Innovation For Impact: MENA Startups Are Taking On The Refugee Crisis
When, at the turn of the millennium, the United Nations General Assembly declared that the 20th of June would be annually observed as World Refugee Day, little was it expected that only a decade and a half later, the world would witness what is considered the largest humanitarian and refugee crisis since World War II.
The misfortune of more than five million Syrians who have been forced to flee their country since the start of the Syrian civil war in 2011 attracted the world’s attention in 2015, with distressing stories and images of Syrian families embarking on perilous journeys of illegally passing the Syrian-Turkey border, crossing the Aegean Sea to reach Greek islands, and then starting the socalled Balkan route, walking days on end, to eventually reach Western Europe. This influx of refugees had seen states respond in different manners, ranging from offering shelter to closing their borders. However, governments, aid agencies, NGOs and other support organizations have been able to provide solace to only a tiny part of those in need.
Having said that, there are now a number of individuals -armed with entrepreneurial attitudes, tech skills, and sheer creativity- who have spontaneously started collaborating to tackle the issue in its entirety. Digital scalable solutions have proved to be essential for reaching out to a large number of refugees and responding to their different needs, since, being disoriented and vulnerable, they need to be informed where to seek help, how to connect with volunteers, where to get familiarized with the laws and regulations of the new country, just to begin with. Furthermore, a number of newly developed tech solutions are taking a step further by helping refugees rebuild their lives by providing them with education and employment opportunities.
In the MENA region, the Beirut-based MIT Enterprise Forum Pan Arab (MITEF Pan Arab) was among the first to focus on the issue. Last year, they partnered with around 30 organizations, including Zain and MBC Hope, to launch Innovate For Refugees, a global competition designed to reward tech-driven solutions that address the most acute hardships faced by refugees. A total of 1,633 entries were submitted, 32% of which were developed by women and 15% by refugees, and the seven most effective solutions were awarded with cash prizes and mentoring. One of the winning solutions, the Boloro and BanQu project, a strategic partnership between Boloro Global Limited and BanQu, Inc, has developed an “economic identity” platform to enable the portability of critical data needed by refugees and people living in impoverished areas. Amman-based Boloro MENA currently collaborates with payment service providers, licensed by the Central Bank of Jordan, to create a payment network throughout the country, and allow end users to have a unique identity and a legal source of funds when purchasing goods and services, online and offline. The solution also allows international NGOs to transfer grant funds to refugee wallets in a secure and transparent way, enabling them to gain stronger data-driven insights on the outcomes of their programs.
Another refugee-related issue attracted the attention of two Lebanese IT experts, Ahmad Al-Hidiq and Salah Al-Hidiq. The duo launched a beta version of HeyDoc!, a telemedicine platform connecting doctors and patients worldwide, in September 2016, signing up over 1,500 users and generating over 500 advisories. With the support of the Dubai-based TURN8 accelerator program and an angel investor, the team now plans to officially launch the platform in June, and hopes to reach 8,000 patients and generate 4,000 advisories by mid-2018. Additionally, an idea to cater to the needs of refugees gave birth to their Salamtak initiative. “Every story you hear from friends and family, read on social media or news channels revolves around the lack of basic resources refugees suffer from around the world,” Ahmad Al-Hidiq says. “We saw it with our own eyes in refugee camps in Lebanon, where my family sought refuge when the Palestine crisis started. Doctors, although being a part of different relief organizations and hospitals, are always suffering from the short supply of medical equipment and resources. Despite their best efforts, they are not able to tackle the problem and help everyone in need at the right time.” In addition to taking in thousands of Palestinian refugees since 1948, Lebanon has provided shelter for a huge number of Syrian refugees -more than 1.5 million according to some estimates- since the start of the Syrian civil war. The cofounders of HeyDoc! decided to pitch in to help them, thereby establishing the startup’s motto: “Those who can afford to pay for it, will. Those who can’t, won’t have to.” Ahmad Al-Hidiq adds, “As we talked with doctors and medical specialists to join our platform, we have always informed them of our vision to support refugees, aiming to see whether the doctors would be interested in joining and helping others. The response was fantastic, as many of them were ready to jump on board, and provide their medical advice pro bono to those in need. We also discussed this with NGOs, foundations and governments to help sponsor us, as well as with large corporations that can invest a part of their CSR budgets to support this cause. We believe that our technology will bring great value to those that lack the most basic needs.”
Also among the seven winners of the MITEF Pan Arab’s Innovate for Refugees competition was Evaptainers, which equips farmers and refugees with coolers that can be used instead of fridges at a fraction of the cost and without electricity. It was created by Quang Truong, who came up with the idea in a class at the Massachusetts Institute of Technology, when a professor asked the students to develop a solution to a problem faced by one billion people. “In refugee camps, refrigeration is largely inaccessible to those most in need, and there is a huge problem of accessibility of fresh foods,” Truong says. “Refugees can’t afford to buy expensive solar panel refrigeration devices, and many camps do not have strong electrical grids for conventional refrigerators. For refugees, lack of refrigeration causes loss of perishable food, which can also lead to serious nutritional deficits. Evaptainers solves the problem of food spoilage in refugee camps with a lightweight, portable cooling unit that doubles or triples the shelf life of fruit and vegetables. This solution can help prevent refugees from losing money and precious food.” Together with CEO Spencer Taylor, CTO Jeremy Fryer-Biggs and the rest of the team, Truong is currently trialing the solution’s 10 prototypes in three different regions of Morocco.
In November last year, Farah Shamout was a member of the team that took part in the Digital Tools for a Cooperative Society track of the MIT Media Lab Redefining Cities workshop, hosted in collaboration between MIT Media Lab and Wamda at AlSerkal Avenue in Dubai. The team developed Basma, a tech solution that helps overcome barriers preventing cooperation between refugees and potential volunteers. “According to our data analysis of over 10,000 volunteering events and 1,700 volunteer profiles, activities in helping with the refugee crisis are the most desired volunteering opportunities in the Middle East,” Shamout says. “However, 50% of volunteers stop volunteering after their first volunteering experience. Our interviews with volunteers in the region reveal two major problems that deincentivize volunteers. First, the volunteering experience is not personalized, meaning that volunteers cannot find events where their skills will be most valued and appreciated. This problem causes a lack of participation and integration among potential volunteers interested to help with the refugee crisis. Second, the impact of volunteering is not transparent. Volunteering activities are not properly documented and there is no easy way to keep track of their impact after the event. This limits the repeated engagement of volunteers and makes impact assessment difficult in public eyes. Basma is an intelligent platform that allows volunteers to be matched according to their skills and interests. We believe that helping each other is the key towards solving the refugee crisis. Our analysis has revealed that people in the Middle East have a great desire to help refugees, but the full potential can’t be realized due to the problems identified above.”
Some tech companies have looked at creating more sustainable, long-term solutions to aid refugees to start new lives in their new communities. Recycle Beirut, a Beirut-based social enterprise, was established to address both the issues arising from the unemployment of Syrian refugees, as well as the garbage crisis that broke out in Lebanon in 2015 due to the closure of the country’s main landfill site. “The idea came up three years ago to try to solve both the garbage crisis and the refugee crisis in Lebanon at the same time,” says the startup’s co-founder, Kassem Kazak. “Even before this, we knew that the government did not have a systematic recycling plan. So, we wanted to start Recycle Beirut as a social and environmental enterprise to support the environment but also to create jobs for refugees. We recruit only refugees to handle our waste management activities.” Recycle Beirut, which was awarded US$20,000 in cash prize as one of the seven Innovate For Refugees winners, currently employs 17 Syrian refugees.
Similarly, edSeed, an education crowdfunding social network developed by the VIP.fund, a US-based youth-focused venture philanthropy fund, uses tech solutions to help integrate former refugees into society. The app allows students to run fundraising campaigns for university tuition and other university-related expenses. The edSeed team is currently running orientation programs among students in Palestine, Syria, Lebanon and Jordan. “We believe education is the most powerful weapon we can use to change the world,” says Rama Chakaki, co-founder of VIP.fund. “It is a basic human right, and the only way to economic prosperity and self-reliance. Unfortunately, according to the UNHCR, only 1% of refugees attend universities, which is significantly lower than 34% globally. It is because of lack of funding. Students who cannot continue their education are forced into low-earning jobs that have no future growth. We want to change that by offering a platform that anyone who believes in education and cares about refugees can go to donate as little as $10 or as much as $100,000.”
At this point, it must be noted that while there does appear to be a number of MENA-based entrepreneurs proposing innovative ways to solve refugees-related problems, the main question that arises is whether (and how) they plan to convert their projects into either investor-ready business cases, or financially self-sustainable ventures. Chakaki explains that the edSeed team is reaching out to donor organizations to get support in early stages, while charging a small percentage on transaction fees should help them scale their offering and become sustainable within three years. As for Evaptainers, Truong says that the startup’s USP -offering a lightweight, off-grid, electricity refrigerator that can retail for under $50- allows them to count on financial returns early on. “If our underlying assumptions hold, we believe that we could produce our units for a very low cost once at scale,” he says. “As long as there is enough margin between our production costs and eventual sale price to account for overheads, we would be able to sustain ourselves financially. The key to our company sustaining itself depends largely on how low we can get our Cost of Goods Sold (CoGS) figure to be. Operationally, we would exist as a for-profit. Our current financials show our Moroccan operation being revenue positive in year three of operation with a sales volume of over 50,000 units. After our break even point in year three, we plan to continue to expand our presence in Morocco, by moving into other areas of the cold chain in residential and retail uses, as well as expanding into other countries in the region and branching out into larger markets. Part of our growth strategy relies on eventually turning our Moroccan operations completely over to our local staff, and moving onto refugee camps.”
Likewise, the HeyDoc! co-founders appear to have a sound financial footing for the startup’s initial business model, which is based off charging $40 per consultation that would be split between themselves, the doctors, and the hospitals. However, their Salamtak initiative is dependent upon the support from large corporations, NGOs, foundations and governments. Ahmad Al-Hidiq explains that their vision to provide free medical consultations to people in need is challenged by the lack of awareness about the concept of telemedicine and the difficulties with establishing partnerships with large corporations. As for Recycle Beirut, Kazak says that his startup is a not-for-profit enterprise at the moment, while more scale should help them formulate a solid business case in the future. To reach that target, he says, they will need the support of the government of Lebanon. “We started this business from our own savings,” Kazak explains. “We didn’t have any support until we won the MIT Enterprise Forum Innovate for Refugees prize, which did help us to improve our company. However, we still need more resources to create more jobs for refugees and provide income for their families. Since we are providing an environmental service, which is not-for-profit, we have not approached any investors yet. However, the government of Lebanon still hasn’t recognized us, although what we are doing is saving them a lot of money. We have had many meetings with government representatives who are in charge of environmental protection, but nothing has happened yet.”
Vanessa Zuabi, a social impact consultant at Elevate, a Beirut-based social impact accelerator formed by AltCity and UNICEF, explains that in addition to mentorship, connecting startups with various organizations, including the UN and the government of Lebanon, is part of her enterprise’s focus. Her work has exposed her to the currently still nascent impact investor network in the MENA region, she says. “Most investment is focused on large-scale projects that can generate quick returns,” she says. “For social enterprises, a more long-term gradual approach needs to be applied. In sectors like education and health for example, there is enormous potential for return and we are seeing these as huge markets for technology and innovation disruption, as well as social impact. Achieving financial and social impact returns takes more time and requires more flexible financing tools that allow social ventures to not just scale quickly but measure the depth of their impact. We need to train investors to understand that both are important. However, even though there is a small community of social impact investors here, what excites me is that they are committed to supporting startups that are really addressing core needs in the region, and exploring how to create flexible financing options for them. I think that actually, a locally growing impact investor community is critical in order to attract more international impact investors, allowing for more opportunities for partnerships, more channels for our startups to actually grow into other markets, and more opportunities for knowledge sharing. So, having a network here that international impact investors can partner and co-invest with is really important, because so few international impact investors have been interested in coming to this region to date.”
Christina Andreassen, a business development manager at WOMENA, a Dubai-based angel investment platform, explains that when analyzing a social impact startup for investment, investors often base their decisions on three pillars- opportunity, solution, and scalability. “Firstly, solve a tough problem,” she explains. “Picture a scale between ‘a cure for cancer’ and ‘a skin whitener.’ Where does your product lie within this scale? Do prospective customers need your solution enough to adopt new technology, switch providers, or add a new cost to their budgets? The more the market needs to be educated before adopting your product, the higher your Customer Acquisition Cost (CAC) will be. Secondly, target a large and growing market. The opportunity size is one of the most important factors investors consider when evaluating a company for investment. At WOMENA, we look to invest in companies targeting a total addressable market of over $1 billion. Although not without challenges, impact sectors in MENA can represent remarkable opportunities. For example, the consumer goods market for low-income consumers in the Middle East is estimated to be over $300 billion. Lastly, use innovation to scale. The impact space has great potential for innovation, with incumbent players tending to use traditional methods to solve problems. Disruptive innovations, usually using technology, can challenge the status quo, allowing impact startups to challenge large competitors by offering more effective or lower-cost solutions, and scale quickly across geographies. Therefore, if you use innovation to find a solution to a tough social problem in a large market, you have hit the investor’s sweet spot.”
As with any other nascent sector, it’s clear that impact investing will take time to register in this locale. But, if one does align it with social entrepreneurship, that could build the case for more responsible, sustainable and mission-driven initiatives across the MENA region, which would be a welcome development, especially in this part of the world.
Tamara Pupic is the Managing Editor of Entrepreneur Middle East.