Survey: Youth startups in Qatar stifled by red tape

Startup

Tim Lawrenz/Flickr

Youth in Qatar have the highest entrepreneurial ambitions among their Gulf peers, but also feel the most frustrated with the legal hurdles involved in starting up a business here, according to a new survey.

Local telecom firm Ooredoo tapped into the perceptions of more than 10,600 youths between the ages of 18 and 30 living across the Middle East and North Africa last summer. The results, New Horizons: Young, Arab and Connected, were released yesterday and are primarily focused on attitudes toward technology and economic prosperity.

The Ooredoo findings echo a 2012 Silatech / Gallup report that found a growing number of young Qataris planned to start their own business. It also jives with a more recent Bayt.com survey released this week, that found two-thirds of young Qatar residents consider entrepreneurship more preferable to other forms of employment.

However, it also adds to anecdotal perceptions that red tape discourages individuals from launching new businesses.

Qatar led the way among GCC nations in expressing interest in launching a business, but lagged at acting on those intentions:

Hurdles

The reason for this gap between aspirations and actually running a business could be many.

“A potential hurdle for these entrepreneurs to overcome is the legal registration and establishment of a company in their country,” the Ooredoo report authors say.

In Qatar, 64 percent of surveyed youth said it was difficult yet important to address the legal restrictions related to setting up a business. That was the highest response in the entire MENA region after only Yemen, at 65 percent.

Would-be entrepreneurs in Qatar are required to have a solid financial foundation before launching a company. To register their business, they must have QR200,000 (US$54,921) in their bank account, in addition to having signed a one-year lease for office space that’s been approved by Civil Defense – a commitment that can run above QR100,000 ($27,460).

There’s also an added burden on expats, who must have a Qatari sponsor who owns 51 percent of the company.

“From a pure economic perspective, Qatar is just a very bad place to do business,” Abraham Kamarck, an American entrepreneur and former resident told Doha News last year.

There are other unique barriers affecting startups in specific sectors.

For example, the Ooredoo survey found that 47 percent of youth in Qatar plan to launch an online business. However, local e-commerce entrepreneurs are hindered by low credit card penetration rates and restrictions on using debit cards for internet purchases.

Qatar ranks near the middle of its GCC peers when it comes to the popularity of online shopping. Some 42 percent of respondents said they regularly or occasionally buy products over the internet. That’s higher than the 34 percent in Saudi Arabia and Oman, but lower than the UAE (71 percent), Bahrain (59 percent) and Kuwait (54 percent).

And while many local youth many have entrepreneurial aspirations, other surveys have found that the allure of a steady paycheck and the chance to receive training from an established company or government employer trumps the risks and rewards of starting one’s own business for many.

Other findings

The Ooredoo survey also revealed that:

  • Youth in Qatar have the highest satisfaction with their higher education system compared to their GCC peers, with 83 percent rating it as very or slightly good;
  • They also put Qatar ahead in both the GCC and broader MENA region in rankings of perceptions of future economic prosperity and job prospects;
  • Youth across the GCC reported high levels of optimism about the coming 12 months, with between 82 percent and 88 percent saying they felt very or slightly optimistic. In Qatar, the figure was 85 percent;
  • Some 82 percent of young Qatar residents believe that women should have the same business opportunities as men. That’s the third-highest in the GCC, after Bahrain (90 percent) and the UAE (89 percent).

Have you considered starting a business in Qatar? Thoughts?

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