Mindset, resources holding back Muslim entrepreneurs

A rapidly expanding Islamic Economy creates opportunities but the support infrastructure is still in nascent stages of development

An app here, a website there and trading enterprises across the gamut of industries today typify the entrepreneurship culture in the Islamic world. But there is a long way to go to match the pace of development and innovation in a Silicon Valley or a Bengaluru.

A demographic profile that is particularly orientated towards youth is making it increasingly critical for Islamic countries to implement efficacious entrepreneurship and innovation initiatives. According to the State of the Global Islamic Economy 2016/17 report (SGIER), Muslim youth will comprise 27 percent of the world’s young adult population in 2020, increasing to 29 percent in 2030.

According to Abdulla Al Awar, CEO of the Dubai Islamic Economy Development Centre, “young and ambitious entrepreneurs” contribute to the growth of “vital and real sectors. In doing so, they can play a crucial role in ensuring financial stability and sustainable growth.”

Al Awar told Salaam Gateway, “We have witnessed a number of innovative businesses taking shape in the domain of developing mobile apps – from Arabic edutainment apps to Ramadan apps to various lifestyle apps.”

“In my view, however, we could greatly benefit from seeing young entrepreneurs involved in innovative projects that address current challenges, such as environmental concerns, job creation, healthcare and food safety, as priority areas for national development,” said Al Awar

“We encourage young entrepreneurs to focus their business on quality rather than quantity, and on common good rather than individual profit,” he added.

STUMBLING BLOCKS

Stalwarts of the entrepreneurship and innovation space identify three main stumbling blocks to the entry of more Muslim youth into the arena: education, resources and what they call mindset.

The SGIER says that $402 billion, or just 9 percent of the total global public and private spend on education of $4.4 trillion in 2015, is attributable to Muslim communities. Islamic societies are grappling with various levels and types of educational requirements to equip a new generation of entrepreneurs who can act as leaders in their social context. The issue acquires additional significance in the face of economic and political turbulence.

Despite an impressive spend on education, Malaysia, United Arab Emirates and Turkey, the most innovative countries among the Organisation of Islamic Conference (OIC), are ranked at 35, 41 and 42 on the Global Innovation Index published by Cornell, INSEAD and the World Intellectual Property Organisation.

Ahmed Abdulwahab, Managing Director at Dubai-based Turn8 Seed Accelerator, which incubates ideas into viable commercial entities using knowledge, mentorship and financing, says the seeds of entrepreneurship can be sown in school by offering courses on technical knowledge.

“Small changes or additions to a curriculum that inculcate the joy of experimentation and creation would become the foundation on which an entrepreneurial mindset is built,” he told Salaam Gateway in a phone interview. “My 10-year-old son is already learning how to code and he is enjoying it!”

SKILLS TRAINING

Prof Masooda Bano, Principal Investigator CSIA & Associate Professor, Oxford Department of International Development, University of Oxford, shares an example of a skill-training pilot implemented in 2014 in the residential Tsangaya Quranic schools, in Kano, in northern Nigeria. Targeted at children referred to as Almajiris, who leave their homes to board at these schools and beg during non-school hours, the programme brought up the need to provide skills training as a means to generate income.

“The idea for this pilot emerged from the work being carried out with children in Tsangaya schools in Kano under the DFID [UK’s Department of International Development] sponsored Education Sector Support Programme in Nigeria (ESSPIN).”

“Under ESSPIN Islamiyya, Quranic and Tsangaya Education (IQTE) intervention, malams (religious scholars) from Tsangaya schools were mobilised to send children between the ages of 7 and 13 to a central community school established by ESSPIN, where basic education in modern subjects was provided. The idea of introducing skills training to this population emerged due to the high demand for such training by the malams,” Bano told Salaam Gateway.

Imparting skills training at a young age broadens the view of life of young people who are otherwise restricted to seek growth in the context they’ve witnessed.

In a survey, 47 percent of the children in a control group expressed the desire to become a Quranic malam as compared to only 26 percent expressing the same ambition in an intervention group. On the other hand, the children in the intervention group expressed a much higher desire to become entrepreneurs than in the control group.

Creating the entrepreneurial mindset is not the bailiwick only of schools. “Parents need be more supportive of business ambitions in their children rather than pushing them to play it safe and find a government job,” Abdulwahab says.

“We as Muslims need to go back to our roots, when we were all innovators and entrepreneurs, because we had to be. And this was not too long ago. Even the UAE, for instance, has families who, less than 50 years ago, took risks, built new models of living, and thereby built a prosperous society.”

BALANCING ISLAMIC VALUES

This view is echoed by Com Mirza, a serial entrepreneur who claims he set up nine businesses that failed before achieving success with his tenth. The founder of Com Mirza Holdings, a venture capital firm, says, “We are experiencing a lot of mindset blocks in the Muslim world. We need to create a mentor network for these people, not just a fund, to help them balance their business ideals with their Islamic values. Unfortunately, we have more dream-killers than we have dream-chasers.”

Himself a high-school drop-out, Mirza is derisive of “institutionalised business education”, which is “taught from a textbook that is six years outdated by people who have never started, run or failed at a business”.

“The mindset is the way to deal with failure, to overcome setbacks and adversity. If you don’t have the right mindset, it takes only one punch to knock you out of the ring,” Mirza said at the MPowered Summit in Dubai.

While Mirza believes that citing a “lack of funding” is simply a result of a negative mindset, the World Bank says financing is a serious challenge facing entrepreneurs in the Muslim world.

In a report titled ‘What’s Holding Back the Private Sector in MENA’, which examines the funding ecosystem in Djibouti, Egypt, Jordan, Lebanon, Morocco, Tunisia, Yemen, and the West Bank and Gaza, the World Bank states, “Bank lending is highly concentrated, however, with credit targeting only a limited number of large companies, leaving the bulk of firms with little or no access to credit.”

In the UAE, the Global Innovation Index cites as weaknesses tertiary education enrolment, ease of getting credit, and patent applications as some of the roadblocks to the development of innovative entrepreneurship.

RESOURCE CONUNDRUM

Abdulwahab believes there is a resource conundrum at play in the Muslim world. “The need to innovate and become an entrepreneur is higher in countries such as Egypt, Jordan, Pakistan, India… Unfortunately, those countries have fewer resources to support such ambitions.”

“ On the other hand, the socio-economic dynamics of the GCC countries are such that there is a lower imperative to innovate, but more access to resources,” said Abdulwahab.

The government and private sector need to work in tandem to create an ecosystem that supports the aspirations of Muslim youth, wherever they may be located, says DIEDC’s Al Awar. “There is huge untapped potential – encompassing halal food and lifestyle products, Islamic knowledge, art and design, among other sectors.”

“Islamic assets are available, the market offerings are encouraging, and our understanding of Shariah-compliant ethics is embedded in our culture. Young entrepreneurs and investors are best suited to apply innovation in developing products and services that meet the needs of Muslim consumers in other countries,” said Al Awar.

“Dubai’s initiative to develop a holistic strategy encompassing dynamic sectors of Islamic Economy is in itself a great opportunity for the youth and SMEs in the UAE to explore and leverage the investment potential these sectors offer,” he told Salaam Gateway.

Turn8’s Abdulwahab recommends two courses of action designed to support and empower entrepreneurs. “Government corporations should re-examine and potentially restructure their policy of demanding bid guarantees in cash, especially from small businesses. This would help entrepreneurs deploy already-tight cash reserves for productive activities.”

He adds, “Both government and large private sector corporations should set aside a certain percentage of their procurement function for small businesses. Not only will this help the entrepreneur grow the company but also hire more people and thereby support economic growth.”

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