Is entrepreneurship the missing piece in the puzzle of emerging markets?

Entrepreneurship has emerged as a powerful catalyst for economic transformation and sustainable development, particularly in emerging markets. Countries such as Malaysia, Colombia, Ecuador and Paraguay rely heavily on micro, small and medium-sized enterprises (MSMEs) to drive employment and foster growth. In the Gulf Cooperation Council (GCC) countries, the entrepreneurial ecosystem is ripe with opportunities for startups.

These countries provide valuable resources, such as workshops, incubators, mentors and co-working spaces. And angel investing has gained significant traction in recent years, attracting substantial startup funding. This support has propelled three GCC countries –Qatar, Saudi Arabia and UAE – to be placed within the top ten of the Global Entrepreneurship Monitor (GEM) 2022/2023 National Entrepreneurship Context Index (NECI).

Looking at Africa's unique context, the continent presents promising opportunities for robust and inclusive economic growth. With a youthful and fast-growing population, projected to reach 2.5 billion by 2050, Africa offers fertile ground for entrepreneurship.

A recent panel discussion at the Qatar Economic Forum noted that Africa's potential may be unlocked through intracontinental trade, enhanced productivity across sectors, investment in infrastructure in primary and secondary cities and support from large private-sector firms.

Intracontinental trade has the potential to boost economic growth by facilitating the exchange of goods and services within the continent. Meanwhile, investments in infrastructure can boost overall efficiency, making it easier for businesses to operate and flourish.

That said, an entire population segment – women entrepreneurs – still face significant challenges related to access to networks, education, training and financing. The COVID-19 pandemic further exacerbated this. Efforts must be made to create an enabling environment that supports and empowers women in business, including access to mentorship programmes, capital and targeted training.

Encouragingly, the 2021/2022 Global Entrepreneurship Monitor report highlights a significant increase in the number of women starting businesses in upper-middle-income countries. In Central Asia, Kazakhstan boasts a thriving entrepreneurial ecosystem, especially for women. During the pandemic, another significant shift was observed in India, where women were comparatively less affected than men regarding established business and exit rates.

In contrast, the Middle East and Africa struggle with a sizeable gender gap of 28 points in startup activity. Yet, the report also acknowledges the progress being made in the region with robust enabling environments for women entrepreneurs, with Qatar experiencing a tenfold increase in the rate of female-established businesses between 2019 and 2021.

Access to finance is a challenge for entrepreneurs in emerging markets. Traditional institutions have stringent criteria, hindering funding for early-stage entrepreneurs. Innovative financing models are emerging, including microfinance institutions (MFIs) that offer tailored financial services to underserved entrepreneurs.

Another trend is the rise of impact investing and social venture capital, offering financial returns and positive societal impact. Impact investors seek businesses that address pressing challenges. Crowdfunding platforms have also gained popularity, allowing individuals to support business ideas. They provide financial support, validate concepts and build networks.

To improve access to finance, governments can implement policies facilitating entrepreneurship, such as regulatory frameworks promoting innovation, venture capital funds and partnerships with financial institutions. Several thriving open innovation ecosystems, such as Silicon Valley in the US, Singapore's Innovation District and Startup Chile, are already setting an example of collaborative environments that drive technology entrepreneurship.

Entrepreneurship education and capacity-building programmes can provide aspiring entrepreneurs with the tools they need to start and grow their businesses effectively. A recent study published by the Small Business Economics journal found that, in the US, additional schooling increased self-employment in high-growth industries for men and women and in low-to-medium growth industries for women.

Similarly, in emerging markets, entrepreneurship education can be integrated into formal education systems, vocational training programmes and community initiatives. Collaborations between educational institutions, government agencies and industry players can keep the curriculum relevant and aligned with the needs of the local entrepreneurial ecosystem.

Creating a supportive ecosystem is essential for entrepreneurs to thrive in emerging markets, from pathways to connect with mentors, advisors and peers, to access to key resources and networks. Governments, corporations and non-profit organizations must collaborate to establish and fund business incubators and accelerators that encourage entrepreneurism.

Qatar exemplifies this collaborative approach through key stakeholders, including the Qatar Development Bank (QDB), a government-owned development bank providing financial and non-financial support to businesses; Qatar Foundation (QF), a non-profit organization supporting education, research and community development; and Qatar Science & Technology Park (QSTP), a dedicated free zone for technology and innovation.

These entities actively empower entrepreneurs and startups to realize their full potential and achieve sustainable growth. QDB offers funding options, grants and technical assistance, QF provides initiatives and resources to support startups and QSTP offers services, such as office space, mentorship and funding opportunities. These stakeholders, coupled with Qatar's favourable policies for entrepreneurship, including simplified business registration processes and funding accessibility, have created a conducive environment for startups to thrive.

Governments and organizations in emerging markets should establish and fund tailored support programmes for entrepreneurs. Governments can, for example, create entrepreneurship development funds that provide low-interest loans and grants for MSMEs in emerging markets.

PPPs can facilitate the establishment of business incubators, accelerators and co-working spaces for entrepreneurs. Corporations can sponsor mentorship programmes or provide in-kind support, while government agencies can offer regulatory incentives for private sector involvement.

Innovative financing models can help address funding challenges faced by entrepreneurs in emerging markets. Governments can support these models through regulatory frameworks and collaborate with financial institutions to establish specialised impact investment funds and crowdfunding platforms for entrepreneurs in emerging markets.

Entrepreneurship education should be integrated into formal education systems, vocational training programmes and community initiatives to help navigate the challenges of starting and growing a business. Through collaboration, governments and educational institutions can develop relevant and up-to-date curricula that align with the needs of the local entrepreneurial ecosystem.