DinarStandard Editors

US Presidential Summit on Entrepreneurship focuses on the Muslim World

DinarStandard has been highlighting and covering entrepreneurship and innovation trends across the Muslim markets for the past many years.  We have hardly come across any event that has effectively discussed entrepreneurship for this market in the manner that President Obama’s Summit on Entrepreneurship did earlier this year, April 26-27th in Washington DC. 

This event put into action the promise President Obama made during his speech to the Muslim world in Cairo on June 4th, 2009.  I was invited to cover the event and here are some of my observations regarding the diverse mix of delegates, key messages, interesting quotes, and some tough questions asked.

First, the sheer diversity of entrepreneurs that were present was impressive.   There were Muslim entrepreneurs representing emerging, exciting ventures from Ghana, Nigeria, Bangladesh, Morocco and elsewhere.  One delegate I met, Mr. Shaffi Mather from Cochin India, runs one of the largest private Ambulance service there.  Another delegate Mr. Mohammed El-Fatatry (whom we have profiled before) from Finland, owns one of the largest online Muslim lifestyle networks – Muxlim.com

Indeed the big boys were there too.  Mr. Mian Mohammad Manshah, recognized as one of richest businessman in Pakistan by Forbes magazine, was in attendance mingling amongst the delegates.  Dr. Mo Ibrahim, Chairman of Celtel and famous for his philanthropic activities in Africa was an active participant during panel Q&A’s.  Mr. Naguib Sawiris, CEO of Orascom (the giant Telecom player) from Egypt and Mr. Ferit Sahenk, of Dogus Holding, Turkey were also on the invite list. 

Some of the star panelists of the event for me were:

• Mr. Fadi Ghandour, CEO of Aramex, an absolute rock-star with his passion and vision of entrepreneurship for the region.
• Nobel Laureate, Dr. Muhammad Yunus, sharing the success story of his now global brand – Grameen, and its taboo-breaking, women focused social impact.
• Dr. Naif Al Mutawa, CEO of The99 - a comic book series with Muslim values and a global message.  President Obama even enthusiastically acknowledged The 99 comic series in his speech at the event.
• Ms. Tri Mumpuni (in picture), from Indonesia.  Her community based off-grid power system supply's power to the national grid while generating revenue for the host communities.   She was passionate about entrepreneurs making a difference and spoke of the struggles in balancing her family life while leading as a trailblazing entrepreneur.
• Mr. Sandiaga Uno, Chariman, Saratoga Capital, Indonesia.   Profiled the struggles of being laid-off and starting a first-ever Private Equity firm taking it from 4 employees to today 15,000.  One of richest Indonesians today, Mr. Uno is a big proponent and driver of fostering entrepreneurship in Indonesia.
  

Key actionable messages from the panel discussions were:

• The critical need of Venture Capital (early stage and even angel investing) in the region to support entrepreneurship.   From investor’s side, however, more transparency and exit opportunities were identified as needs.  Also, other capital raising models discussed included Sharia financing and Micro-finance.
• Need for increasing awareness and education about entrepreneurship – especially for celebrating success stories (e.g. sale of Maktoob.com to Yahoo.com).   Interestingly, the word entrepreneurship doesn’t exist in common vocabulary of many major markets.  What is Entrepreneurship in Arabic? Mr. Ghandour suggested “Reyada.”  How about in Urdu?
• In today’s, connected, technology driven world, Entrepreneurship can thrive despite governments being slow.   Mr. Ghandour gave an example of how Maktoob bought a small internet company in Yemen where the owner did not have a passport or even bank account.  However, government’s critical role in helping to scale entrepreneurs was emphasized.

Some of my favorite quotes from the event:

• Mr. Mohammad Yunus: “Every Muslim should follow the Prophet PBUH and marry an entrepreneur.  If you can’t find one come to us we have hundreds and thousands for you to choose from.”
• Mr. Fadi Ghandour on definition of entrepreneurs:  “Builders that have long-term impact.”
• Ms. Tri Mumpuni  - “Life is meaningful if you are useful to others."
• Arif Naqvi, CEO of Abraaj Capital (largest MENA Private Equity firm) - "What is social entrepreneurship?  I don’t understand.  Every business should be socially geared." (Note:  Abraaj has launched an SME Fund recently, Riyada Enterprise Development )

Some tough Questions/ Observations:

• One Muslim delegate asked a panel the question:  "Is there such a thing as Muslim Entrepreneurship or relevance of Islam to entrepreneurship?"  The response from the panel was mixed.  Mr. Sandiaga Uno and Ms. Tri Mumpuni from Indonesia acknowledged the positive role Prophet Mohammad’s (pbuh) life lessons and religious values played in inspiring them.  Meanwhile Ms. Douja Mahmoud Gharbi from Tunisia viewed entrepreneurship as a standard set of skills world over.
• Another emotional Q&A discussion happened when a Muslim delegate from Philippines asked, “My dear Arab brothers where are you?  Why don't you look at investing in the less developed Muslim communities?”  To which Dr. Tarik Yousef, Dean of Dubai Gov. School, humbly acknowledged, “yes, we should and we have not been engaged as much as we can.”
• It was interesting to see that the only people comfortable referring to the collective “Muslim Majority Countries” were the US administration panelists.  Most Muslim majority country delegates I spoke to didn’t seem comfortable with the concept of the “Muslim world” as a whole.  Their focus was very much national in nature.
• Interestingly also, no Islamic Finance institution was represented - either as delegate or panelist.  Was that a political statement or simply that there isn’t much of an entrepreneurial drive amongst Islamic Financial institutions?
• Prominent countries with entrepreneurs showcased as panelists were:  Jordan, Indonesia, Egypt, UAE, and Bangladesh.  Whereas, countries I thought were relatively less visible on panels: Malaysia, Turkey, Pakistan, and Saudi Arabia.  Would that be any indication of a political US slant or again a function of lack of entrepreneurial success stories from amongst these markets?

Was the event a success?

The Summit did not address or bring Government agencies from Muslim markets to address various structural issues raised.  So the impact from that point will be minimal.  Obviously, no aspect of the role of Islam as a means of strength was touched upon.   Also, the critical question of Venture Capital for entrepreneurs was listened to by select PE players at the event but, the absence of Islamic Financial Institutions and their possible prominent role was not tapped into.

Regardless of these and possibly other short-comings, this Summit was a big success and a great contribution to fostering entrepreneurship spirit across the Muslim markets.  It has certainly helped amplify the many voices emerging in support of entrepreneurship from across the Muslim markets.  The next one is going to be hosted in Turkey and President Obama has announced a number of additional initiatives to sustain this beginning of a new partnership. 

    

Canada's UM Financials finds a Unique Partner

UM Financials is a steadily growing provider of Shari’ah compliant financial products to the Muslim community in Canada.  The company was recently profiled by the Toronto Star newspaper in an article which showcased the company’s recent growth through a unique partnership – UM Financial is partially backed by a Jewish investor.  At first glance many readers might think, “A Muslim in partnership with a Jew?!”  It is unfortunate that the founder of UM Financial, Umar Kalair, has been criticized for approaching conventional financial institutions for support.  The fact of the matter is that Kalair committed himself to developing financing for customers who wanted Shari’ah compliant finance and he delivered on that commitment.  He observed that the Prophet (s) bought grains from a Jewish merchant after mortgaging his armor with him.  Kalair’s UM Financial has received support from the Credit Union Central of Ontario and is now partnering with Derek Scheinman of New Horizon Mortgage Investment Corp. to structure Shari’ah compliant commercial real estate financing.  Such partnerships keep it real – for all the ideology and identity behind the parties in this transaction Kalair and Scheinman are doing business.  Each party looks to their benefits and measures risk against reward before proceeding.  This deal makes sense for everyone involved.

Prince Al-Waleed on reform, investment, and the future of Islam

This month, the McKinsey Quarterly features a lengthy interview with Prince Al-Waleed bin Talal of Saudi Arabia, one of the most successful international investors today. Prince Al-Waleed represents the best of the new breed of global businessmen who integrate their investment prowess with their vision for society as a whole. Prince Al-Waleed in particular stands out because he exerts a global impact from within the Muslim World. Prince Al-Waleed’s holdings in such global and regional corporations such as Savola Group, LBC, Four Seasons Hotels, Citigroup, News Corp., - and the list goes on – make him a man whose opinions are taken seriously from the trading floor, to the board room and the hallowed halls of government around the world. Awarded the Humanitarian Contribution to Islam award by the International Islamic Finance Forum, Prince Al-Waleed has donated over $100 million to various academic and civic causes ranging from the Islamic Studies program at Harvard University to supporting the Islamic wing of the Louvre in Paris – all to bridge the gap between Islam and the West.

Commenting on the interplay between different forces affecting global capital flows after 9/11 he says, “…politics is mirrored in economics and finance”. But interestingly rather than reflect this by avoiding investment in the US like many other investors from the Middle East, Prince Al-Waleed says that after 9/11 his investments in the US grew “strategically”. We look forward to seeing the Prince’s investments bear fruit – not only in the business world but also in the world of ideas.

Birth of Venture Capital in the Arabian Gulf

On February 20-22nd, 2006, a historic gathering of the nascent Venture Capital and Private Equity industry of the MENA region was organized in Manama, Bahrain under the auspices of the newly formed Gulf Venture Capital Association (GVCA).  What's the big deal?  Afterall there are so many events happening in the region that are just talk with little substance.  Well this event apparently turned out to be something special.

According to Jerry Borrell of Private Equity Week, who attended the event, at least 21 new funds were announced, ranging in size from $28 million to over $10 billion.  Interestingly the focus was on investing in regionally-founded, regionally-run and regionally-operated funds.  Little interest was shown on raising funds for American or European venture funds.  PE Week also projects that funds from the Gulf region will raise at least $17 billion by the end of 2006 which could pass the total of all new PE funds being raised in Asia (inclusive of China and India)!

So will the GVCA live up to its purpose?  Only time will tell.  We certainly pray and hope that the GVCA will not just wither away, but play a sustained critical role in developing the financial engine of an entrepreneurial, innovative regional economy.