"My Business" is a Joint Collaboration on Entrepreneurship Program for Arab Youth between INJAZ Al-Arab and MASTERCARD Worldwide.
MasterCard, a payment industry giant, has taken the initiative to join hands with INJAZ Al-Arab, a non-profit organization in the Middle East and co-member of Junior Achievement Worldwide, both collaborating on a corporate volunteering program to provide experiential education and training to Arab youth in work readiness, financial literacy and entrepreneurship.
MasterCard will support INJAZ Al- Arab's 'It's My Business', a leading entrepreneurial mentorship program developed for youth in Lebanon and countries across the Middle East and North Africa (MENA).
The announcement was made February 8th, 2012 at an event MasterCard and INJAZ Al-Arab held at the Intercontinental Phoenicia Hotel, Beirut, marked by the attendance of H.E.
Mr. Walid Daouk, Lebanese Minister of Information, Soraya Salti, INJAZ Al-Arab Regional Director and Junior Achievement Senior Vice President, MENA, Patricia Devereux, Group Head, Corporate Philanthropy and Citizenship, Michael Miebach, President, Middle East and Africa, MasterCard Worldwide, Chady Zein, Principal at Booz & Co., and Basel El Tell, Vice President and Regional Manager, Levant, MasterCard Worldwide.
"All young people deserve an opportunity to reach their full potential," said Miebach. "MasterCard is proud to work with INJAZ Al-Arab to launch the 'It's My Business' program, which we believe is a great investment in youth in Lebanon and across the MENA. Equipping the youth with entrepreneurship skills will enable them to pursue their own business, thus reducing unemployment rates and allowing them to build stronger futures for themselves and their families while positively contributing to the economic development of their countries."
The program also has the full endorsement of the Lebanese government, allowing a mostly underprivileged public school sector to benefit from international expertise that would otherwise be of scarce availability if not an impossibility.
"The introduction of 'It's My Business' program in Lebanon, will provide our youth with a wealth of knowledge on financial literacy and business-related skills, which will allow them to thrive when they enter the real world.," said H.E., Walid Daouk, Minister of Information, Lebanon.
Carrying forward the vision and inspiration behind INJAZ Al-Arab, is a profoundly committed Salti who said: "Youth unemployment in the MENA region currently stands at 25%, which is double the world average."
Moreover, research from Booz & Company shows that on average, youth are waiting five years after graduation The high level of entrepreneurship is mainly driven by necessity - shop owners, farmers and cart sellers trying to satisfy their basic needs of food, shelter and security.
Booz & Co. says there are currently about 150 existing initiatives that encourage entrepreneurial activity in the MENA region. These initiatives include technology incubators, government (25%), non-governmental organizations (NGOs 62%), networking associations for aspiring entrepreneurs and university programs dedicated to entrepreneurship.
The entrepreneurial ecosystem has four success elements: personal enablers, financial enablers, business enablers and environmental enablers.
A. Personal Enablers
The first ring in the ecosystem affects the entrepreneur's individual development, says Booz & Co. These personal enablers include:
Mentors/Advisers: Typically other entrepreneurs willing to share knowledge and real-life lessons.
Informal Education: Informal education is available through various sources, such as seminars and networking events.
Formal Education: Universities around the world offer entrepreneurship courses and programs to nurture a spirit of entrepreneurship.
Fewer than 10% of the universities in the MENA region offer entrepreneurial courses and a mere five actually offer a major in entrepreneurship.
B. Financial Enablers
These financial enablers or financiers include:
Equity Investors: Equity investors include family and friends, angel investors and venture capital funds Banks and SME Financing: Debt financing from banks requires collateral and usually involves a lengthy approval process since start-ups lack a track record.
Microfinancing: These lenders offer very small loans to aspiring entrepreneurs in poor regions.
Government Programs: These programs include funds, short-term loans, guarantees and other financing initiatives for specific industries.
The MENA region's financial enablers are underdeveloped in particular the network of equity investors, a critical source for start-up capital in the West, which is still nascent in the MENA region, according to Booz & Co. Only 20% of local SMEs have a loan or a line of credit, the lowest percentage of any region in the world; and only 10% of their investment expenditures are financed by a bank loan, also among the lowest worldwide.
C. Business Enablers
The third ring in the entrepreneur's ecosystem consists of professional enablers and includes:
Professional Services: This is a large category that includes marketing companies, media associations, consulting firms and accounting firms.
Incubators: Incubators provide office space and back-office support for startups, usually in return for a nominal fee and/or equity stake in the firm, until they achieve sufficient scale to afford these services on their own.
Network Associations: Network associations connect entrepreneurs with experienced business people and/or consultants who serve as mentors or more formal advisers to help the entrepreneur tackle business challenges.
Over the past 20 years, about 60 initiatives have been launched within the MENA region to promote business support.
D. Environment Enablers
The final outer ring in the entrepreneurship ecosystem involves a diverse group of environment enablers: the regulatory framework, infrastructure, lobbying organizations, prevailing culture and media. Booz& co. reports:
Regulatory Framework: Government agencies and private chambers of commerce can stimulate entrepreneurship by simplifying rules and providing incentives for start-ups. However, much more reform is needed across the region in many areas.
Infrastructure: The existing infrastructure in MENA countries needs upgrading to improve the start-up and business environment in general.
The Internet is used by just 24% of the population in the Arab states versus 79% in the US and 67% in Europe, with average Internet speed in the MENA region (2.73 Mbps) a mere fraction of the global average of 8.69 Mbps.
Prevailing Culture: Most people in the workforce value the stability of a lifetime government job over the excitement of risk taking or innovating. A survey of young people in the Gulf showed that only 9% said that "opening their own business" was their top priority in life.
About Junior Achievement
Junior Achievement Worldwide is the world's largest organization committed to inspiring and preparing young people to succeed in a global economy, catering to 9.3 million students annually.
About INJAZ- Al Arab
INJAZ Al-Arab, a regional branch of JA Worldwide®, is an organization that works with young people in the Middle East and North Africa region providing them with entrepreneurship, financial literacy and workreadiness skills.
About MasterCard
MasterCard (NYSE: MA) is a global payments and technology company operating in more than 210 countries and territories.
Making Cash Flow
An interview with Michael Bach, President of Middle East and Africa, MasterCard Worldwide, reveals the inner workings of a regional giant who sees but only one competitor: cash!
"Clearly there is significant growth potential in the payment industry. MasterCard is bringing solutions to displace cash; that is what we do for a living and what we do well. We drive growth into the markets, and the key competitor that we see out there is cash, which we try to displace every single day, simply through payment tools; smart and safe payment tools. That's our focus," Miebach explained.
MasterCard's business plan is to first target banks, their traditional customers and then acquirers and merchants. This 3rd party model has been established for years, and it's undergoing change.
"You have other players entering the payment industry, you have mobile operators coming in, have merchants extending beyond immediate merchant business models into adjacent business models, so that's a massive trend out there," said Miebach. Though the B2B model is what drives the company's growth, the final consumer is ever present on the corporate mindset of MasterCard. "The MasterCard brand reflects security and trust, and there is a relationship that this brand has with the consumer. We work with the market stakeholders that we talked about and all of them talk to consumers. What do these consumers need? We are truly driven by consumer needs and we try to educate on what these needs are and could be. It's a virtual circle, more like a B2B2C."
MasterCard is a technology company, in the payment industry, providing payment tools to various sectors including debit cards, charge cards, pre-paid cards, mobile payment, and more. "We are bringing the benefits of payments to society and the economy."
"It's about access, transactions, and driving commerce. As far as running a credit card business, that's what banks do," clarified Miebach. In reality, banks are the ones positioned to handle responsible lending to individuals regardless of age and profession.
"But generally in the region, regulators have, after 2008, driven regulations across countries in the MENA region, specifically in GCC, to enhance rules that foster responsible lending. And banks are seeking ways to balance their business models to differentiate themselves with payments visa- vis the consumer rather than with the credit proposition, with cards that bring mileage, give access to lounges, and other true benefits, to drive value to businesses and consumers."
Transaction security has accompanied the payment industry early on trying to combat fraud and prevent loss to both providers and end-users. "You have the highest risk of fraud when you are not in the electronic payment world but rather the cash world. In the cash world, there is no control or transparency. In electronic payments, there are still a set of risks associated, but MasterCard has been driving security solutions that prevent fraud," affirmed Miebach. MasterCard has pioneered industry leading tools and mechanisms to ensure authentication on the internet. "With a clear set of established rules, MasterCard brings the clarity of rules that are rigorously tested, for each business, merchant and consumer."
The payment industry has also been paying close attention to the rise of Islamic banking.
"Islamic finance is the fastest growing sector in this region. We have taken a look at that. We are a payment company with different sets of products, and by definition, a debit or a prepaid card qualifies under Islamic considerations. As we work with banks, their interest in addressing their Islamic customer set, specifically Islamic countries where you have to choose either or, such as Qatar for example, induces us to work jointly in driving their product set, specifically to their customers
© Capital ME 2012
