartney, J., Lawson R. (2005), Economic Freedom of the World, 22.
4Gilpin, Raymond, Koltai, Steven (2012), Using Entrepreneurship to Promote Stability in Fragile Regions. United States Institute of Peace PEACEBRIEF, 134.
5Gilpin, Raymond, Koltai, Steven (2012), Using Entrepreneurship to Promote Stability in Fragile Regions. United States Institute of Peace PEACEBRIEF, 134.
6http://www.bbc.com/news/business-24227158
7http://blogs.wsj.com/middleeast/2014/02/23/entrepreneurship-remains-alive-in-syria/
8http://techcrunch.com/2015/08/16/tips-for-silicon-valley-from-a-startup-accelerator-in-gaza/
10Oyelola, O. T., Ajiboshin, I. O. , Raimi, L., Raheem, S.,
Igwe, .C. N. (2013), Entrepreneurship for Sustainable Economic Growth in Nigeria, 2: 197-215.
11http://www.itnewsafrica.com/2015/07/5-nigerian-startups-take-on-2015-mitx-global-entrepreneurship-bootcamp/
12http://www.virgin.com/entrepreneur/the-worlds-best-start-up-hubs-cairo-egypt
13http://endeavoreg.org/effecting-high-impact-entrepreneurship-in-egypt-endeavor-egypt-and-the-cairo-tech-map/
14http://mashable.com/2014/02/25/egyptian-startups-political/
