2

Our blog has moved!

3

You should be automatically redirected in 6 seconds. If not, visit
http://investeddevelopment.com
and update your bookmarks.

4
Showing posts with label conflict areas. Show all posts
Showing posts with label conflict areas. Show all posts

Thursday, July 14, 2011

Opportunity in Egypt

Cairo's Tahrir Square during the Revolution via Wikimedia Commons
After the Egyptian Revolution of 2011, a man named his daughter “Facebook” in honor of the site’s mobile app and the role it played. On Twitter, #jan25 was trending for weeks, as Egyptians tweeted from their phones to report on the protests. Despite the government’s best efforts to cut off communications, protesters were able to organize through mobile technology. It’s clear that few places in the world have experienced such a dramatic impact of social networking and mobile technology, but why this happened and what will happen next are less apparent.

Why Egypt?
Around the globe (and, in particular, across Africa) there are plenty of leaders who have overstayed their welcome. Yet few have been hit with an uprising as intense and well organized as the one that brought down Hosni Mubarak. A quick reflection on a few indicators highlights three intriguing variables that influenced Egypt’s unique revolution:

Economy - Egypt boasts the second highest GDP in Africa. This might sound like a counter to revolution, but it takes a certain level of development for citizens to organize. As Paul Collier described in Wars, Guns, and Votes: Democracy in Dangerous Places it also takes a minimum income level for people to afford political activism. Egypt’s comparatively robust economy provided both. At the same time, affluence is very poorly disbursed. An estimated 22% of the population lives below the poverty line, a staggering 44% are illiterate, and less than 10% have bank accounts.[1] The dangerous divide is common across emerging markets and has long been fodder for uprising.

Infrastructure - In a continent that has seen the fastest adoption of mobile phones in the world, Egypt’s mobile penetration is over 90%[2] and sources expect that Egypt will reach 100% mobile phone penetration by 2013[3]. Paraphrasing Gil Scott-Heron, the revolution was not televised. In Egypt it was broadcast via mobile social networking platforms and Egypt’s telecommunication infrastructure ensured that over 70 million of Egypt’s nearly 84 million citizens could tune in.

Unemployment - Joblessness cuts three ways. First, it creates anger and desperation as people struggle to afford basic needs. Second, losing a job removes much of the recourse that dissuades people from illegal or banned activities. Finally, it provides the time to gather. In Egypt, nearly 9.4% are officially unemployed[4] and unofficial numbers are likely much higher. More importantly (in this scenario), nearly 90% of the unemployed are under 30 years old.

The confluence of a vast unemployed youth with existing infrastructure to coordinate undoubtedly played a role in the successful deposition of Mubarak. The same attributes are also creating a tremendous opportunity for entrepreneurs and impact investors to influence Egyptians’ success in rebuilding.

Where to Next?
The good news is that there is untapped potential for investment and development in Egypt. Despite relative economic wealth compared to its Sub-Saharan neighbors, many problems remain and investment in entrepreneurship, technology, and the country’s youth will shape the future.

Social entrepreneurs can harness the mobile technology that was so dramatically influential during the revolution to promote sustainable economic development and make lasting social impact. It’s proven that for-profit social enterprise can play a significant role in post-conflict resolution. As a study of post-war Bosnia-Herzegovina showed, business and workplaces contribute to community development and “rebuilding post-conflict societies” better than volunteer organizations[5].  Although traditional investors may find post-conflict areas too risky, the potential for impact investors to reap both financial and social returns is too great to ignore.

In Egypt, entrepreneurs have an amazing opportunity to create for-profit social enterprises that develop and distribute new mobile technologies, that combat the unique issues their fellow countrymen face. Illiteracy, unemployment, and financial access (click on the issues to see examples of mobile technologies that have been developed to combat each issue) all have benefited from the emergence of mobile devices. Both the need and the demand exist and thanks to the existing telecommunications infrastructure, the solutions already lie at the fingertips of 90% of Egyptians.


[1] http://thedailynewsegypt.com/banking-a-finance/transfers-ready-but-full-fledged-mobile-banking-to-take-longer-in-egypt.html
[2] http://www.egyptictindicators.gov.eg/en/pages/Publications/PublicationsDoc/Eng%20Flyer-April-%20last.pdf
[3] http://english.ahram.org.eg/~/NewsContent/3/12/14445/Business/Economy/Going-mobile-Egypt-gears-up-for-cellphone-banking.aspx
[4] http://data.worldbank.org/country/egypt-arab-republic
[5] http://pmpick.people.wm.edu/research/EthnicRacialStudiesPickering.pdf

Friday, July 8, 2011

Weekly Review July 4-8

Tomorrow, South Sudan becomes the newest country with their declaration of independence. At ID, the newfound independence sparked a conversation. We discussed social enterprise in post-conflict areas, and found that social enterprise will be and has been effective in South Sudan and throughout other conflicted areas in the world.

Recently, we’ve watched public uprisings unfold in Tunisia, Egypt, and Libya over high unemployment rates, mismanaged public sectors, and outdated political regimes. The common trend in MENA seems to be state-owned enterprises failing to meet the public’s needs and demands, which are as simple as employment and transparency. “A regional reform program for state-owned enterprises is a financial and social enterprise with global relevance.” Such social enterprises will not only development the economy, but give the people what they want: jobs.  

photo: Mai Shaheen via Ahram Online
Earlier this year, information and communications technologies played an integral role in the Egyptian revolution. Many will recall that Internet and phone services were shut down during the protests to oust President Hosni Mubarak. Despite the highly influential ICT sector in Egypt and obvious success of mobile money transfer services throughout Africa, mobile money operators will find it difficult to penetrate the Egyptian market until the telecoms recover their losses from earlier this year. Social enterprise in the form of mobile wallets will grant financial inclusion to the 90% of the population who do not have access to traditional credit cards.

In an effort to bring economic opportunity to a country still scarred from genocide in 1994,  two non-profits, Blue Marble Dreams and BPeace, teamed up to open Rwanda’s first ever ice cream shop. BPeace believes that “creating jobs creates peace.” The ice cream shop, called Inzozi Nziza or “Sweet Dreams,” is a unique social enterprise with both financial and social goals. Although not a high-tech product or elaborate business model, Inzonzi Nziza exists to foster entrepreneurship and provide employment for Rwandan women who were directly affected by the Rwandan genocide. The women working at Inzozi Nziza received training in all aspects of business and ice cream service.  While there are some struggles for this one-year-old social enterprise, Inzozi Nziza serves as an example of using business to create economic and social change in post-conflict areas.

The private sector has the power to create successful businesses that will also protect the environment, reduce poverty, and promote sustainable agriculture and safe water management. Especially in areas in post-conflict resolution stages, the article reports, the private sector has a significant influence on the development of a devastated area. For some investors, it may seem too risky to invest in post-conflict zones, however the potential for significant social return outweighs the cost of patient capital. In fact, for-profit social enterprise over non-profit philanthropy has a better capacity to develop a post-conflict area. “A study of post-war Bosnia concluded that ‘workplaces… [are] better suited than neighbourhoods or voluntary organisations for building bridges.’”

Kenya has been a key ally in South Sudan’s efforts to gain independence. Now, Kenyan business will play an influential role in the development of the world’s newest country as of July 9, 2011. Many Kenyan enterprises operate in South Sudan and a surge of new businesses is expected in the newly independent country. With the support of North Sudan and a largely anticipated peaceful declaration of independence, impact investors and social entrepreneurs may find new opportunities in South Sudan. An improved business environment means that it will take 15 days to register a business, compared to Kenya’s  30+ days wait time. Additionally, a new South Sudanese currency and Central Bank will build financial independence for the new nation.  All around, South Sudan is a new market for social enterprise and investment for those willing to take on the challenge. 



Like us on Facebook
Follow us on Twitter
Learn more about BETA