In recent years, the Middle East and North Africa (MENA) region has been witnessing a transformational shift towards green entrepreneurship. As the world becomes increasingly conscious of environmental challenges and the need for sustainability, MENA countries are stepping up their efforts to create a more eco-friendly business landscape. However, despite the progress made, the region has yet to realize its full potential in establishing a sustainable green ecosystem.
Greening the Desert: A Challenging Transition
The journey towards a greener future in MENA is not without its challenges. According to a 2022 survey of 350 Middle East CEOs conducted by the IBM Institute for Business Value, sustainability has been identified as a top priority for more than half of the corporate sector in the region. While this is a promising sign, it comes with its own set of challenges.
One of the major obstacles faced by businesses in MENA is the lack of clear data and an uncertain return on investment in sustainability initiatives. Additionally, unreliable technology adds another layer of complexity to the transition. These uncertainties can hinder the adoption of green practices, despite the good intentions of many businesses.
The Business Case for Going Green
Investing in green entrepreneurship is not just an ethical choice; it’s a smart business move. Over the years, the International Financial Corporation has built a compelling case for transitioning to a sustainable business model. This shift can significantly reduce operational costs, increase revenue, and make businesses more attractive to investors. It’s not just about saving the planet; it’s about saving money and enhancing the potential for growth.
The Role of Government and Support Organizations
Recognizing the importance of green entrepreneurship, governments and support organizations in MENA have been proactive in their efforts to accelerate its growth. They have introduced various measures such as funding, grants, tax incentives, and regulatory frameworks that encourage sustainable practices. For instance, the European Green Deal (EGD) has set stricter sustainability and environmental standards, impacting businesses from developing countries that export to the EU. This underscores the urgency of embracing sustainable practices.
However, progress has been uneven across the region. While Gulf countries and Egypt have made significant strides in supporting green startups, countries in the Levant have lagged behind due to economic challenges.
Creating Jobs through Green Entrepreneurship
One of the compelling arguments for green entrepreneurship is its potential to create jobs. Companies with strong environmental, social, and corporate governance practices tend to perform better financially. Studies by the International Finance Corporation have shown that these companies are more likely to outperform their peers in terms of return on equity and assets.
Green entrepreneurship can span various sectors, from renewable energy and sustainable agriculture to green transportation and waste management. This diversity means that it can address the root causes of economic stagnation and unemployment in MENA countries, particularly in regions recovering from conflicts or dealing with the challenges of hosting large numbers of refugees.
Facing Environmental Realities
The MENA region is not immune to the impacts of climate change. Countries like Turkey face high levels of air pollution and heavy reliance on imported fossil fuels, leading to extreme weather events. Jordan and Lebanon grapple with chronic water supply issues. Sustainable and green solutions can help these countries leverage their resources and address these challenges effectively.
What is Green Entrepreneurship?
Green entrepreneurship is a concept that emerged in the 1990s and is dedicated to generating eco-friendly products or services and incorporating sustainable practices within existing businesses. It aims to address environmental challenges such as climate change, deforestation, water scarcity, and air pollution.
In the context of MENA, green entrepreneurship involves developing innovative technologies and business models to minimize the negative impact of human activity on the environment. It strives to foster sustainable economic growth, generate new jobs, and conserve natural resources for future generations.
A Growing Trend in MENA
Green businesses have been on the rise in MENA, with many operating in fields that focus on sustainable and green business models. According to a survey, 72% of respondents in the region are either engaged in green entrepreneurship or interested in transitioning into environmentally sustainable business models.
The top three sectors of green entrepreneurship in MENA are sustainable agriculture, waste sorting and management, and renewable energy. These sectors address critical issues such as food security, waste management, and the transition away from traditional energy sources.
Challenges Facing Green Entrepreneurs
Despite the growth of green entrepreneurship in MENA, founders in this sector face significant challenges:
- Funding and Investment Constraints: Securing adequate funding is a chronic struggle for green entrepreneurs, often due to a lack of understanding among investors about the potential returns on green ventures.
- Insufficient Support and Resources: Green entrepreneurs often lack access to mentorship, networking opportunities, and business development services tailored to their unique needs.
- Exporting Challenges: Expanding beyond the initial country of operations can be hindered by navigating different regulatory frameworks and adapting to new market environments.
- Cultural and Societal Barriers: Resistance from consumers to adopting green products and services can stem from limited environmental awareness and a preference for short-term convenience over long-term sustainability.
- Identifying Suitable Partners: Collaborating with partners who share the same vision for environmental sustainability can be challenging.
Investing in Green Businesses
Investor interest in green businesses has grown in recent years, driven by rising consumer demand for sustainable products and long-term profitability potential. Green companies tend to have lower operating costs and can benefit from government incentives and subsidies.
Investors consider various factors when evaluating green entrepreneurship investments, including environmental and social impact, financial return, market potential, and the quality of the management team.
Green Government Policies
Governments in MENA have introduced policies to support green entrepreneurship:
- Turkey introduced the Green Deal Action to promote green transformation, reduce CO2 emissions, and support sustainable energy and agriculture.
- Jordan’s National Green Growth Plan aims for inclusive and sustainable economic growth, focusing on transitioning to a green economy.
- Lebanon introduced the National Energy Efficiency Action Plan to reduce energy consumption and increase renewable energy in the electricity mix.
Turning Ambition into Action: Recommendations
To create a sustainable environment for green startups to thrive, an action plan based on recommendations includes:
- Facilitating Access to Funding: Initiatives to connect green startups with investors and tailored funding opportunities.
- Matching Values with Work: Matching green jobs with employees who hold environmental values.
- Providing Training and Mentorship: Programs offering training and mentorship for green startups.
- Supporting Green Marketing: Providing targeted marketing and promotional assistance.
- Supporting Green Transition: Policies offering tax incentives and special loan programs.
- Fostering Connections: Platforms and events that encourage collaboration and networking among green startups, businesses, government agencies, and non-profit organizations.
By addressing these key areas, green entrepreneurship can continue to make a positive impact on the environment, society, and the economy in the MENA region. It’s not just a trend; it’s a pathway to a greener and more prosperous future.
Invest in green entrepreneurship today, and be part of the solution for a sustainable tomorrow.
September 16, 2023
