Booz & Company’s Ideation Center: Empowering Women Entrepreneurs in the Middle East
One of the greatest challenges in the Middle East and North Africa (MENA) is to bring more women into the workforce. The region has a large number of aspiring, young, and well-educated women who lack exposure to work. Over the next decade many of these women will start to participate in the economy, driving growth and prosperity as part of a global trend. In the Middle East there are around ninety million economically excluded women – women poised to become employees, producers, and entrepreneurs.
One of the most powerful drivers of economic inclusion is entrepreneurship. This is the driver that Middle East governments should focus on. The Middle East lacks women in business. Insufficient encouragement for young women is reinforcing this trend. Women own just 20% of Middle East companies. This compares to nearly 40% in Latin America and the Caribbean.
Underlying this fact is the lack of students’ exposure to entrepreneurship and their consequent failure to demonstrate much interest. According to a recent W & Company survey conducted to better understand students’ voices across the countries of the Gulf Cooperation Council, Qatari youth showed the least interest in entrepreneurship. Just 3% of Qatar’s high school and university students expressed any interest in going into business – compared to the regional average of 11%. There is also a striking imbalance between female and male students, in part because young women lack female role models to look up to. In Qatar, 62% of interest in entrepreneurship comes from male students, and just 38% from females.
“Businesswomen do not enjoy easy access to credit since they often lack the required collateral against which to secure loans.”
A lack of finance opportunities and the challenging overall business environment tend to make matters even more difficult for women entrepreneurs. Businesswomen do not enjoy easy access to credit since they often lack the required collateral against which to secure loans. This is in part due to unequal access to land and property. As a result, barely 10% of the funding for women entrepreneurs is provided by commercial banks and other formal sources.
Household Savings and Red Tape
Women are forced to seek funds from family and friends or use household monies or savings to cover new investments and to raise working capital. The few women who do try to run their own business are confronted with excessive red tape and must face steep fees to register their activities. Infrastructure costs are significant as well. Rents for business premises and offices are high, as are the costs for communication systems and other utilities.
Another disadvantage that businesswomen face is the lack of entrepreneurial training and support. There are few networks dedicated to supporting women entrepreneurs and almost no chances to obtain an advanced degree in business administration. Men take such support – colloquially known as the “old boys’ network” – often for granted.
For Qatar, bringing women into the workforce and ensuring they have access to the tools needed to become entrepreneurs, will advance the country toward sustainable economic growth – one of the core goals of the Qatar National Development Strategy 2011–2016.
Encouraging more women to become entrepreneurs has the positive effect of helping more women to participate in the workforce and of putting more women in higher level positions. Currently, women constitute about 25% of the total workforce in female-owned firms in the MENA region, with many at professional and managerial levels. This compares to a 22% female participation in male-owned firms where women mostly occupy low skills positions according to research conducted by the International Finance Corporation (IFC), the World Bank, and Booz & Company.
Qatar, which has taken steps to advance women in the workforce, can boost these efforts by focusing on five key areas:
- Introducing early entrepreneurship education into the school curriculum
- Developing an enabling regulatory environment
- Facilitating the availability of finance
- Providing access to business support services and mentoring
- Ensuring openings for collaboration and networking
Early entrepreneurship education is important because it instils an entrepreneurial culture among women. This starts in the middle or secondary school classroom and should encompass the fundamentals of entrepreneurship, business, and financial management. One system used by schools worldwide to teach entrepreneurship as a practical skill, rather than just theory, is supplied by the BizWorld Foundation. Students participate in workshops in which they run mock enterprises, allowing them to experience something akin to the business cycle.
An enabling regulatory environment is critical because it sends the message that entrepreneurs are welcome. This framework will require the government and stakeholders to establish an institutional body focused on women to collect data, formulate policy, and advocate it. Government should also define public procurement guidelines integrating women-run small and medium-size business into the supply chain.
Facilitating the availability of finance involves the government ensuring that female entrepreneurs have access to information about the types of financing being offered. The government should also support their eligibility which may require changes to family and labour laws in order to enable women access to credit. Governments should furthermore ensure that women become aware of other credit options such as those offered by equity investors, microfinance loan schemes, and state-sponsored programmes.
In terms of providing women with access to business support services and mentoring, governments can establish business incubators focused on supporting female entrepreneurs. Developed countries use this technique frequently. Incubators offer women the support they need to successfully run their businesses. This includes basics such as assistance with marketing initiatives, accounting, training, and regulatory compliance. Incubators can also provide female mentors and role models so that potential women entrepreneurs can acquire the necessary knowledge, expertise, and confidence to start their own businesses.
Structures and Networks
Finally, governments and other stakeholders need to come forward with structures for collaboration and networking opportunities for women. Local businesses and associations should be encouraged to offer entrepreneurship and management training. Business development centres and businesswomen’s associations can provide venues for networking opportunities. International women’s associations should also be encouraged to support and partner local initiatives, thereby creating regional networks of women entrepreneurs.
By providing support and services that aim to redress the current bias against women in business, Qatar can help more of its women to become entrepreneurs and thus take advantage of the multiple opportunities arising from the country’s robust economic growth and ambitious development goals.
About the Authors
Leila Hoteit – Principal at Booz & Company.
Mounira Jamjoom – Senior Research Specialist at the Ideation Center.
About the Ideation Center
The Ideation Center is Booz & Company’s leading think tank in the Middle East. Established in 2007, the Ideation Center provides thought leadership through insightful research, analysis, and dialogue that is true to the Middle East’s dynamics. The Ideation Center brings these ideas to the forefront through their publications, website, and forums.