Business leaders across the Middle East are anxious that a large and growing young population could threaten future stability and lead to escalating unemployment.
"We are in the region faced with a youth bulge. It is really a demographic time bomb that the Arab World is facing," Badr Jafar, CEO of Crescent Petroleum, told CNBC's "Access: Middle East." "We need to create over 150 million jobs over the next 20 years which is more than the Arab world has created over the last century."
Close to 60 percent of the Arab world is under the age of 25, the highest percentage globally, according to the World Bank. A recent United Nations Development Program report identified Egypt as the country with the largest number of unemployed youths in the region. An estimated 54.1 percent of Egyptians aged 15-to-25 do not have a job.
Jafar said structural and legal changes were needed to allow small-to-medium enterprises (SMEs) to thrive in the region, as these could provide extra employment opportunities. Currently, SMEs make up less than ten percent of economic activity in the region, compared to over seventy percent in developed countries.
Abdul Malik Al-Jaber, founder of MENA Apps, which specializes in investing in starts-ups, said that at present there are significant barriers to entrepreneurship in the region. "There is money available to invest and set-up entrepreneurs, but the regulatory framework is not friendly towards entrepreneurs and SMEs," he explained from the sidelines of the 2013 YPO Global Leadership Summit in Istanbul.
Cultural considerations are also holding back entrepreneurship in a region where failure is rarely accepted. But some countries have fared better than others, with Jordan and Egypt offering "conducive" environments for start-ups,according to Iyad Malas, head of Majid Al Futtaim, which develops shopping malls in the Middle East and North Africa.
Governments in the Gulf, which has mostly escaped the turmoil of the Arab Spring, are scrambling to resolve the employment crisis, in part by revamping the education sector. The GCC countries are heavily reliant on talent from abroad at present and locals often shun opportunities in the private sector in pursuit of better perks and benefits.
The Arab Spring I think force everybody to change the angle and they realized that mega-projects alone will not solve the problem," said Al-Jaber.
This week on "Access: Middle East": A series of discussions with the chief executives from across the region about talent, jobs and entrepreneurship. Tune in to discover their strategies, and what's really at stake.
More from our partner, CNBC:
CNBC: Slowing growth signs everywhere, not just in China
CNBC: Goldman on gold: We've just been through a decade
CNBC: Higher investment banking revenue juiced Goldman profit
CNBC: Cherie Blair: Thatcher taught Tony how to win
CNBC: Why some gold bugs are still hanging on