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What You Need to Know About the Middle East’s New Social Entrepreneurs

Devex Impact

Many things amazed me in my travels across the growing tech startup ecosystem in the Middle East over the past two tumultuous years.

Nothing impressed me more, however, than the regular blurring of lines between “entrepreneurship” and “social entrepreneurship.”  The former once connoted hard-nosed money making; the latter nonprofit, or at least not-solely-for-profit, enterprises.

But now, in almost every business pitch I heard across industries, entrepreneurs were thinking about the social impact of the product or a socially responsible way in which to run their company.  These entrepreneurs envisioned a “double bottom line” of profitability and sustainability and a way of doing business blurs the lines between investment and philanthropy.

At one level this development in the heart of the Arab world may seem unsurprising.   The Arab uprisings have been, if nothing else, an expression of extreme dissatisfaction with the status quo.  But the new generation is not just looking for impact; they are looking for impact now.

Conventional wisdom too often wrings its hands over today’s social and economic problems – and the seeming inability of traditional non-profits to solve them. After all, many of these NGOs have unreliable funding and mixed results on the ground.  A new generation around the region sees that profitable business can help solve these problems. And through self-funding, these enterprises can rapidly accelerate their social impact.

Who are some of these new problem solvers?  They are young, they are creative, and – here’s what everyone else needs to realize – they are legion.  Here just a few examples of the extraordinary social enterprises I encountered in Egypt alone.

To deal with the critical issues of potable water and arable land, for example, KarmSolar is designing and manufacturing solar-driven pumping tools that can help populations access the world’s largest collection of clean water, which is located under the sands of the Egyptian and Libyan deserts.

As any visitor to the region will know, massive traffic in over-populated cities like Cairo make it difficult, time-consuming and expensive for people to work or get to school. Start-up bey2ollak created a crowd-sharing app to help citizens navigate from point A to point B and won top honors in Google’s first country-wide startup competitions.

And enterprises have not shied away from tackling one of the region’s most pressing problems:
access to quality education. School systems in Egypt and beyond are often at least a generation out of date and irrelevant to the new economy. About 20 percent of the startups I’ve seen, like Nafham, are working to address this need by creating video and other new resources that deliver collaborative online courses in Arabic.  

I was particularly struck by the inspiring story of Mostafa Hemdan, an engineering student at Tanta University, a small college two hours outside of Cairo. Tanta is a working-class town and, like many other cities in Egypt, suffers from intermittent and unreliable garbage collection.

At his university Hemdan noticed a lot of unattended waste, particularly the metal and material left from computers and consumer electronics. Schools and businesses just seemed to let the debris stack up in warehouses or at garbage dumps.

He spoke to me with the mix of urgency and determination that I found among so many of his generation  “We are outraged by so much that we have inherited,” Hemdan told me. “We simply want to fix it. Why wait to see if someone else will?”

One day, while reading through a leading engineering website for a school assignment, he discovered a collection of videos entitled “The Green Environment.” One was a documentary about how a new company built a business separating precious metals—including gold, silver and copper—from discarded computers and selling both the metals and scrap material to separate recyclers.

Hemdan watched the film dozens of times and showed it to his closest friends. He ask his friends: What if they found “green” recyclers for the precious metals and other high-value parts, then cut a deal with local scrap metal shops to take what was left?

“I knew nothing about recycling,” he explained to me, “but it was clear no one else really did either. Not my professors, not even the people at the two local scrap metal businesses, had ever given a thought to consumer electronics. There was a gap, and I thought we could not only build a significant company, but also build a culture of recycling in Tanta and throughout Egypt.”

The very week he watched the videos, Hemdan launched RecycloBekia with 20 students—two founding classmates and other students who volunteered to help.

“I first tried to look for something similar in Egypt to learn from,” he said. “We found a few guys recycling bottles and glass, but that was it.” He tried in vain to find the person who posted the video for advice on how to create a startup recycling facility. Finally, he decided to simply post a question on one of the leading global business-to-business websites, alibabba.com: “I have old computer components to sell if there are any green buyers.”

Almost immediately he was contacted by businesses in China, the United States, and England. His first customer was Chinese recycler who wanted 6,000 hard drives.

Hemdan spoke to his school and local businesses about procuring the old computers cheaply or even free if he took them off their hands. He researched how to ship materials and set up safe online banking. He partnered with a local scrap dealer to separate the parts, committing to the “cleanest” way to do so—and finally shipped that first batch of hard drives. The money appeared in his account the day they were received in China.

“That was my first $1,000, our first capital,” he recalled. “We had received a loan from one of our professors to help us to buy those hard drives and, after receiving the money, we gave him his percentage of profit. That’s how we launched the company.”

Other buyers soon appeared, and almost immediately Hemdan received local press attention. Within the first year of operations, he won numerous local awards and raised $150,000 of additional capital. With this investment he decided to move his operation, now nearly 30 full-time employees strong, to Cairo.

“Many schools and companies give us the old computers for free. Corporate social responsibility is becoming more than a buzz word, and people are taking it seriously,” he told me, and then laughed. “But I’ll tell you, we still have to pay for some of these computers because we Arabs care about the value of everything we have. Even if the thing is useless, we want to know, ‘What will you give me for it?’”

Hemdan’s team is now mapping out an investment in what would be their largest e-waste recycling center. “Our hope, of course, when we get greater traction in Egypt is to take the concept throughout the entire Middle East. We plan to be the largest company to collect, cleanly separate, and recycle old computers.”

These young entrepreneurs need mentors, business relationships and financing opportunities – and for them it doesn’t matter whether the money comes from a venture capitalist or social philanthropist.

These enterprising young leaders in the Middle East are mapping out a new world, where the distinction between for-profit and non-profit, business and philanthropy, becomes less and less relevant. 

These innovators give us a glimpse of how today’s most pressing problems will be solved in Egypt and around the world. The job of the global development community, then, is to identify and support these leaders, to make their vision the new status quo.

Originally posted on Devex Impact on August 15, 2013.

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