Finance

Significant challenges for the entrepreneurship ecosystem and the impact of the pandemic in the MENA Region

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The ongoing lockdown measures have affected the operational viability of the startups and forcing many sectors to embrace the digital economy to alleviate the financial stress on startups.

The impact of the epidemic and its effect on the entrepreneurial ecosystem in the MENA region began with the rise in VAT in Saudi Arabia and a volatile oil price, which triggered unrest in Lebanon with nearly 70% of the population at risk of falling below the poverty line.

According to a recent report by Arabnet and Wamda, 33% of the startups’ revenues have decreased by 76-100%. Arabnet and Wamda surveyed startups in the MENA region, including in Morocco, Saudi Arabia, UAE, Qatar, Lebanon, Oman, Jordan and Egypt.

The researchers found that 22% of startups have completely suspended all commercial activities amid the epidemic, while 21% have witnessed a high significant loss.

The research report also outlines the most affected sectors include travel startups. In the transport and mobility industry, 50% of the startups in the region have suspended since the outbreak of the pandemic. Additionally, the travel restrictions have impacted the operational performance of 30% of the surveyed companies and roughly 36.4% of their supply chain.

On the other hand, E-grocery and EdTech startups have seen an increase in revenue and a positive impact on customers demand during the COVID-19 pandemic. According to the report, 46.7% of the EdTech startups in Lebanon, Egypt, and the UAE have seen a positive impact on their revenues and 6.7% of these companies have decided to grow their business and expand into new geographic markets.

Focus on Morocco

Even though many Moroccan companies are still largely unaffected by the outbreak of the pandemic especially limited face-to-face interaction companies such as telecommunications, agriculture, chemical processing and mining companies, the Moroccan government has undertaken several initiatives to support startups and trigger the economy.

The Organization for Economic Cooperation and Development “OECD”, highlighted in its latest report the impact of the Covid-19 and the financial situation of the Moroccan companies and how the government’s efforts and refinancing program have contributed to small and medium-sized enterprises (SMEs) in the country.

Some of the measures that have been taken by the Moroccan authorities include a series of financial measures to aid getting credit for companies and families by strengthening the ability of banks’ refinancing capacity with the help of the central bank “Bank Al-Maghrib”.