Women entrepreneurs in the Middle East and North Africa (Mena) are defying the impression they are concentrated in certain sectors, says a new World Bank study. The investment climate in the region is gender neutral, with fewer gender-based barriers in the business environment than presumed.
There is very little difference between male and female-owned firms in the region. A major finding of the study is female-owned firms in the region are as well-established, productive, technologically savvy and connected to global markets as male-owned firms.
“The commonly held perception is that women-owned businesses are small and informal, that they’re less sophisticated, and that they’re huddled in certain sectors,” said Nadereh Chamlou, lead author of The Environment for Women’s Entrepreneurship in the Middle East and North Africa. “What we are finding defies the perceptions.”
One difference is the share of firms employing more than 100 employees is on average higher among female-owned firms (31 per cent) than male-owned firms (24 per cent). And skilled and professional workers constitute a higher percentage of the work force of female-owned firms, the study adds.
Not only do female-owned firms hire more women than male-owned firms (with the exception of Lebanon and Saudi Arabia), they also employ a higher share of women at the professional and managerial levels. Women-owned firms in Egypt, Jordan, Saudi Arabia, and the West Bank and Gaza increased their workforce on average by more workers than did their male counterparts during two observation periods in the study.
Despite these firms’ similar characteristics and performance, the study also notes women’s entrepreneurship in the region is not reaching its potential, despite an investment climate that is “much less gendered than suspected”. Only 13 per cent of 4,832 firms surveyed in eight countries were owned by women, says the study.
“Women entrepreneurs are a minority everywhere,” said Chamlou, Senior Advisor at the World Bank.
“But their share in the Middle East and North Africa is lower than in other middle-income regions of East Asia, Latin America and the Caribbean, and Europe and Central Asia.”
The study notes: “More striking is all firms in the Middle East and North Africa perceive the business environment as more cumbersome than do firms in other middle-income regions, regardless of the owner’s gender.”
The study used data from the World Bank’s Enterprise Surveys of thousands of business establishments throughout the world.
The surveys ask firms to assess their country’s investment climate along 18 categories, rating restraints as minor, moderate, major, or severely binding. Participants in the Middle East and North Africa region included some 5,169 firms in Egypt, Jordan, Lebanon, Morocco, Saudi Arabia, Syria, Gaza and the West Bank, and Yemen. One category – access to finance – is often presumed as a barrier to female entrepreneurs, but was not affected by gender in Mena countries except for Yemen, according to the study.
The cost of finance was a high barrier for both men and women.
Corruption was also seen as a high barrier for all. The study found some differences linked to the gender of the business owner, after controlling for size, sector, location, and age. In Egypt, for instance, women-owned firms reported more power cuts than their male counterparts, and took, on average, eight months longer to resolve disputes over overdue payments. Women-owned firms in Lebanon and Saudi Arabia viewed transportation as a bigger barrier. Yemen and Lebanon had the most gendered business environments.
“Not only do female-owned firms hire more women than male-owned firms [with the exception of Lebanon and Saudi Arabia], they also employ a higher share of female workers at the professional and managerial levels.”
High barriers in the business environment in general act as a greater disincentive to women than to men, according to the World Bank Group’s Doing Business Report of 2008. But, differential treatment under laws outside the business legislation, as well as social norms and negative attitudes toward working women dampen female entrepreneurship even further, says the report. High capital requirements and lengthy and costly procedures for starting and exiting a business, while borne by all entrepreneurs in Mena, may pose greater barriers to women because they require “greater flexibility to scale down or abandon business aspirations to meet family needs”. According to Doing Business data, getting out of a business takes about 3.5 years and generally results in an entrepreneur retaining only about 30 per cent of their start-up capital.
“If you have these difficult barriers to enter and exit, you might say, Should I really do this or should I just work informally?” says Chamlou.
“Women still do not have equal access to economic opportunity,” says Mustapha K Nabli, World Bank Chief Economist for the Mena region. “Just the same way as women still face more barriers inside and outside the labour market despite educational gains, women face additional barriers in the business environment despite their capabilities and business acumen.”
Daniela Gressani, World Bank Vice-President for the Middle East and North Africa Region, said: “It is clear women play a far more important role than previously thought. But there are still too few of them.
More female entrepreneurs are needed in Mena to help diversify the economy and create 54 million jobs for an estimated 174 million-strong work force by 2030.
31% of women-owned businesses in the region employ more than 100 people, compared to 24 per cent of male-owned firms having that level of staffing, the World Bank study has revealed.
13% of the firms surveyed by the bank have a woman as the principal owner.
5,169 companies reponded to the region-wide survey this year.