The Middle East and North African (MENA) economy may be growing but the lack of Venture Capitalists (VC) dedicated to boosting the region’s local business community, especially in the emerging IT sector, is alarming, claim industry experts.
Venture Capitalists, the backbone of trade and commerce in most developed economies are conspicuous by their absence in the MENA region, leading experts to believe that this will impede growth in the IT sector.
Injazat Technology Fund intends to fill this gap through an aggressive campaign to partner local business houses, in their growth and expansion plans.
“The venture capital market is still in its infancy in the MENA region. In contrast with western economies, where established companies have a wide choice of VCs to fund their growth plans, the MENA region is severely lacking in VC infrastructure,” said leading financial expert and Chief Executive Officer at Injazat Technology Fund, Hussein Rifai.
“Local IT companies find themselves relying on banking institutions to back their ventures, which are regulated by severe conditions and guarantees, and complex decision-making processes, which may not suit the dynamic nature of the digital industry,” added Rifai.
“This problem is compounded by local business themselves, who are reluctant to adapt from the family-owned system to an external professionally managed system. For companies looking at entry or expansion in the international markets, this could spell doom. According to the 2002 Global Investor Opinion Survey recently released by McKinsey and Company, nearly 63 percent of investors have cited corporate governance as a key factor while making investment decisions. Thus, the negligible presence of VCs in the region will work against the government’s drive to attract international investors”, said Rifai.
Injazat Technology Fund is currently working with leading local entrepreneurs to create examples of how VCs can enhance a company’s operations and profitability. By building a convergence between venture capital and Islamic finance, that is, getting a return on the money invested by taking a stake in the business, Injazat intends to leverage the MENA region’s growth plans. Injazat is one of the few VCs to provide a financing model based on Islamic principles, which blend profit motive with social responsibility and commitment to regional development.
Injazat Technology Fund has recently announced an open invitation to entrepreneurs in the region to present their business plans for consultation and funding of selected candidates. Selected applicants will be asked to deliver a twenty-minute presentation, on October 18, 2003, during Gitex Dubai 2003, at the Fairmont Hotel. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
