Really, Florence moved on to JP Morgan since AUB?

Not really putting her money where her mouth is, sadly, as JP isn't in the kind of work that does what she was talking about.

Her papers, mind you, are decent ones, if a bit flawed (the surveys are skewed, but then given her means at AUB).

More on this later if I have time.

Please do. News of Florence's move was apparently not widely spread, given that a year on I've been a vector of news to a number of different people already.

I strongly disagree there's a lack of entrepreneurial spirit among Arabs. I've seen far more entrepreneurs and entrepreneurial candidates among North Africans and Levantines than I've ever seen among, say, the French or the (anglos and french) Canadians.

There are many, many other other flaws though. To sum up the most important that come to mind:
- Lack of business angels and venture capitalists. This basically leads to two big issues: lack of capital and lack of entrepreneurial skills, not spirit. Your only way to start up is love money, which is definitely very limited. No cash señor, and few are willing to sell papa's house to risk it on something like a high tech start-up. No mentors tampoco, nobody to help you avoid the newbie's mistakes and lose the little capital you have before you reach some stage of maturity.
- Corruption and legal insecurity are definitely big issues in quite a few places too. Many people simply won't invest, because they'd have to "share" their assets. I've even known a few who actually started up successful businesses and simply gave up because it became too "hot" for their tastes.
- General lack of professionalism of the labor force. Too many things I'd classify in this category. From people who don't understand the basics of quality and their Sean Penn's U-Turn service level, to people who aren't task oriented and their "get-me-paid-for-showing-up" culture.
- Lack of technical experience. You have to train. And as soon as you give the training, zip, they're elsewhere for a higher wage. The churn for the competent is a real problem. You have to pay to keep them, sometimes to the point that they can be even less competitive than a Canadian.
- Lack of commercial networks in the big markets. Local markets are a joke. For example, in the IT services market, I don't remember the exact numbers for the three countries of the Maghreb combined, but it was in the few tens of million dollars. Compare it to the not-so-dynamic 30+ billions worth French market. You don't become the next "HP" or the next "easyJet" if you don't think export. And thinking export means you have to have efficient networks outside.

So, what is my advice to the Arab who wants to create his business? Well... It's go for a "restaurant in downtown Beirut". The bets would be much more in your favor than the Russian roulette style idea of an Arab high-tech start-up. Not that the high tech start-up is a bad idea. It's definitely needed and rewards can be significant in case of success. But we're not there yet. The Arab start-up isn't going to cost much less than doing it in Europe or North America, and it sure will give you much more trouble. At the individual level, before one can take such a risk and try something as big as a small Arab start-up, it's wiser to garantee some minimal return on your capital.

Shaheen:

I know I've quoted Florence before, her academic work was pretty interesting (although professionally I can note that this "Her poll of two-thirds of the private equity firms investing in the MENA region (that is, 10 of them)" is incorrect - well not Tom's writing but her survey's characterisatin of 2/3 PE firms is and was wrong).

Moving along I agree there is a huge amount of energy in the region. One day we should have a drink and I will tell you how I decided against all reason to specialise in MENA area, but it was from observing this as a student.

The key issues in my mind are institutional strangling of innovation and effort.

I very much agree with your list, I'd write a very similar analysis. Indeed I suspect our only difference would be POV really.

Lack of business angels and venture capitalists.

There is some change here, mostly institutional rather than angel, but not enough.

Corruption and legal insecurity are definitely big issues in quite a few places too.

Again, getting better, but not bloody fast enough.

Commenting on this:
Many people simply won't invest, because they'd have to "share" their assets. I've even known a few who actually started up successful businesses and simply gave up because it became too "hot" for their tastes.

Yup, and this kills off all kinds of growth. I recall as investment officer being told by one of our companies part of their commercial strategy (in Gulf) was to make price points too low to be attractive to the "brown paper envelope syndrome" - a whole upside taken off the table.

General lack of professionalism of the labor force.

I think the real problem here is that the government sector has set a pricing on labour that's too high relative to actual skill levels. I'm of the opinion this is waaay worse in the Gulf of course.

- Lack of technical experience. See above.

The churn for the competent is a real problem. You have to pay to keep them, sometimes to the point that they can be even less competitive than a Canadian.

For a number of reasons I find the emphasised (and ripped from context) section hilarious.

- Lack of commercial networks in the big markets.
Right. And shit poor infrastructure, although often because of... wait for it, idiotic management. Casa Port to Amsterdam is the same time as Shanghia Amsterdam. Certainly not because of the kilometrage.

I need to get back to this meat subject matter as here.

Of course I'd advise against any Arab entrepreneur going into hi tech. Nope, go for middle stuff. Light mfg areas where time to market is important, but skills not so, leverage location and whatever price differentials you have.

IT bets... hoo boy.

Of course you may know Aregon.

Lounsbury,

One day we should have a drink and I will tell you how I decided against all reason to specialise in MENA area

It would be a great pleasure, really.

(S) Lack of business angels and venture capitalists.

(L) There is some change here, mostly institutional rather than angel, but not enough.

Institutions are not the answer. They're anything but effective players, so they can't mentor (and they don't), and they're not risk takers, whereas taking risks is what is needed in terms of financing start ups.

I think the real problem here is that the government sector has set a pricing on labour that's too high relative to actual skill levels.

It isn't just the government. When your skills are so rare on the local job market (like it's the case in IT for example), there's some kind of demand spiral that makes you able to very easily change jobs and earn more. The problem is, with such a spiral you reach a point where you're paid more than your real value. Big companies get to keep you at that price for the few key positions in which they have no better alternative, but it's extremely difficult to build a competitive structure that provides large scale services in your field.

The churn for the competent is a real problem. You have to pay to keep them, sometimes to the point that they can be even less competitive than a Canadian.

For a number of reasons I find the emphasised (and ripped from context) section hilarious.

Put that way, you're quite right, it gave me a good laugh too:)

And shit poor infrastructure, although often because of... wait for it, idiotic management. Casa Port to Amsterdam is the same time as Shanghia Amsterdam. Certainly not because of the kilometrage.

Right. I remember touring Tunisia and Morocco with a business partner for a project we were working on (he's in the logistics sector). It was his first time in MENA and it stroke him as so obvious he didn't stop commenting on that. It didn't really occur to me as part of the top problems because I'm more into dematerialized services (particularly, but not limited to, IT). Logistics are not the major bottleneck there (though telecommunication infrastructure could use some upgrade and QA). It definitely is in manufacturing though.

Of course you may know Aregon.

Honestly, not before you told me about it and I googled it. But then, it's a B2C company oriented towards local markets, while I'm more into B2B exportation.