Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and remunerated to the greatest possible extent. Great entrepreneurs have the ability to change the way we live and work. If successful, their innovations may improve standards of living, and in addition to creating wealth with entrepreneurial ventures, they also create jobs and contribute to a growing economy.

Entrepreneurship is important for a number of reasons, from promoting social change to driving innovation. 

Entrepreneurs Spur Economic Growth

New products and services created by entrepreneurs can produce a cascading effect, where it stimulates related businesses or sectors that need to support the new venture, furthering economic development.

For example, a few information technology companies made up the IT industry in India during the 1990s. The industry quickly expanded and many other sectors benefited from it.

Businesses in associated industries, such as call center operations, network maintenance companies, and hardware providers flourished. Education and training institutes nurtured a new class of IT workers who were offered better, high-paying jobs.

Infrastructure development organizations and even real estate companies capitalized on this growth as workers migrated to cities where employment was growing.

Similarly, future development efforts in underdeveloped countries require robust logistics support, capital investments, and a qualified workforce.

From the highly qualified programmer to the construction worker, entrepreneurship benefits a large part of the economy.

Entrepreneurs Add to National Income

Entrepreneurial ventures help generate new wealth. Existing businesses may remain confined to existing markets and may hit the glass ceiling in terms of income.

New and improved products, services or technology from entrepreneurs enable new markets to be developed and new wealth to be created. 

Additionally, increased employment and higher earnings contribute to better national income in the form of higher tax revenue and higher government spending.

This revenue can be used by the government to invest in other, struggling sectors and human capital. Although it may make a few existing players redundant, the government can soften the blow by redirecting surplus wealth to retrain workers. 

Entrepreneurs Create Social Change

Through offering unique goods and services, entrepreneurs break away from tradition and reduce dependence on obsolete systems and technologies. This results in an improved quality of life, improved morale, and greater economic freedom.

For example, the water supply in a water-scarce region will, at times, forces people to stop working to collect water. This will impact their business, productivity, and income. Imagine an innovative and automatic pump that can fill people's water containers automatically. This type of innovation ensures people are able to focus on their jobs without worrying about a basic necessity like water. More time to devote to work translates to economic growth.

For a more contemporary example, smartphones and apps have revolutionized work and play across the globe. Smartphones are not exclusive to wealthy countries or people. As the growth of the smartphone market continues, technological entrepreneurship can have a profound, long-lasting impact on the world.

Moreover, the globalization of technology means entrepreneurs in lesser-developed countries have access to the same tools as their counterparts in richer countries.

They also have the advantage of a lower cost of living, so a young entrepreneur from an underdeveloped country can compete with a multi-million-dollar existing product from a developed country.

Community Development

Entrepreneurs regularly nurture ventures by other like-minded individuals. They also invest in community projects and provide financial support to local charities.

This enables further development beyond their own ventures. Some famous entrepreneurs, such as Bill Gates, have used their money to finance good causes, from education to public health. The qualities that make one an entrepreneur are the same qualities that help motivate entrepreneurs to pay it forward. 

Is All Entrepreneurship Good?

Are there any drawbacks to cultivating entrepreneurs and entrepreneurship? Is there a limit to the number of entrepreneurs a society can hold?

Italy may provide an example of a place where high levels of self-employment have proved to be inefficient for economic development. Research has shown that Italy has experienced large negative impacts on the growth of its economy because of self-employment. There may be truth in the old saying, "too many chefs and not enough cooks spoil the soup." 

The Role of Government

Regulation plays a crucial role in nurturing entrepreneurship. Unregulated entrepreneurship may lead to unwanted social outcomes including unfair market practices, pervasive corruption, and criminal activity.

Findings from the United Nations University also indicate the possible implications of “over-nurturing" entrepreneurship.

European economist Wim Naudé argues that “while entrepreneurship may raise economic growth and material welfare, it may not always result in improvements in non-material welfare (or happiness). Promotion of happiness is increasingly seen as an essential goal.” 

Paradoxically, a significantly high number of entrepreneurs may lead to fierce competition and loss of career choices for individuals.

With too many entrepreneurs, levels of aspirations usually rise. Owing to the variability of success in entrepreneurial ventures, the scenario of having too many entrepreneurs may also lead to income inequality, making citizens more unhappy.

The Bottom Line

The relationship between entrepreneurship and economic development is important to understand for policymakers and business owners. Understanding the benefits and drawbacks of entrepreneurship allows a balanced approach to nurturing entrepreneurship to be taken, which can result in a positive economic and societal impact. 

source: investopedia

Oman is upgrading its infrastructure – more specifically – ports, as a gateway to economic diversification. A steep decline in global oil prices between 2014 to 2017 weakened the Sultanate’s monetary funds. An alternative strategy applied to accelerate economic growth was to increase the role of private sectors and establish more SMEs. Imports and exports are essential cogs in the industrial wheel, and the Sultanate has been revamping its ports in Muscat, Duqm, Salalah and Sohar, to not just increase its industrial production, but also to exploit the Sultanate’s strategic location to its advantage in transforming Oman into a hub for foreign investment and international trade.

Ports and Free Zones

In line with Oman’s agenda to increase foreign investment, Oman has established free zones adjacent to some of its ports. These free zones will be the direct centers for the majority of Oman’s foreign direct investments (FDIs). International companies and investors will be allowed to establish their businesses within the free zones. Its proximity to ports is a calculated benefit – of ease in imports and exports – that will entice further foreign investment.

The various free zones established by Oman are:

• Salalah Free Zone
• Salalah Port
• Sohar Industrial port
• Sohar Free Zone
• Mazyona Free Zone
• Musandam Free Zone
• Duqm Port
• Duqm Free Zone

Oil Tanker Attacks and Significance of Duqm Port

The tanker attack allegedly carried out by Iran have led to a rise in U.S – Iran tensions. Subsequently, the Strait of Hormuz has become a volatile route for trade. Shipping companies may be wary of utilizing the trade route. This gives Oman the opportunity to present an alternative and safer trade route in the form of Duqm. With direct access to the Arabian sea, Duqm port’s tactical location may urge shipping companies to redirect their trade via Oman’s coastal line. This, in turn, will promote the Sultanate as a major player in foreign investment and trade.

Foreign Investment Regulation

Oman has issued several policies to encourage foreign investment, such as:

• Competitive service prices
• Exemption of tax for five years (extension may be granted in some cases)
• No income taxes
• Exchange of foreign currency at a fixed rate
• 100% Ownership of company within free zones

These incentives have been tailored specifically to allow for ease of trade, encouraging foreign investors to utilize Oman’s ports and free zones.

Foreign Investment vs. SMEs

While some may consider the growing number of foreign direct investments (FDIs) and companies as a threat to budding SMEs within the Sultanate, they pose none. In order to avoid competition between well-established foreign companies and the up and coming Omani enterprises, the country has limited FDI’s reach to its free zones, adjacent to its trading ports. FDIs within the main cities require the investor to find an Omani sponsor. Oman, as part of its economic diversification agenda, wants its SMEs and local industries to flourish, and carefully lays down policies that ultimately benefit its locals, whilst still managing to extend a fair offer to its foreign investors.

source: businessliveme

Africa escaped the global decline in foreign direct investment (FDI) as flows to the continent rose to US$46 billion in 2018, an increase of 11% on the previous year, according to UNCTAD’s World Investment Report 2019.

Growing demand for some commodities and a corresponding rise in their prices as well as the growth in non-resource-seeking investment in a few economies underpinned the rise.

While FDI in some large economies on the continent – such as Nigeria and Egypt – contracted, this was outweighed by a surge in flows to others, most significantly, South Africa.

“The African Continental Free Trade Area (AfCFTA) agreement will bolster regional cooperation. This, along with upbeat growth prospects, augurs well for FDI flows to the continent,” UNCTAD Secretary-General Mukhisa Kituyi said.

North Africa

FDI flows to North Africa climbed by 7% to $14 billion.

Investments in Egypt contracted (down by 8% to $6.8 billion), but the country continued to be the largest FDI recipient in Africa.

FDI to Morocco increased by 36% to $3.6 billion on the back of sizeable investments in finance and the automotive sector.

Sub-Saharan and Southern Africa

FDI flows to Sub-Saharan Africa climbed by 13% to $32 billion, recovering ground after successive contractions in the two prior years.

Southern Africa saw the biggest turnaround, with flows recovering to $4.2 billion after net divestment of $925 million the previous year.

FDI in South Africa more than doubled to $5.3 billion, although this was largely attributable to intracompany transfers by established investors.

Angola remained negative (-$5.7 billion), mainly as a result of oil and gas firms transferring funds to parent companies through intracompany loans.

East Africa

FDI held steady at $9 billion in East Africa, the fastest-growing region of the continent.

Ethiopia topped the region, even as flows to the country declined by 18%, to $3.3 billion.

Flows to Kenya swelled by 27% to $1.6 billion, due to investment in diverse sectors, including manufacturing, hospitality, chemicals and oil and gas. 

West Africa

FDI to West Africa declined by 15%, to $9.6 billion, largely due to Nigeria where flows plunged by 43% to $2 billion.

Flows to Ghana also dipped, albeit by a more moderate 8%, to $3 billion.

Looking ahead

Multinational enterprises from developing countries are expanding their activities in Africa but investors from developed countries remained the key players.

Based on data through 2017, France is the largest investor in Africa, although its stock of investment has remained largely unchanged since 2013, followed by the Netherlands, the United States, the United Kingdom and China.  

Growing demand and a corresponding rise in the price of commodities, of which Africa is a key producer, are expected to prop up FDI flows to the continent in 2019.

Closer regional integration aided by the AfCFTA can also draw additional FDI flows.

While investment in manufacturing and services is likely to be sustained, this is expected to be confined to a few countries in North and Southern Africa, and the emerging manufacturing hubs in East Africa.

Special economic zones buttress prospects

The growing number of special economic zones (SEZs) could become another factor in drawing investment to the continent in the coming years.

There are an estimated 237 SEZs in Africa, some still under construction, along with more than 200 single-enterprise zones (so-called free points).

SEZs operate in 38 of the 54 economies on the continent, with the highest number in Kenya (61).

The three largest economies of the continent – Nigeria, South Africa and Egypt – all have well developed SEZ programmes.

Many smaller economies have only established SEZ frameworks in the last decade and tend to have fewer zones.

Stronger regional cooperation also creates scope for more ambitious regional and cross-border zones.

In 2018, Burkina Faso, Côte d'Ivoire and Mali launched an SEZ spanning border regions of the three countries. Similarly, Ethiopia and Kenya recently announced their intention to convert the Moyle region into a cross-border free trade zone.

source:unctad

What is the best way to attract foreign direct investment to Egypt? Niveen Wahish sounds out the experts

Foreign direct investment (FDI) into Egypt fell to $6.8 billion in 2018, down from $7.4 billion the previous year, according to the UN Conference on Trade and Development (UNCTAD) 2019 World Investment Report.

However, Sherif Fahmy, a director at NGage Consulting in Cairo, believes that although the FDI was lower than expected in 2018, it is still the highest in the region.

The UN report showed that Egypt figured as the largest recipient of FDI in Africa that year. Fahmy said that global FDI flows had seen a 13 per cent decline in 2018, falling to $1.3 trillion. This had been attributed to US tax reforms in 2017, which provided tax incentives to US multinationals to repatriate foreign-held capital and invest it in the US economy, he said.

FDI into Egypt had reached around $8 billion in 2016, almost double the figure of 2014, prompting the government to target $10 billion in FDI. However, this did not happen despite multiple efforts.

Allen Sandeep, director of research at Naeem Holding, a consultancy, believes the government has done a decent job in laying the foundations for Egypt to be viewed as an attractive investment hub in the future by enacting bold economic reforms such as the phasing out of petroleum subsidies, taming inflation, and maintaining a competitive exchange-rate policy.

He said that measures such as the new investment law with the one-stop-shop to facilitate set up and the various incentives it offers in free zones had been important to changes in the balance of payments, drops in yields on treasury bonds, and levels of interest shown by investors in international bond issuances.

Fahmy added that the government intended to take further measures to accelerate the automation of procedures. It was also committed to policies designed specifically for value-added and technology-oriented sectors that contribute to overall economic growth and decrease unemployment, he said.

The government’s investment act in particular is designed to promote investment in less-developed regions to enhance living standards.

While Fahmy was optimistic that Egypt could attract more FDI to reach around $8-8.5 billion in 2019-2020, Sandeep believed that for FDI to pick up as a result of the reforms being enacted a time frame of five to 10 years was needed.

In the meantime, he stressed that the government must engage more in investor roadshows and strong PR and marketing impetus to improve awareness externally. Risk perceptions about Egypt, whether on politics, the economy or security, were a lot different outside than within the country, he said.

This had meant that risk premiums were mispriced, resulting in sluggish investor interest both for foreign portfolio and foreign direct investment. He suggested that new venues for investment needed to be prioritised in areas such as the services sector.

Business-process and knowledge-process outsourcing and IT-enabled services were good options for Egypt, he said, because it had a strong edge in terms of human capital.

Alexandria University economics professor Mohamed Abed agreed on the need to coax investment towards areas with potential for Egypt. He lamented the fact that around 60 per cent of incoming FDI poured into the oil-and-gas sector, while more was needed in manufacturing because that was what created jobs.

Around 10 per cent of FDI goes to manufacturing at present. This was mostly directed towards domestic consumption, however, whereas what was needed were export-oriented industries that could generate hard currency, Abed said.

Fahmy explained that according to the UNCTAD report, foreign investment in Egypt was skewed towards oil and gas, as significant discoveries of offshore gas reserves had attracted investment and the country became a net exporter of gas in January 2019.

British Petroleum, he said, had increased its investment stock in the country to more than $30 billion. Egypt also signed at least 12 exploration and production agreements with international oil companies in 2018.

However, Fahmy said the UNCTAD report also showed some large foreign projects had been announced in other sectors, such as a $2 billion Ukranian project by Nibulon to upgrade Egypt’s grain-storage infrastructure and a $1 billion Saudi project by Artaba Integrated Holdings for the construction of a medical city.

In addition, the Chinese Shandong Ruyi Technology Group had signed an agreement to invest $830 million in the construction of a textile area in the Suez Canal Special Economic Zone (SEZ).

Fahmy said that companies opening up in Egypt were not there just for the domestic market, but “for the entirety of the two billion people that represent countries that are part of free-trade agreements and encourage the flow of goods into international and regional markets.”

However, FDI into Egypt could also be affected by global conditions. Sandeep said that the ongoing trade war with China instigated by the US could have long-lasting global impacts, both directly resulting in the flight of capital out of emerging markets and indirectly because of the spillover impacts due to contagion.

Geopolitical risks due to tensions between Iran and the Gulf countries and the US could also affect the price of commodities such as oil and could impact trade, tourism, and Suez Canal receipts, Sandeep said.

source:ahram

A new World Bank Report finds that Mashreq countries have a unique opportunity to catch up on strengthening the digital economy ecosystem and reposition themselves as strong economic competitors at the regional and interregional levels.

Building the ecosystem of a regional digital economy would greatly benefit from two main comparative advantages these countries enjoy: competitive higher education levels and tech-savvy youth, and a strategic position that allows them to be at the center of advanced service trade and connectivity.

The new report, Mashreq 2.0: Digital Transformation for Inclusive Growth and Jobs, examines the inventory of digital infrastructure in Iraq, Jordan and Lebanon.

The report reviews the legal, regulatory and institutional frameworks governing the sector and pins down the obstacles preventing the full development of digital economies. The report also analyzes cross-sectoral digital applications and platforms, namely in the sectors of energy, financial inclusion, e-government, regional trade and logistics, agriculture and skills development. 

“Digital transformation can address some of the most imminent challenges the Mashreq region faces at this critical period, namely the need to foster inclusive growth and create the much-needed jobs for the region’s vibrant youth,” said Saroj Kumar Jha, World Bank Regional Director for the Mashreq. “Recognizing the importance of digital transformation, the World Bank committed back in October 2018 to the Moonshot approach which calls for doubling broadband access by 2021 and expanding access to digital payments.” 

The transformative impact of the digital economy stems from the growth in the billions of data and online transactions that businesses, individuals and governments perform every day. This transformation can bring about efficiencies, allow faster inclusion of lagging economic and social groups and improve governance and transparency.

Disruptive technologies are also increasingly changing the business model of core sectors of the economy, including agriculture, electricity, oil and gas, and industry production. 

Drawing on the expanded World Bank MENA Strategy which prioritizes leveraging technologies for a new digital economy, the Mashreq region has the opportunity to create an infrastructure for the development of a more sophisticated digital economy and capitalize on its large base of digitally literate youth to position itself as the digital hub of the region. 

“Increased contestability is essential to meet the Moonshot Approach targets,” said Carlo Maria Rossotto, World Bank Lead ICT Policy Specialist and lead author of the report.

“Mashreq countries will need to reduce excessive profits by stimulating competition, strengthen regulatory institutions, create regulatory incentives and ensure universal access in broadband through proactive use of public sector subsidies.” 

Broadband infrastructure enables economic growth as it provides easy access to information and increases efficiencies and productivity in the economy.

In fact, boosting broadband penetration alone by 10% would lead to as high as 1.4% GDP growth and significantly boost economic growth and trade integration in the region. The report finds that overall, there remains a considerable gap in the adoption, speed, usage and affordability of fixed broadband services between the Region and emerging economies such as Turkey, Romania and Bulgaria, countries that compare positively in digital economy development.  

On another hand, the development of physical access networks (“last mile” access) will be the area where most policy attention will need to be paid and the area which could attract the largest amount of investment.

The level of investment needed to bring high speed broadband access to 30% of the population of the Mashreq through fiber access (about 13 million households) will be between 4.0bn and 5.2bn. 

The report also finds that the Mashreq region has an extensive regional and backbone broadband infrastructure in place, that is however sub-optimally used, due to a mix of war and instability, complex political economy, and lack of reform at domestic level. 

The region has a strategic geographical position with respect to the global internet infrastructure. Mashreq countries could capitalize on the strategic access to major sea cable links through further liberalization of international gateways and internet exchange points. 

source: worldbank

The force of digitalization is driving the global economy, creating distinct groups of leaders and laggards. Through institutional reform that leverages the advantages of digitalization, the Mashreq can become a vital hub in international data networks.

Furthermore, digital transformation can assuage pressing challenges. It can deliver higher transparency, accelerate lackluster productivity and increase economic opportunities for all, especially the youth of this region. A new report, Mashreq 2.0, charts the roadmap for the region to capitalize on this rapidly emerging opportunity, and assesses the prospect of a digitally integrated regional market.

Outside the dominant paradigms that portray the region in popular media, the Mashreq is the epicenter of the world’s fastest growing data transit market. Data traffic growth within the region will increase at a precipitous 42% compounded annual growth rate from 2016 to 2021.

Influenced by historically intertwined geographic and cultural ties, MENA-Europe data exchange grows at over 50% per year.

The Mashreq’s potential in the digital economy is also evidenced by the many unicorns that have been incubated in the Arab region. Hallmark cases include Maktoub and Souk.com, born in Jordan’s capital, Amman. These digital platforms indicate an evolution in consumer behavior, embracing digital consumption. Another example is Magnitt, an Iraqi startup now hosted in Dubai, which is a marketplace for investors that links 5,500 startup firms with investors across the region.

These examples signal a bright future for the region, but crucially, broadband internet infrastructure is not yet equipped with the capacity to realize this potential. While mobile phones are ubiquitous in the Mashreq, broadband internet paints a different picture. Mashreq countries have a similarly stark disparity between mobile and broadband penetration: Iraq has 95% mobile penetration but only 28% for broadband; Lebanon is less glaring, with 75% mobile penetration and 71% for broadband. Mobile access is also rather uneven in the region: The gender gap in mobile ownership is 11% in Iraq and 21% in Jordan, but only 2% in Egypt or Turkey. Creating a significant bottleneck, all countries in the Mashreq also have a lower fixed download speed than the global average of 55Mbps: Jordan is at 29 Mbps, Iraq at 13 Mbps, and Lebanon at 7Mbps. Mobile download speed is relatively better off: the global average is 25Mbps, and Lebanon is at 40Mbps, Jordan at 15Mbps and Iraq at 6Mbps. Even so, they fall behind best in class examples such as Romania, that has successfully introduced competition and market contestability to achieve 131Mbps (fixed download speed) and 34Mbps (mobile download speed).

The ability to absorb new communications technology is another source of disparity: 4G connectivity is only available to 25% of Iraq’s population, though present in 95% of the population in Jordan and Lebanon. Internet Exchange Points (IXPs) also present a largely untapped opportunity.

To provide Internet connectivity that can augment the data economy, significant investments in key areas of the infrastructure value chain are necessary.

In Iraq, it is estimated that a total of IQD 660.5 billion (US$558.8 million) will be needed to build a robust fixed network in areas afflicted by conflict.

Investment in the ”last mile” broadband infrastructure is also lagging more generally.

Investments to bring high speed broadband access to 30% of the population of the Mashreq (about 13 million households) through fiber access is estimated to be between US$ 4 billion and US$ 5.2 billion. A large part of the investment needed for this fiber buildup can be provided by the private sector, through competitive entrants, or strategically using Private Private Partnerships (PPPs). A good example is Jordan’s planned PPP on the National Broadband Network (NBN), which may crowd in at least $100 million of additional private investment leveraging an existing government fiber network. Considering the significant potential in the region, unlocking such a high quantum of investment is not beyond possibility. In addition to “last mile” broadband infrastructure, improving IXPs in the region can strengthen regional data exchange networks, and unleash at least US $200 million in investment.

Digital ecosystems can leverage high level of education in the region, including digital literacy, and a strategic geographic position as a central node in advanced service trade. Boosting broadband penetration alone by 10% would have a significant impact on GDP growth, estimated to be as high as 1.4%. This could give a significant boost to economic growth and trade integration in the region. However, this is only one piece of the puzzle.

Where the Mashreq’s regional and backbone broadband infrastructure is extensive, it remains sub-optimally used, due to intricacies in the political economy context, and lack of credible rules and institutions. Institutional reform to increase contestability is essential. Compelling priorities include: a) deepening competition to eliminate rents; b) strengthening regulatory institutions; c) creating regulatory incentives, including a Fiber Regulatory Package (FRP), to facilitate fiber investment; and d) ensuring universal access to broadband through proactive use of the public sector, and fast-track a timetable towards frontier technologies such as 5G.

Implementing these reforms would position the Mashreq to become a digital hub for the region, leveraging the full potential of the new digital economy for MENA, fully embracing innovation and entrepreneurship, creating opportunities for its technology savvy youth.

source: .worldbank

Global experience shows that entrepreneurship stimulates job creation in the economy. The degree of entrepreneur success depends on the maturity of the underlying ecosystem.

Traditional pathways for job creation and growth, however, are at risk of not producing enough jobs in the future.  The Government of Jordan has been encouraging entrepreneurship to shift these forecasts and accelerate the rates of job creation.

The entrepreneurship ecosystem in Jordan has been emerging over the last decade, but there are key challenges hindering its growth and connectedness. 

Jordan’s ranking in the Global Entrepreneurship Index, which measures both the quality of entrepreneurship and the extent and depth of the supporting entrepreneurial ecosystem in 137 countries, improved by 23 ranks between 2014 and 2018 (going from 72 to 49). According to the Global Entrepreneurship Index 2018, the score of Jordan is equal to the Arab region’s average score of 37%. Jordan outperforms the region in product innovation, technology absorption, competition, startup skills, and cultural support indicators.

On the other hand, Jordan lags in high growth, risk capital, risk acceptance, networking, and human capital indicators.

In 2019, the World Economic Forum (WEF) included 27 Jordanian startups among the top 100 in the Arab World.  Jordan’s technology entrepreneurs have shaped the region’s tech scene in the last decade (Maktoob, Souq.com, Arabia Weather, Mawdoo3, and many others). There are thousands of Jordanian technology professionals, who assume senior positions in key technology companies in the Arabian Gulf region and look for good opportunities to work back in Jordan. 

A recent World Bank survey of 230 Jordanian entrepreneurs found that Jordanian entrepreneurs are well-educated and have solid experience in business.

According to the survey, 94% of the Jordanian startups key founders hold BA degree or above, 62% have 10 years of experience or above, and 20% have 6-9 years of experience.

The majority of Jordanian entrepreneurs (71%) have previous experience working at middle- or senior- level jobs, and most of them (91%) worked as employees in a private enterprise, including their own, before establishing a business.

Jordanian entrepreneurs also tend to work in groups where co-founders bring in a mixture of diverse but complementary skills to support business operations.

These characteristics show high quality composition that align with the characteristics of WEF’s 2017 top 100 startups from the Arab World.

The World Bank surveyed the top 100 startups back then, studied entrepreneurship trends and policies, and published a chapter on entrepreneurship at the Arab World Competitiveness Report 2018 to inform government policies in the region.

As a step to support entrepreneurs’ aspirations, the Government of Jordan and the World Bank facilitated the participation of 14 leading entrepreneurs from Jordan at the 2019 London Initiative. 

The entrepreneurs demonstrated the scale of ambition of Jordan's economic transformation, highlighted the growth potential in digital entrepreneurship, and pitched investment opportunities to global funds. Expansion into the wider regional/global markets is key for the Jordanian entrepreneurs, considering the relatively small size of the local market.

On challenges, Jordanian entrepreneurs perceive taxes as the key barrier facing their business (73%), followed by laws governing investments in startups (62%), excessive government formalities (58%), obstacles related to customs law and regulations (55%), and social security (52%). Focus group discussions provided insights on these challenges and suggested that tech-enabled entrepreneurs are unclear on the economic classification of activities that are tax exempted, burdened by the relatively high tax levy on imported/input services (26%), and troubled by the requirement to file tax on a monthly basis. Startups also expressed concerns about the complicated company restructuring process (increasing/decreasing capital, changing shareholders, etc), difficulty in obtaining work permits for skilled foreign labor, and inconsistent estimation of custom fees on imports. Clearly, there are specific legal and procedural reforms that the Government could implement to support businesses in Jordan. Entrepreneurs expect the Government to enable a friendly business environment, help open local and regional markets, and develop the local entrepreneurial ecosystem, according to World Bank’s survey.

In May 2019, the Government of Jordan introduced a new cabinet Ministry for Digital Economy and Entrepreneurship (MoDEE) to expand the mandate of the former Ministry of Information and Communication Technology and support digital entrepreneurship, electronic payments, and digital skills development. This comes as an organic step to support the growing role of the Government in supporting these digital economy pillars.

The Government has taken key steps in supporting the digital economy by endorsing a PPP model for expanding the national broadband network, supporting digital skills development for hundreds of youth, launching an ambitious plan for government e-payments, and supporting access to growth finance and global markets for entrepreneurs. These efforts will contribute to World Bank’s Moonshot initiative for MENA, which calls for doubling broadband access by 2021 and expanding access to digital payments.

To enable a business-friendly environment in Jordan, entrepreneurship ecosystem representatives (including Intaj, Oasis 500, Endeavor, JEIA, Startup Council, and others) and MoDEE have started a consultative effort, facilitated by the Word Bank and the Jordan Strategy Forum — a leading local think tank, to develop a policy matrix for addressing these challenges. MoDEE will recommend specific regulatory reforms to the Cabinet of Ministers for endorsement and lead the implementation afterwards.

To support the digital economy development in Jordan and the Mashreq region (Jordan, Lebanon, and Iraq), the Government of Jordan will host the first Digital Mashreq Forum in Amman on June 29-30. 

The two-day high-level regional event will serve as a platform to discuss the role of digitalization in shaping the region’s future through the lens of government and business leaders. The Forum will provide a business networking opportunity for Jordanian entrepreneurs with regional and global investors. The Forum will also showcase Jordan as a regional hub for technology enabled services. Growing the entrepreneurship ecosystem and digitalizing business activities in Jordan would offer promising growth potential for the economy.

source: worldbank

The regulations are to protect data and privacy for all Egyptian citizens and European Union citizens in Egypt.

Egypt - Due to the increasing developments of the internet, maintaining personal data has become very difficult. Hence, under the state’s efforts to prevent illegal spreading of personal data over the internet, the country will apply data protection regulation in Egyptian Law.

The data protection regulations were finally approved by parliament on Monday, June 17. The regulations are to protect data and privacy for all Egyptian citizens and European Union citizens in Egypt.

The regulations contain provisions and requirements pertaining to the processing of personal data of individuals.

However, the personal data considered to be information about the individual can identify them directly or indirectly, using names or pictures, or any other data identifying the individual’s economic, cultural, or social conditions.

Meanwhile sensitive personal data is what reveals the physical, or mental health, the financial, religious data, and political opinions also are sensitive data.

The data protection regulation obliges companies which deal with personal data to follow these regulations.

Personal data may not be collected, processed, or disclosed by any means without permission from the concerned person. The law shall punish any person that does not comply by imprisonment for a period of not less than three months and a fine between EGP 100,000 and EGP 1m.

Moreover, the second article of the law prohibits the collection, transfer, storage, preservation, or processing of sensitive personal data, or making it available without a license from the centre, with the obligation to obtain written consent of the concerned person.

Article 14 prohibits the transfer or sharing of personal data to a foreign country, except by a license from the centre. The law would fine any person between EGP 300,000 and EGP 3m.

For electronic commercials, article 18 requires permission from the receiver to get any commercial messages.

Any violation can lead to imprisonment or a fine from EGP 100,000 up to EGP 1m.

source: zawya

The oil price shock has led the country's government to record sustained fiscal deficits since 2015, which has forced it to draw on the reserves of one of its sovereign wealth fund's assets

Assets of the Kuwait Investment Authority (KIA), the oldest sovereign wealth fund (SWF) in the world, have continued to grow despite the oil price shocks, according to Moody’s Investors Service.

Future Generations Fund (FGF), one of two funds managed by the KIA, which receives mandatory transfers of funds equivalent to 10 per cent of the government's revenue has continued to grow with solid profitability that has seen it rise to about 309 per cent of Kuwait's gross domestic product, Moody’s said in a report. The growth has come despite a reduction in the ratio of mandatory funds transfer from previous 25 per cent, Moody’s which rates Kuwait at Aa2 with a stable outlook, said.

“We expect it [FGF] will continue to grow as long as the fund remains profitable and the mandatory transfer remains in place,” it noted in the report.

By contrast, Kuwait's government has drawn down on its second investment vehicle, the General Reserve Fund (GRF) “quite rapidly since the 2015-16 fiscal year to finance deficits triggered by the oil price shock,” Moody’s said.

Kuwait's fiscal deficit peaked at 17.5 per cent of its GDP in 2016-17, a huge decline from a 20 per cent surplus recorded in 2013-14. The government had tried to relieve pressure on the GRF in the beginning of the oil price slump that saw crude falling from a peak of $115 per barrel in the mid-2014 to below $30 per barrel in the first quarter of 2016.

However, the country’s parliament blocked the government's attempts to increase the debt ceiling to 25 billion dinars (Dh301.6bn) and lengthen tenors up to 30 years in 2017 from previous 10bn dinars and 10 years, respectively. The debt law subsequently expired and the government was forced to finance deficits and maturing domestic borrowings from the GRF.

Relying on the GRF has led to an accelerated drawdown of the fund's assets to an estimated 23bn dinars as of March 2019, from 26.

4bn dinars from a year earlier, Moody’s explained.

The rating agency said a further depletion of the GRF would depend on “if and when” parliament passed another debt law, but the government will need to finance deficits around 9 per cent of GDP over the next few years. However, as only around 65 per cent of GRF assets are liquid, the fund would only be able to finance around three years’ worth of deficits and run out by the end of fiscal year 2021-22.

“The eventual depletion of the GRF could have several implications for sovereign creditworthiness,” Moody’s said. “Under our baseline scenario, which assumes parliament approves the debt law by 2020 and FGF assets remain ring-fenced, a depleted GRF implies that the government will rely much more on debt issuance for funding.”

Combined with large fiscal deficits, such a scenario could lead to a rapid increase in general government debt and an increase in debt-servicing costs from the budget.

“Although unlikely, a situation where the GRF is depleted before no alternative funding sources have been arranged would be very credit negative,” Moody’s said.

“Such a scenario would require the government to make significant cuts to spending, given our expectations for persistent fiscal deficits.”

source: thenationalthenational