Refrigerators in the Moroccan desert; a bracelet to prevent heart attacks in Tunisia; a source funding system for charities in Egypt. Mission-driven startups are blossoming in these three North African countries, which are now at the forefront of social entrepreneurship.
Morocco now boasts more than 250 startups. With around 100 seed-stage startups, Tunisia is ranked seventh in the world as the best place to launch startups by SeedStars World. Egypt broke records with the creation of thousands of startups in 2012 and 2013, according to the Egyptian bureau of statistics.
How can we explain the meteoric rise of social-oriented startups in countries where economic indicators remain weak?
According to the data company Mattermark, while for several years North African startups mainly flourished in sectors like e-marketing and online dating, since 2012, they have begun appearing in areas such as banking, health, lending, currencies and e-commerce.
New businesses and collaborative economics
This trend towards collaborative economics makes sense in emerging markets where the startup business is a little under ten years old.
Foreign backing helps finance such businesses, which are seen as unstable and insecure, and consequently receive little or no funding from traditional local banks which bridle at the prospect of a slow return on investment. It should be noted that these countries have retained a European-style investment model mainly based around banking institutions. For young entrepreneurs, foreign backing may be the only available funding source.
Besides the “investment gap” left by the banking sector in countries that refuse to finance startups, foreign investors have also noticed the significant opportunities for positive social impact.
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