The MENA business environment has continued to improve steadily and consistently over the last decade, according to the latest findings by the Legatum Institute.
According to the 2018 Prosperity Index, MENA’s “Business Environment [score] has experienced a clear and consistent rise since 2007, where various countries have improved access to credit and ease of starting a business.”
The annual prosperity index was created by Legatum 12 years ago as a tool to help global leaders set their agendas for growth and development. Improvements are measured yearly across a range of factors in 149 societies across the globe, covering 96 percent of the world’s population and 99 percent of global GDP.
Business Environment is one of nine pillars measured to judge a nation’s overall prosperity. Factors such as ease of access to credit, labor market flexibility, and business infrastructure are used to produce an overall score for Business Environment.
Over the last year, MENA has seen a rise in this pillar score of 0.23. This shows faster improvement than Western Europe, Latin America and the Caribbean.
Where MENA’s Business Environment is Improving the Fastest
The Prosperity Index attributes MENA’s business environment improvements to better access to credit across a number of nations. This is particularly true for Egypt, Lebanon, Morocco, and the UAE. It is significantly easier to obtain credit to fund ideas in these nations than it was 10 years ago.
It has also become typically easier to start a business over the last 10 years across the region, particularly in Oman and the UAE. The Prosperity Index score in this area is arrived at using indicators such as the perception that business is easy to start and that working hard gets one ahead, and that there is ease in starting a business.
Opportunities for entrepreneurs to succeed in the MENA region are generally more abundant than they were a decade ago.
MENA’s Biggest Successes
The UAE is the region’s biggest success story in terms of business. Aside from having better access to credit and ease of starting a business, scores for the nation’s business infrastructure, labor market flexibility, and investor protections have also improved over the last 10 years. It currently has the best ranking for business environment in the MENA region.
Furthermore, of the 149 global nations ranked by the Prosperity Index, it was positioned 20th for its business environment in 2018.
Four MENA nations have seen a particularly significant rise in their Business Environment score over the last 10 years; as well as the UAE, Egypt, Lebanon and Morocco have made significant gains. Compared to a decade ago, Lebanon’s business infrastructure has improved; and both Egypt and Morocco now benefit from increased labor market flexibility.
Some Disappointments in the Region
It is not all good news for the MENA region, however. Much larger gains in the Business Environment score were produced in Eastern Europe and Asia. More progress in creating strong entrepreneurial environments is being made in these parts of the world. Disappointingly, MENA ranks in fifth place out of the seven world regions for business prosperity.
Unfortunately, greater disparity in the region’s business environments is also apparent. Despite the generally positive increase in score and some notable successes for some nations, MENA also has a disproportionate number of countries whose Business Environment score has decreased compared to other world regions, namely Algeria, Libya, and Tunisia.
Significant differences are found across the region. In the sub-region of the Old Persian Empire, the Prosperity Index highlights weaker economic foundations than the Gulf. There is slower economic growth, too. Unemployment rates are higher in this part of the MENA region.
In Iran, Jordan and Turkey, the levels of unemployment are over 10 percent higher than in the Gulf. Generally, investor protection is lower and there is greater difficulty in starting businesses as well.
A More Prosperous Region Overall
Baroness Philippa Stroud, CEO of the Legatum Institute, writes in the introduction to the 2018 report: “This is the 12th consecutive year of the Legatum Prosperity Index and the very good news is that we see prosperity continuing to rise in the world, both over the last year and consistently over the last 11 years. More countries are becoming more prosperous and more people are living more prosperous lives.”
This is also true of the MENA region. Despite some disappointing figures, overall progress in the region’s business environments should still be applauded. Where entrepreneurs are able to better use opportunity, prosperity in terms of social well-being and material wealth tend to follow.