Rai Insights Contributor
In his book: “The Entrepreneurial Revolution Remaking the Middle East”, Christopher M. Schroeder paints a remarkable picture of the entrepreneurial shift happening in the MENA region, one that is not covered by the mainstream media. With more than half of the population of the Middle East and North Africa (MENA) under the age of 25 years old, the region is facing higher percentages of unemployment and underemployment which results in high rates of brain drain, inequality and poverty.
The unemployment rate among women is standing at over 60% in some MENA countries and if the current employment rates stay as they are, there will be 50 million unemployed men and a staggering 145 million unemployed women by 2050.
Furthermore, female labor force participation rates in this region are the lowest in the World. According to this Freedom House 2010 report on women’s rights in the Middle East and North Africa; only 28% of adult women in the Middle East are economically active. It is a multifaceted problem that needs to be addressed if the MENA region wants to reach higher social and economic outcomes. The sooner women have an equal opportunity to contribute, the sooner the region will benefit.
To study the female entrepreneurship revolution in the MENA region, it is necessary to understand the substratal challenges facing them from a social and economic standpoint. According to this McKinsey Global Institute’s Power of Parity report published in September 2015; if women’s participation in labor markets in the MENA equaled that of men’s, the regional GDP could rise by 47% over the next decade, and the region could realize $600 billion in economic impact annually, that’s $2.7 trillion by 2025.
In this manner, the potential for women entrepreneurs to become an engine of economic growth and social development is tremendous, but only if policy makers make it a priority and start tackling the challenges that hinder the creation of new organizations and prevent women from maturating their businesses.
To become globally competitive, governments across the Middle East and North Africa must create more jobs and diversify the economy by building a new class of entrepreneurs, innovators, and risk-takers who can prosper outside the traditional sectors of oil and agriculture and ultimately help reduce the region’s dependence on its natural resources and increase its reliance on its human wealth and talents through including and empowering women.
In order to make that possible, we need to identify the major factors that clarify the low rates of female entrepreneurship in the MENA region. According to this 2008 study by Nadereh Chamlou; female labour force participation and business ownership rates are high in economies with more positive attitudes toward working women which is not the case in the MENA region.
In her own words, Nadereh Chamlou confirms that:
“Attitudes about the value of work, working women, and gender equality affect women’s economic participation and entrepreneurship everywhere, but especially in the Middle East and North Africa, where optimism and attitudes toward working women are less positive than those in other regions. Combined with the perception of weaker governance and corruption, these attitudes are likely to hinder female entrepreneurship, affecting women’s work choices more than men’s.”
Additionally, MENA women face a great deal of difficulties to start their own businesses. As reported by this World Bank Doing Business 2017 report, the cost of starting a business in the Middle East and North Africa is higher than any other region in the World. The procedures are complicated and lengthy which gives room to bureaucratic entanglements and corruption.
By the same token, the legal environment in the MENA region hinders female entrepreneurship. A quick inspection of constitutions, civil codes, labor codes and investment laws of different countries around the MENA region demonstrates that the laws are gender blind and the tones are completely neutral with terms such as ‘the applicant’. This can be explained by the fact that although women’s equality rights are ensured under the constitutions of most MENA countries, customary practices often prevent them from exercising their legal rights and affects the implementation of their business in delicate ways.
Most MENA governments need to take action to level the playing field for women entrepreneurs. It is their duty to further develop and implement policies and measures aimed at helping women address the specific challenges they face and allow them to easily create their own opportunities instead of keeping the focus on raising awareness of successful female entrepreneurs and role models.
With governments not providing enough opportunities, businesswomen associations play an active role in advocating the needs of women entrepreneurs and seeking to influence policy makers. These businesswomen’s associations exist in most MENA economies from Morocco all the way to Oman. The Palestinian Businesswomen’s Association (ASALA) is a great example with its 10 branch offices in the West Bank and Gaza Strip. Its objective is to target excluded and impoverished Palestinian women in order to empower them and develop their financial independence and stability through trainings and access to micro-finance. In Tunisia, they have the National Chamber of Women Entrepreneurs (CNFCE) which was established in affiliation with the Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat, Association of Women Entrepreneurs and Council of Arab Business Women. It aims to promote women’s entrepreneurship by providing a supportive framework responsive to the specific needs for assistance, training and information for women entrepreneurs. However, it remains unclear to what extent these Businesswomen associations are included in public and private consultation processes and to what extent issues affecting women are considered in the dialogue between these business communities and governments.
Another concern for female entrepreneurs is the restricted access to funding. This study by the International Finance Corporation (IFC) reports that women in developing countries are largely concentrated in small firms and are more likely to face greater financial constraints. At present, financing programmes focus on micro-finance for low-income women entrepreneurs and efforts by banking institutions to reach out to women entrepreneurs are very limited.
One effective solution to all of these challenges is training women and building their capacity to create and develop their own businesses and help them find funds to sustain their activities. This will improve the business start-up rates and help women take advantage of opportunities to actively create their own networks and most importantly, it will encourage women’s employment. The good news is that there is a growing number of initiatives to provide women entrepreneurs with technical support and to improve their access to financing but they remain small and with limited reach.
To conclude, the entrepreneurial environment in the Middle East and North Africa has seen a lot of changes, all aiming at improving the overall status of women with inclusive laws, a growing number of incubation programmes, access to finance and the thriving businesswomen associations. All these factors will hopefully fast approach gender equality in the entrepreneurial ecosystem in the MENA region.
**Hind Touissate is an Award-winning blogger, Human Rights activist, citizen journalist and Social entrepreneur based in Kenitra, Morocco. She is currently a PhD student conducting a research on: “Female Social Entrepreneurship in the MENA region.”