We take a closer look at the potential economic impact of integrating millions of educated women into the world of business in the MENA region.
If the gender gap was to be reduced in the labour market by just half in a country like the UAE, research shows the annual GDP growth rate to jump seven per cent. In Egypt it would rise close to eight per cent, while in a low participation market like Saudi Arabia, the economic impact would be explosive with an estimated 8.45% rise.
Measuring the gender gap
This is the main point being driven home by Booz & Company’s recent report on Empowering the Third Billion: Women and the World of Work. The Third Billion refers to the number of educated women around the world who could enter the global economy during the coming decade. The company recently co-hosted an event in conjunction with with the Chicago Booth UAE Alumni Club in Dubai, which was organised to showcase the findings of the report, and at the same time bring together experts from around the MENA region to share their insights and policy recommendations.
The MENA region was a major area of focus for the global report, which sought to analyse the economic potential of empowering and integrating more educated into the workforce. The majority of MENA countries ranked at the bottom of the global index in the areas of economic integration. Even with the UAE’s progressive environment, it still scored a less than stellar overall ranking 109 out of 128 countries, while Egypt stood at 108 and Saudi Arabia ranked at 123, respectively. However, if you look at different areas of the index, women scored higher in education and preparation and lower in access to labour market.
The report also put a major focus on promoting entrepreneurship and its contribution to the overall economic empowerment of women. The research was done with the intention of providing a better understanding on data gaps, as learning about the experiences and challenges faced by women entrepreneurs who have reached a certain level of success.
Until recently, economic data on women employment and entrepreneurship has been scarce, especially in this region. Survey-based research by the World Bank shows that only 17% of firms have female participation in ownership, compared to a 35% world average. It is also important to mention that overall entrepreneurship levels in the MENA region are among the lowest in the world: from 2004-2006 only .6 new firms per 100 adults were created in MENA, compared to 4.2 in high income countries, 2.2 in Europe and Central Asia and 1.3 in Latin America (according a new OECD report on New Entrepreneurs and High Growth Enterprises in the Middle East and North Africa).
Spotlight on Saudi Arabia
It’s safe to say that the MENA region, for the most part, has nearly closed the gender gap when it comes to education, as statistics show that women have equaled, and in many cases exceed the number of male college graduates. Interestingly, they outnumber men in Saudi Arabia, making up 57% of graduates, according to the Booz & Company report. Of this 57%, only 12% are integrated in the workforce, and most of these educated women end up joining the public sector.
“We are trying to help incentivise the private sector to hire women there through a lot of initiatives through the Ministry of Labour. There needs to be more education and outreach about opportunities in the private sector and what it can offer. Another issue is that women there are not really into entrepreneurship, and there no real financing channels for women or even a one-stop-shop where women can go to learn more about business opportunities and training,” says Mounira Jamjoum, Senior Research Specialist with Booz & Company, who co-wrote the Third Billion report.
Mounira, a Saudi national, has seen firsthand how the Arab Spring has changed cultural perceptions in Arab countries. It has played a pivotal role in calling for a new focus on job creation that are now starting to take into account groups who have been sidelined by governments in the region. “Women are now more visible after Arab Spring and they’ve shown that they are strong and have a voice. We believe that the Arab spring has done something very important, which is bring forth the case for inclusive economic development to include youth, women, minorities. This has been a very important issue, in which these types of discussions were launched,” says Mounira. Recently, Saudi Arabia has taken some small steps by allocated 20% of its Shura or advisory council to women. Mounira says that such a move sends a positive message to a younger generation and may also be a sign that more proposals of this nature are forthcoming. “It’s an advisory council to council of ministers, it’s not a legislative council, but at least they will be at the table. We hope to see women in council in ministers within next few years,” she predicts.
Microfinance is not enough
Looking at the available relevant data, a large portion of the women who are in business in the MENA region are limited to microfinance, depending on very small funds and are very vulnerable to failure. As a result, their businesses are unable to grow and they lack adequate resources and support institutions that cater to them, as opposed to just entrepreneurs in general. “Micro firms often operate in the informal sector, which limits their ability to access formal financing for growth and to export to new markets. Creating incentives to encourage these firms to enter the formal economy could be a first step. Especially for women-led firms, micro financing has made a major impact,” says Nicola Ehlerman-Cache, Senior Policy Analyst, MENA-OECD Investment Programme and Project Manager for the Women’s Business Forum.“Greater efforts are needed to expand financing so that women entrepreneurs who graduate from the micro financing stage can access commercial credit and grow their businesses, thereby contributing to competitiveness and job creation,” she added.
Policy and enforcement
On the policy side, such issues have been addressed time and time again on paper. Most MENA governments have in fact developed elaborate policies to improve women’s economic and social status, and have also made commitments of the same nature. For example in 2007, MENA Ministers endorsed a Declaration on Fostering Women’s Entrepreneurship in the MENA Region, committing to integrate women’s entrepreneurship in broader efforts to support SMEs and entrepreneurship. The issue, however, exists in the actual implementation of these policies, as these committees do not have enough sway with economic ministries, leaving any issues and policies relating to women often sidelined and not included in broader policy efforts to support SMEs.
According to the Third Billion report, the biggest obstacles to women’s integration are: the availability of childcare, cultural barriers and stereotypes, lack of financial support, regulation of micro finance and a lack of support institutions in place to help and encourage women’s involvement. Any forthcoming legislation must take such issues into account to ensure a real increase in participation.
During a keynote presentation during the Booz & Company event, Dr. Nasser Saidi, Former DIFC Chief Economist, presented exclusive data which highlighted the economic potential of integrating millions of educated women in the regional workforce. He stressed the role of the governments in drafting the right laws and enforcing the laws across the public and private sectors. He noted that currently, the private sector lacks incentive to hire women, and this has largely contributed to the marginalisation of business women and women entrepreneurs in the MENA region.
“There’s no question that more research and affirmative action in this area must be carried out. These issues facing women, should be taken into account to various business indicators being used in the GCC, for example,” said Nasser. He added: “There’s a bi-directional relationship between economic development and the empowerment of women. The gender inequality issue in the MENA region is creating a waste of human capital, as a large percentage of countries’ populations have the potential to contribute ,but are currently unproductive to the economy,” he added.
Equality issues in Egypt
Sharing the perspective of Egyptian women during the conference was Ghada Waly, Managing Director of Egypt’s Social Fund for Development. During a panel discussion, Ghada spoke about the lack of business development providers, entities and experts to help with the eco system for business and support services to SMEs in the country. “Credit is not enough– businesses need mentoring and they need a diversity of financial products. Credit is available to some extent but more is needed,” she said. “In Egypt there are cultural reasons preventing women from accessing finance, regulatory constraints such as starting a formal business, financial reasons related to access to collateral, to finance and to affordable business development services. In Egypt, it was always the public sector that was the friendly women employer and now employment in the public sector is shrinking and private sector employers tend to employ men,” she added.
From Egypt’s perceptive, the Arab Spring has brought both progress and a whole set of new challenges. “The economic and political transition since then has hurt business for men and women owners alike. The development of institutions, such as a new parliament, should be seen as an opportunity to introduce an enabling environment and introduce incentives for small business development and growth.” She also explained how the government is now supporting the formalisation of the informal sector. “On one hand, this allows informal businesses access to market access to finance, but on the other hand, it adds costs to the small size businesses and might necessarily represent an opportunity for women business owners,” she explained.
Among Ghada’s recommendations are increasing entrepreneurship education in school curricula, creating special funds for startups and women, supporting the use of IT and technology and availability of connectivity everywhere with Arabic content, as well as creating a package of incentives for job creating investments and the hiring of women, to name a few. Such suggestions would be no doubt beneficial to forthcoming labour law drafts in a number of Arab countries that are looking to make headway on the job creation front.
Paving the way forward
The experts at the centre of these issues have mixed feelings when it comes to their outlook for the future of women in business. “There is certainly a risk that women’s issues will be sidelined during this time of change in the region. Women were highly mobilised during the revolutions of 2011, but more efforts are needed to ensure that progress made in women’s rights over the last decade is not lost,” says Nicola.
Ghada is of the belief that women in this region already possess a lot of the qualities that make entrepreneurs and businesses successful. “Women are resourceful–they need to generate income, be it from formal or informal types of jobs. If they are provided with the needed support systems, many will opt for self-employment by creating their own enterprises. It is the way forward for youth both men and women, as governments are not creating jobs in the numbers needed,” she says.
Going forward, Mounira says that visibility will be a key factor in closing the gender labour force gap. “We consider visibility one of the most important issues for women in workforce. If you take Argentina, for example, about 23% of the country’s parliament are women, yet they are facing a lot of the same issues as women in this region. However their visibility in leadership visions has had a real impact on women penetrating the workforce,” she says. She added:“In GCC and Arab countries, you will find female ministers, however, businesswomen are not so visible, and the ones who are succeeding tend to create a wall around themselves. These women should really be participating in outreach, accelerator programmes and other initiatives being created for women here.”
Ranking: Third Billion Index
UNITED ARAB EMIRATES Score: 38.4 Rank: 109 out of 128
Women: largely employed in public sector (42.6% of total national female labour force in federal govt depts, 35.9% in state govt depts).
Interestingly, Emirati women on average work more hours than men – 56.6 hours per week, compared with 51.6 hours for men.
SAUDI ARABIA Score: 34.2 Rank: 123 out of 128
Women: 57% of university graduates; but underrepresented in workforce – FLFPR = 12% in 2008 & work predominantly in public sector (6.9% female Saudis work in pvt sector). Unemployment rate for women = 28% (men: 7%)
Both women in workforce and entrepreneurs, a small but growing number, are inhibited by restrictions on women’s mobility, both within KSA and abroad
EGYPT Score: 38.6 Rank: 108 out of 128
Women achieved near parity with men in education; 30% household heads are women.
Women unemployment rate at 23% vs. 6% (men)
20% of all firms are owned by women, spanning a broad range of industries
Need to change regulations: lacks laws against gender discrimination; govt subsidies biased in favour of men
Source: Booz & Company, Empowering the Third Billion report
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Rushika Bhatia Editor
Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.