by Diala Mahfouz & Youmna Cham

Despite the significant increase in women’s educational attainment in the Middle East and North Africa (MENA) region, the female labour force participation remains the world’s lowest. The high female unemployment level has resulted in bleak development outcomes leading to more poverty and income inequality, and less growth. Social and legal barriers holding back female representation in MENA workforces are costing the region a staggering $575 billion a year.

Although many countries in the region have directed efforts towards women’s economic empowerment, female entrepreneurship remains an untapped source of inclusive growth, employment generation, and innovation in a region that still suffers from the largest gender gap in the world when it comes to women establishing and owning businesses, estimated at over 40 percent, according to the Global Entrepreneurship Monitor (GEM).

Today, there is a growing awareness in the MENA that entrepreneurship is key to empowering women and accelerating gender equality, while reducing poverty and building more stable and resilient societies. Governments across the region have started to acknowledge the fact that advancing female entrepreneurship helps drive knowledge, increase competitiveness, and develop communities, ultimately leading to sustainable and inclusive economic growth. As such, many of the Arab countries have recently launched unprecedented initiatives and strategies to promote women’s active participation in the formal labour market and nurture women entrepreneurial development. 

Set free to establish their own businesses without the permission of their husbands or male guardians, Saudi women are nowadays active more than ever, accounting for nearly 40 percent of the total number of entrepreneurs in the Kingdom. The United Arab Emirates has similarly implemented locally-driven reforms that empowered women in the world of work; with women now permitted to be heads of households, to work at night and to enter any industries (including mining, for instance) – the country has become home to over 23,000 businesses run by Emirati women, with a worth of USD 45–50 Billion. The government of Jordan has followed the trend, developing gender-friendly policies for women to access credits, register a company, and sign contracts in exactly the same way as men.

Yet, the overall gender gap remains paradoxically unchanged in the economic sphere, and women in the region still hold the lowest rates of Total Entrepreneurial Activity (TEA) at just 4% of the overall population. When starting and growing a business venture, Arab women continue to face a series of overwhelming constraints. These predominantly include a gender-discriminatory environment shaped by patriarchal structures that have long challenged girls and women’s access to economic opportunities and networks, undermining efforts to increase their participation in the formal labour market, let alone entrepreneurship.

Every day, Arab women bear the brunt of outdated gender stereotypes that continue to label men as more entrepreneurial, while placing the former in subordinate positions. Constrained to fulfilling their roles as mothers, wives and (unpaid) caregivers, women struggle to reconcile family expectations with employment, with this reported to be the main reason keeping them outside the labour force. That being said, women tend to work as contributing family members much more than men do, and are obviously less likely to be entrepreneurs. Even when self-employed, they mostly happen to run smaller-sized businesses, and they largely do so out of necessity and not entrepreneurial endeavours.

Just like discriminatory gender norms, the lack of knowledge, skills and networks to start a business act as powerful barriers to women’s entrepreneurship in the MENA. Indeed, only a few female entrepreneurs have ever accessed entrepreneurial skill training programmes in the region. Moreover, the potential that information and communication technology (ICT) has in facilitating the upgrade of women’s skills and knowledge, stimulating new market developments, and driving progress remains largely unexploited, especially in rural areas. Add to this the difficulties women encounter in joining established business networks, a key element in fostering the development and growth of companies.

Similarly, the restricted access of Arab women to financial resources and their low levels of integration into the formal banking systems keep pulling them back from starting and sustaining a business, thereby obstructing the productivity of their prospective investments, with the MENA region recording the second highest female microenterprise finance gaps in the world, estimated at 29% (USD 16 Billion). Gender-biased financial institutions generally perceiving women as more ‘risky clients’, unfavourable lending practices that sometimes require women to involve their husbands as cosigners, unreasonable interest rates, short repayment methods and inadequate collateral requirements are some of the stubborn challenges facing women entrepreneurs when trying to secure a loan. Owing to their marginal status in assets ownership and their lack of a credit history, the only formal loan product women have access to in the MENA is microcredit, which is insufficient to sustain a business and drive job creation, and definitely not enough to challenge the prevailing gender hierarchies and structural inequalities.

As a result, Arab female entrepreneurs remain concentrated in informal and low-productivity sectors where avenues for advancement are limited. As such, they are unable to grow their micro and small enterprises and contribute more fully to their economies. Moreover, most of the political commitments to support women’s entrepreneurship activities have so far failed to break through the deep-seated barriers to female economic empowerment, or to advocate for an adequate legal framework that takes into consideration the root causes of their business constraints and aspirations. In this context, public policies and reforms developed together with the private sector and the civil society have a leading role to play in building entrepreneurial capacity for women. This calls for genuine efforts into designing and implementing evidence-based, gender-responsive and intersectional policies and programmes, taking every opportunity to adequately involve them – mothers, wives, businesswomen, and above all women – in policy making, treating them as equals. The current inadequate responses are akin to putting a Band-Aid on stab wounds.