Incentives for start-ups prove a boon for long-term growth

One of Jordan’s greatest strengths in the information and communications technology (ICT) sector is the availability of educated and skilled human capital. Given the country’s increasingly strong educational standards in ICT, low start-up costs and friendly business environment, Jordan’s expanding start-up sector is helping to position the kingdom as a leading location for tech entrepreneurship in the Middle East.

Regional Pioneer

The country has long been known for its strong gaming and media companies. Indeed, three-quarters of global online Arabic content is currently developed in Jordan, according to the Geneva-based International Telecommunication Union. Over the past several years, the kingdom has been home to an attractive and growing tech start-up ecosystem, which has taken advantage of the country’s central location and political stability to harness the growth in regional tech entrepreneurship from Cairo to Gaza City. After the Jordanian internet portal Maktoob was sold to Yahoo for $175m in 2009, the kingdom earned the title of Silicon Wadi (wadi being Arabic for “valley”).

The sale of Maktoob demonstrated the potential for the local ICT sector, and soon a handful of start-up incubators cropped up in Amman designed to help foster the next big idea in the tech start-up world. Leading the pack is Oasis500, the Arab world’s first and largest tech start-up incubator. With roughly $7m in venture capital funding, the company, launched in 2011, is a tech accelerator modelled after those that have helped to build the tech industry in Silicon Valley.

At the heart of Oasis500’s operating model is a programme that grants roughly $30,000 in funding to new tech companies. The funding is made up of cash payments, which are disbursed alongside services such as office space and legal advice. Nearly half of the graduates of the programme have found further funding, and many are still in business. Oasis500 says it sifts through more than 350 applications a month, and by 2015, the group aims to train and fund at least 500 ideas and start-ups in the Middle East and North Africa.

Incentivising Activity

Export revenues for the IT sector totalled $324.44m in 2013, but some experts worry that the industry reached a crossroads during the peak years of 2008-09. The ICT sector’s chief advocacy arm, the Information Technology Association of Jordan (int@j), is looking to boost its skills development programme, as well as increase investment channels into Jordan. The association also regularly conducts conferences around the world aimed at raising the profile of Jordan’s ICT and start-up sector.

Further advancements in the availability of high-quality and ultra-fast broadband and mobile internet are helping to entrench the kingdom’s reputation as a force in the Middle Eastern start-up community. The capital, Amman, is planning a $1bn telecoms, media and technology (TMT) space in the Naour suburb – an idea that dates back to 2008 but was put on hold due to budget cuts and the global financial crisis. Once complete, the TMT space will feature offices, conference halls, research and development facilities, training centres and ICT company headquarters, spread across an area of 240,642 sq metres.

Retaining Talent

As a leader in online Arabic content and an incubator for many of the region’s most successful tech start-ups, Jordan’s greatest challenge in the sector is the flight of young and talented tech entrepreneurs to the West or the Gulf. “We have the human capital, but the departure of many of our most talented developers to the Gulf has hit the industry particularly hard,” Ziad Al Farekh, CEO of Semantic Intelligent Technologies, a local IT solutions group, told OBG. “However, we are noticing that given the quality of the start-up ecosystem in Jordan, we are seeing some developers return. Our goal is to make sure that we can keep Jordanian developers at home.” Continued state investment in the sector, such as the TMT project in Amman, will translate into better infrastructure for Jordan’s tech start-up industry. Jordan’s high output of Arabic content and the continued growth of start-ups look set to bolster its reputation as a centre for IT development.