J Boima Rogers – December 2018
This note is part of the report of Mediterranean Week of Economic Leaders in Barcelona convened on 21-23rd November 2018, focussing on innovation and technology. The event was organised by the Association of Mediterranean Chambers of Commerce and Industry (ASCAME) covering a much wider range of topics than the focus of this report involving most of the countries in the Mediterranean region. As in the main report, it outlines presentations made at the event but goes a step further with an analysis and suggestions on how to enhance the conversation regarding the digital landscape of the region, notably, suggestions on further development of the event as the organisers envisage into“a platform for international and regional companies, start-ups, innovators, entrepreneurs and investors to showcase their innovations.” Measure proposed will enrich the conversation and provide practical support to the establishment of “business relationships that ultimately enrich the economy.”
Anwar Zibaoui, General Coordinator of MedaWeek stated that the future of Europe and Africa will be based on cooperation and innovation. Eighty percent of job losses will be caused by innovation, highlighting robotics and Artificial Intelligence as key factors. The region needs to embrace innovation but new ideas involve significant risks and reduce the concentration of economic power. SMEs which account for the bulk of jobs in the private sector receive only a fraction of loans. He emphasized developing a dialogue, supporting members, facilitating networking, lobbying policy makers and promoting investment.
Miguel Valls President of the Association of the Mediterranean Chambers of Commerce and Industry (ASCAME) highlighted the need for laying the grounds for the digital transformation, which is disruptive, with the list of top companies constantly changing because of new entrants. Member states must improve their competitive positions, noting the importance of young people and educations as the main challenges of the digital revolution.
Xavier Tarra, President of Technology Centre of Catalonia (EURECAT) noted the need for Catalonia and Spain to embrace internationalization to become more competitive, offer better service and be more relevant to stakeholders. This entails more investment in research and development. Miguel Marti, CEO of Barcelona Tech City stated that efforts to increase the digital eco-system must: consolidate the hub with the right information; make Barcelona more competitive/ knowledge based; improve talent commitment in schools and universities, in particular by reducing the gap between universities and enterprises and; take a more international outlook. Relationships must be developed between the region and Northern Europe, North Africa and Asia through workshops on knowledge concepts. Philippe Guillaumet, General Secretary of MedPorts reported on work in developing networks between ports in Europe, Asia and Africa, highlighting recent developments with significant impacts, namely, improvements in the Panama and Suez canals, the new Silk Road and climate change. His goals are: increasing efficiency and visibility, new locks, improved data, promoting best practice and improved communication between stakeholders. They will be launching a Barcelona project/harbour event on 24th June 2019.
Jorge Barrego, Deputy Secretary General for Energy and Climate Action, UFM noted that his organisation represents the entire ecosystem of the region and that it was essential that all approaches must have as a goal the development of the Mediterranean community. Challenging issues include the democratic process, climate change, human capital, globalisation and the youth. Many issues were common to all members and cannot be resolved by individual states and the region must look at models in Northern Europe, South East Asia and North America. The culture of innovation is a challenge and his organisation is working on developing a conducive regulatory framework at national and regional levels. Natalia Mas, Secretary for Foreign and European Union Action, Government of Catalonia is happy that many actors are based in Catalonia and noted the need to foster public/private/open structures. Catalonia wants to enhance an innovative policy framework and is launching a med project to foster innovation.
Rising Software Driven Generation
Chair, Roger Albinyana highlighted the sharing economy, caused by the internet which has significantly reduced transaction costs, spurring the innovative sector. The sharing economy is disruptive and has brought about political debate regarding the rights of individuals. He referred to two videos which show how entrepreneurial success is seen as a threat that politicians find hard to cope with and raises the following questions: what can be done for entrepreneurs to make the public understand them; how to engage entrepreneurs and; how to link entrepreneurs with governments. The other video focussed on: the advent of the gig economy; the impossibility of regulators foreseeing changes. There are many obstacles relating to the move from traditional marketing to the new marketing paradigm and a policy framework that is appropriate for the new landscape. Players need to: make it right; legal and; sustainable. Joan Romero, CEO, Agency for Business Competitiveness (ACCIO)/Catalonia Trade & Investment, Government of Catalonia noted that disruptions are bigger and faster than ever. New players will rule the world and start-ups will disrupt: the business model and; the environmental framework. Start-ups are a tool that helps established companies become more innovative. Experience varies according to sector but a crucial missing factor is the ex-ante assessment (review). Start-ups require, attract and facilitate the movement of talent, with 36% of their employees in Barcelona coming from abroad.
Davide Ravera, Eworks Manager, ESADE Entrepreneurship Institute challenged the video’s concept, noting that entrepreneurs must be aware of the regulatory framework even though, depending on the country or culture, the new players will challenge that framework. Some countries, notably those in Northern Europe, are more used to challenging the culture. The perception of the government is important, with the vast majority seeing it as trying to block them or biased. Governments should reduce restrictions and add value – the speed of relevant changes in regulations can impact companies and customers. Governments act faster if they employ people who are more open to changing legislation to introduce new standards and frameworks. Bacely Yorobi, CEO and Co-Founder ConnectX Global noted that the subservient African and Mediterranean perspective is a negative factor. Countries need to be run as start-ups, citing Israel and Rwanda as countries with conducive environments. Disruptions have a positive effect and SMEs are crucial in the development of the sector. Diversity, a fast paced environment, education and development of an appropriate eco-system are crucial.
Marc Realp, General Manager, Catalan Competition Authority noted that entrepreneurs are penalized by big players and policy makers need to reduce entry barriers and increase competition by: investigating anti-trust behaviour and unfair competition and; analyse regulations to see how efficient and effective they are, appealing to courts when regulations do not work. Asymmetrical compensation does not work anymore, hence the need to review regulations, possibly by setting only minimum security and health standards. He suggested regulatory platforms that promote portability, identify negative externalities, make demands for data in real time and levy penalties in real time. Moises Santana, Managing Director, EMERGE Association stated that regulation and access to finance are crucial and not all entrepreneurs are disruptive or should be labelled as start-ups. Governments are confused in dealing with entrepreneurs in the 21st century and still act like they are in the 20th century. This is why so many start-ups move to the US where there is a more conducive environment. He posed the question of whether governments in the region want to embrace disruptions.
R Y M Bourguba reported that his organisation lobbies the Tunisian government to create an enabling environment for start-ups and leads and guides young entrepreneurs, in line with the government’s objective of increasing youth employment. His organisation, operating in a country which inherited a bureaucratic system from France, acts as a bridge between a government with controlling tendencies and a new technologically innovative landscape. Paul Fox, Director of Entrepreneurship Studies, La Salle Campus Barcelona highlighted the difference between the US and the situation in the region, noting that dramatic changes have occurred in Barcelona. In the US if there is a regulatory vacuum you can initiate it unlike the situation in Europe. The issue is when you start something without a regulatory framework in place, the questions arises regarding: who are you protecting and; what/who are you promoting? Regulations can be barriers that stifle innovation. The issue of bankruptcy laws in Europe can be a big burden because often they do not allow a clean break, unlike the US where such breaks are routine. Toni Mascaro, President, Barcelona Loves Entrepreneurs (BLE) noted the significant changes over the last 20 years, in Barcelona society and the economy. Language skills, critical in being competitive, have improved significantly. He cited increased rents as a major problem associated with the disruptive economy and talent mobility, negatively impacting the long established population. US companies have bought start-ups and moved them away.
Comments: On the issue of the disruptions and losers in the new economy, a high proportion of jobs will change which will necessitate a change in the quality of the workforce and authorities and residents need to adjust to the new economy. Governments need to act quickly to prepare people and address the issue of social cohesion. People would need to consider dual education and constantly upgrading their skill profile. Governments need to act in the face of gentrification and rising rents. Companies bought out by US corporations will be replaced by second generation entrepreneurs and it will be a spur for stakeholders to develop the eco-system to ensure that start-ups stay and grow to be major brands. Governments often do not know the effects/outcomes of innovators and politicians cannot often manage the process but history tells us that the Mediterranean has adapted over 3000 years. The consensus is that the disruptive sectors are here to stay and governments and other stakeholders have just got to adapt to the new reality.
Chair, Carmen Margeli, Head of International Development, Technology Centre of Catalonia (EURECAT) reviewed world trends which ranked regional leader Israel, at number 10 in the Global Innovating Index. Stakeholders in member states must work, in collaboration, to improve their rankings/competitive positions in the index. Challenges and opportunities highlighted include lack of proximity and trust, improving cooperation between countries, new policies to promote competitiveness, encouraging entrepreneurship, improved standards and increased mobility of researchers and talent within the region. Ramy Boujawdey, Deputy General Manager Baytech in a review of the Lebanese experience in developing its ecosystem noted that the country ranked 15th on the Global Innovation Index in human capital and is an exporter of labour because of lack of jobs in the country. The Lebanese Central Bank had initiated a project, with a budget of $600 million, to support entrepreneurs, promoting collaboration and projects to develop them to regional and global scales. They had joined the EU network to develop synergies and clusters.
Dr Murat Erten, General Manager, Izmir Techno Part reported that his university offered undergraduate and post graduate degrees in English and operated an innovation ecosystem which provides ideas for industry, an infrastructure, social welfare and employment for graduates. The infrastructure develops knowledge, realisation, creation, support for start-ups and management of intellectual property. Since its inception it has developed 145 companies, generating $650 million revenue and exports of $60 million. It actively encourages graduates to set up companies rather than just look for jobs and assists them with technical and marketing expertise. It is working with the government to foster technology and on projects with Poland, Lithuania and the Newton Fund in the UK. Under the Hackathon programme it is assisting in the promotion of clean energy and organises events and acceleration programmes. Fadi Mikati, Co-Founder and President, Tripoli Entrepreneur Club said her organisation aims to promote knowledge, economic activity and capacity development by shifting the business model, creating three start-ups to develop soft skills, digital marketing and mentorship, focussing on the youth.
Joan Parra, Technology Partner, DFactory/Executive, Vice President, Leitat reported that their work is on digitalisation focussing on 4.0, 3d tech incubation, open innovation culture, local impact, best international practice, talents and social responsibility. The three phases of their approach are 0 high 3d tech incubator; 1 industrial hub, assisting in digital transformation and; building new reality space, mode, areas and reference centre. Emmanuel Noutary, General Delegate, ANIMA Investment Network reported that they had received EU funding to create value networks. They are reviewing regions in areas that are producing solutions, guided by their belief, approach and objectives. They believe in reverse innovation, solutions from emerging countries; shared values with balanced partnerships; social responsibility, inclusive and engaged local communities and: leadership, innovative leaders that can spot and develop new trends. Their approach is: mobilising communities and; creating brands and open platforms. The objective is to create networks and promote innovators, enhance and coordinate innovation strategies, working through policy frameworks, technology transfer mechanism, start-up booster tracks and cluster booster tracks. Jose Manuel Duran, North Africa and Middle East Delegate, CDTI reported that they work in eleven countries on a variety of projects, planning, implementing and monitoring projects. In surveys conducted of companies 47% say that R&D gave them prominence in the market, 11% of SMEs said it increases their sales, a third of companies say innovation increases their presence in international markets and collaboration between countries and partners is very productive. Their conclusion is that there is need to increase R&D activity in all states.
Rachid El Mrabet, Innovation Manager, Research Institute for Solar Energy and New Energies (IRESEN). gave a report on the use and efficiency of green energy highlighting the impressive gains made in Morocco and challenges/opportunities in Africa, noting that lack of access to power is the most debilitating factor. After rigorous debate Morocco has planned and implemented projects which have increased renewable energy generation significantly and by 2030 this should account for 52% of total energy production. The country has created a research institute for solar energy, financing mechanism and open space project for Spain and Morocco. Morocco is looking at improving energy efficiency in homes, at different scenarios and smart green technology. He cited opportunities for private/public partnership opportunities in Spain, Algeria and Mauretania, smart city, green technology parks and electric mobility. Morocco is working with the Ivory Coast on solar energy projects and exploring opportunities in other African countries, notably, through events that it organises. Morocco is a good conduit for European companies intending to enter the African market because of its knowledge and presence in other African states, notably, its prominent role in the Green Africa Innovation Network project.
Digital Transformation in the Mediterranean – Opportunities and Challenges
Chair, Joan Guasch, Senior Area Manager, Public Programme Manager, Area, EURECAT highlighted the four major elements in digital transformation, namely, technical developments/business models, the digital infrastructure, digital skills and digital hubs. The key drivers are Big Data and PIME. Helena de Felipe, President, Federation of Mediterranean Women Entrepreneurs (AFAEMME) reported that her organisation promotes the interest of entrepreneurial women, focussing on closing the digital gap through best practice by promoting science education for girls, improving the labour market, closing the wage gap and generally developing platforms and the environment for women. Hakam Kanafani, Chairman, Arab Advisors Group noted the need for everyone to be digitalised because every industry is affected by the digital transformation taking place all around us, on the beach, cars, cinemas, passport control etc. The government’s role is less regulation, public/private/partnership, finance, incentivising the public, e-government programmes and digital education. He proposed that Gaza be invited to the next event.
Luis Bandrinas, CEO, Barcelona Health Hub reported that his organisation promotes innovation in digital health, working to develop the ecosystem for start-ups in the sector to improve competiveness, leadership and collaboration in the region. Elif Caskunkan, Managing Partner, Etohum & Start-up Turkey, a private accelerator working on PR, marketing and ecosystems, stressed the need for a good infrastructure. Sisco Sapena, President and CEO, Ileida.net noted the huge opportunities in the sector, pointing out though that the new landscape is merely a repeat of challenges and opportunities faced by forebears in the region three thousand years ago, the main difference being the new digital tool. Youssef El Alaoui, Vice President General, Apebi Morocco reported that in his role representing IT companies in Morocco, he lobbies for companies and universities and helps organise an annual African event which covers agro-technology and networking. He proposed that the event include Africa, China and Canada and corporations.
Mediterranean Start-up and Entrepreneurship
Chair, Diana Koboyter, Founder, Oils and Beyond/Young Entrepreneurs Working Commission of ASCAME gave a report of her work on her family business and with young entrepreneurs in Lebanon which she embarked on after work and skills gained in a variety of projects. She is applying digital tools on traditional industry and an NGO she founded. Raoula Moussa, Managing Partner/Diaspora ID reported they had developed an accelerator in Dubai with an Artificial Intelligence start-up to provide socio-economic services to the Lebanese diaspora working with the chamber of commerce. The 30 million Lebanese diaspora who far out-number the 4 million citizens living in the country are provided support with regards to markets, capital and knowledge access. Aintzane Arbide, Technology Partner, DFactory Incubator/Business Development Manager, Leitat operates a 3D factory incubator and chooses the best 25 projects to support, providing them training, networking, advice, technical services, certification and other relevant resources. Their criterion is that the project must be technologically related to 3D printing.
Stefano Bonfa, Owner and Manager, Oxford Sustainable Development Enterprise (OxSDE) gave a report of his organisations work on strategic, scalable multi-sensor analysis of big remote sensing data making use of the data cube concept. The goal is to develop an integrated processing pipeline. OxSDE is working on deep learning, linking major brands with SMEs and in Italy it is working on climate, health and tourism issues. Almudena Solera, Global Head of Strategic Partnership & Business Development, Spain Start-up – South Summit focusses on innovation in tourism linking projects requiring funding. The objective is to identify start-ups that will have a significant impact, link them to large corporations by organising open innovation fora inviting business leaders. Vincent Ernoux, Coordinator, Branch Office for the Western Mediterranean, ENI CBC MED operates in 13 countries with a budget of Euro 209 million focussing on socio-economic, R&D, education and social inclusion issues. He noted that while SMEs played a significant role in the socio-economic fabric in the region they accounted for only 2% of R&D spend. His organisation targets start-ups and local authorities to provide finance, training, management and development of local hubs and accelerators. They build partnership and cooperative projects to solve shared needs.
Burcu Tuncer, Team Leader – Networking and Partnership, UN Environment MAP Regional Activity Center for Sustainable Consumption and Production (SCP/RAC) posed the question of what the region is trying to achieve, noting that the Mediterranean has been a cradle of innovation. Switchers/change makers work in many different sectors and so the approach should be to work with the whole eco-system. This involves stimulating and nurturing great ideas, providing training, business planning, incubation, reviewing results and assessment of start-ups, funding and business support facility services. Every two years there should be a networking forum/review.
Comment: It was noted that to build a legacy and enhance the infrastructure of the region, fora like this event document and develop a database incorporating initiatives outlined and with the assistance of academics/the European Commission map and link them to be used as a resource and the development of networks throughout the region and the EU.
Finance and Funds for Mediterranean Entrepreneurship
Chair, Richard Garriga, CEO Trioteca/Co-founder & GP, Torret Road Capital stated that there is not much link in the region other than sharing the Mediterranean Sea and the event and his role as a venture capitalist is to try to amend this anomaly. Boutheina Ben Yoghlane, Director General, Caisse des Depots et Consignations (CDC)Tunisia reviewed the role of banks, focussing on Tunisia, where there are only four active players. Because many of the players are young there is need to assist in the development of professional management teams, strengthen finance infrastructure and set up best practice processes. Tunisia has the potential to be a hub with a youthful and educated population and a large diaspora. The country is the top ranked place for start-ups in the Arab world and in Africa according to Bloomberg. Her organisation works on developing legal, financial, talent and inclusion infrastructure. It is developing start-up funding using a public/private initiative and partnership model. Daniel Romy, CEO, Media Digital Ventures reported that his organisation provides media partnership links with companies to assist in advertising campaigns, focussing on start-ups as part of a venture capital project, taking shares in companies they work with.
Mathieu Carenzo, Director, IESE Entrepreneurship Centre stated that his organisation focusses on the missing link in the ecosystem with the aim of building the right financial system. They teach business angels how to build start-up portfolios strategically, making use of investment criteria as part of the plan. Zakaria Fahim, Hub Africa reported that their unique hub provides a platform that allows entrepreneurs to develop their business, network and raise funds. They engage the diaspora many of whom are very rich. The hub is a good forum for European companies who want to trade and/or invest in Africa. Tamer Taha, Founder and CEO Yamken noted that stat-ups in the region are underperforming and need more than just funding and new ideas. The skillsets needed include product design, trust, proven solutions and ability to minimise risks. Crowd sourced solutions are the most efficient way. His organisation works with many partners and organise workshops in many countries, including Palestine, Morocco, Jordan and Tunisia.
Adil Rzal, President, Association Marocaine des Investisseurs en Capital (AMIC) reported that his organisation has invested Euro5 billion over the last fifteen years in public/private start-ups, averaging Eur 1 million per start up. They have developed incubators and now operate in France and Morocco. The company has made use of Big Data in the agricultural sector. Fadi Saab, Chairman, Trans Capital Finance/President, Integrity Values and Business Ethics Working Committee of ASCAME noted that a recurring issue is why finance companies should provide funding for any project. They can only do so if it is a great idea, with credible plan, vision and presentation. A major issue is the fear factor; finance companies will not make investment if the business/project is not good and/or they do not have confidence in management. Companies need proper corporate governance particularly in the case of start-ups needing to scale up. He cited Nissan and Tesla as two companies with recent governance issues.
Analysis and the way forward
The event was a comprehensive gathering of key stakeholders in the economy of the Mediterranean and the digital conversation allowing them to showcase their work as part of efforts in the digital transformation taking place. The conversation could however be enhanced in a number of ways. Notable by their absence in terms of presentations were key players such as France and Italy the countries y with the largest and second largest economies and technological sectors in. While it was acknowledged that Israel is the top ranked country the region in the Global Innovation Index, there was no presentation from that country. Egypt, the powerhouse in the Arab world and Africa, economically, politically and technologically was similarly not represented in terms of presentation. Major global and regional technology brands were similarly not represented. The event could have had more input from academics and think tanks who would have reviewed cross sectional data to provide findings that can be applicable to a range of sectors and commercial ventures. Such analysis could include cutting edge developments such as that in a recent paper by Joshua P Meltzer on the impact of Artificial Intelligence on international trade which explores many of the issues covered in the event . It should be noted that the points made above do not mean there was zero input from the sources named. The lack of participation only relates to the digital conversation and indeed individuals from those countries contributed significantly to the event in other ways. Furthermore it reflects the importance of the countries cited that did not participate in the digital forum, notably, that a more significant input on developments in those countries is required given the contribution that would make from such powerful players in the conversation on the Mediterranean digital landscape. A good example was Ms Anael Le Bihan, who gave a presentation on the EBSOMED project, a French national, who as Head of Cooperation Projects at ASCAME, played a key role in organising the whole event. Dr Paul Fox from Campus Barcelona provided valuable academic input in his review of the US and EU digital environment. Indeed his analysis is the reason why there should be more input from that source. Finally, it should be noted that organisers, can invite these players as they no doubt did, but they cannot compel them to attend.
The way forward is to ensure that key players noted above are encouraged to take part in the conversation and become integral in its development, adding significant economic, political, commercial and technological value. Major regional and global technology brands need to join the conversation as do universities and think tanks. Major technology brands will showcase products and services and universities and think tanks will analyse policies, products and infrastructure, hopefully, without the bias that other players understandably have because they do not have to sell specific products, region or country but are rather more concerned about the rigour of their analysis with regards to peer review from other academics and universities; if their presentations are sponsored they must clearly specify that sponsor. The key elements within the platform should include data, networking, centres of excellence (CE) and ecosystems/infrastructure. The digital revolution is data driven and the platform should develop, rationalise and link databases that partners can utilise. As ASCAME has correctly noted a major objective is to develop networks. The region must acknowledge and promote centres of excellence, building on initiatives that other companies and policy makers can learn from and/or replicate. The ultimate aim is the development of ecosystems/infrastructure that can allow innovation to develop and flourish. Presentations featured all of these elements and as a starting point, efforts should be made on developing concepts and initiatives in presentations I will highlight below.
Dr Stefano Bonda’s data cube project is a notable case study that could be adapted with regards to the data element. The Diaspora ID networking project by Raula Moussa is an interesting initiative that could be relevant to the region. While virtually all initiatives presented can be viewed as centres of excellence (CE), the term should focus on initiatives and promote them as CE if they are multi-dimensional, self-sustaining and/or ground-braking. Presentations for Lebanon and Tunisia show how these countries produce digital talent to an extent that they are net exporters of such talents. It was noted that the success of start-ups and talents in Barcelona has resulted in them being bought out by American and other foreign companies. In these examples although progress had been made in certain areas, deficiencies in the digital ecosystem/ infrastructure had negated that progress. In my view therefore the Izmir Technology project, (Teknopark) and Israel should be accorded the CE label. In both cases the multi-dimensional and self-sustaining aspects of those projects which allow for the development and maintenance of a digital ecosystem make them eligible for the CE label. Dr Murat Erten explained how a multi-faceted approach has nurtured enterprises and talent to ensure a vibrant digital ecosystem in Izmir. Israel has been acknowledged, verified in World rankings, as the top country in the region in the Global Innovation Index, encompassing the whole innovation ecosystem.
While the term platform has been used, it should be noted that this is a process incorporating a number of activities that will contribute to the conversation to develop the digital landscape in the region. The process entails events such as MEDA 18, other MEDA and related events, follow-up actions from those events and other regional organisations and the EU and national policies and initiatives. A dedicated website can incorporate much of this process and elements noted above. Obviously political forces will play a significant role in the process; hence the involvement of the EU, the Arab League and the African Union will be helpful.
J Boima Rogers is Principal Consultant at Media and Event Management (MEMO) http://www.oxfordmemo.co.uk