Impact Investing in the Middle East

5 min readSep 20, 2018

After a few years of working in the Arab region with funders, investors and start-ups, I noticed there is a lack of information in the field of impact investing. Therefore I compiled this text, to provide a basic overview for investors interested in the region.

Starting point will be my own encounters and experiences. Being complete is not an ambition, it is a work in progress. Therefore please do send me your comments, suggestions and additional information to help grow this document into a comprehensive starting point for social impact investors in Middle Eastern countries.

Monique Doppert, September 2018

1. Introduction

2. Setting the scene

3. What is impact investing?

4. Situation sketch of the Middle East

5. Impact investing per country

6. List of relevant links for further reading

Introduction

‘If I can make it there, I’ll make it anywhere.’ This famous line sung by Frank Sinatra does not apply to New York only. If you can make it in the Middle East, you earn a standing ovation as well.

As said, this article is a starter for investors interested to know more about impact investing in the Arab region. For now this appetizer is limited to four countries: Jordan, Lebanon, Egypt and Tunisia. This is an introduction to the main players, platforms and events in these countries.

2. Setting the scene

Everyone who started a new project in the Middle East knows upfront: this is not going to be an easy ride. Foreign investors are not keen to operate in this region. Foreign investors from Europe are often unfamiliar with this part of the world — its different cultures, religion, economics and politics — and therefore they consider the risks too high.

Also the differences between the countries are underestimated. For example, the investment situation in Egypt is very different from Tunisia due to geographical location, social and economic structure and political and colonial history. The huge variation between the Arab countries might be the main reason local investors are often reluctant to invest in neighbouring countries.

Apart from being different, there are some obvious risks. Like for example security issues, bureaucracy and corruption, mediocre infrastructure; to name a few. After the so-called Arab Spring the situation in many countries is unstable. However, it is also a region with many undiscovered opportunities with countries developing a constructive economic vision such as Tunisia. Governments are beginning to focus more on boosting promising ecosystems. With a newly passed Start-up Act — a law which sets out government’s policies for start-up growth — Tunisia appears to be taking the lead in this regard.

The Arab region and specific sectors — like ICT, technology, food, agriculture and water — can offer rewarding opportunities. Reasons for an investor to keep an eye on this region are:

a. Market size. Its demographics make MENA attractive for private equity investments. Egypt, the Levant and Mena’s Golf council countries have populations of over 160m people, who are amongst the youngest and most digitally connected in the world, with relatively high GDPs per capita.

b. Innovation is global. Coding can be learned at and performed from home. So this offers many opportunities for (international) companies to set up high tech business or invest in outsourcing initiatives to use the region’s relatively high educated and large young population as a source of relatively cheap labour.

Some visionaries are considering technology as the new fuel, with as positive effect sustainable job creation of high quality jobs, on good standards for labour condition.

c. The past five years the MENA ecosystem has matured enough to the point where investing can start, for example in early stage tech companies to drive successful returns. You will find nice examples of successful companies on the pages of Wamda, a platform on entrepreneurship ecosystems throughout the MENA region.

3. What is impact investing?

Before we step into the region, let us first be clear on what impact investing is. This is an investing strategy aiming for financial return alongside positive social and environmental impact. These investments are made in companies, organizations and funds by impact investing funds or individual (angel) investors.

Impact investments can be made in both emerging and developed markets — the UN goals (see below) apply for all countries. They target a range of returns from below-market to market rate, depending on investors’ strategic goals. More specific, the Global Impact Investing Network (GIIN) considers you an impact investor if:

• investments are made that aim for social and environmental impact in addition to financial return

• investments of at least 10 million dollar, or at least 5 investment transactions are made

• these investments are aligned to the Sustainable Development Goals (one or more of the 17 SDG’s of the UN), or you are planning to do so

4. Situation sketch of the Middle East

According to a Stanford Social innovation study in 2013 the MENA’s impact investment space was virtually non-existent. Two main issues can justify this gap, firstly a lack of awareness for such a hybrid concept of the private sector and potential for social impact, from both investor and entrepreneur side. Secondly; a lack of an enabling legal and regulatory environment.

Since five years the situation has positively changed. Local investors, incubators, mentors, and entrepreneurs are becoming more experienced at converting ideas to businesses and fortifying them with resources and networks. The entrepreneurial communities have grown tighter — with hubs of activity in Amman, Beirut, Cairo, Tunis and Casablanca. There are more extensive pipelines — entrepreneurs become more socially minded — and the number of impact investors is slowly but surely growing.