The Middle East and North Africa region faces well-known challenges. The region is home to several fragile or conflict-affected states, and even the stabler countries are characterised by an overbearing public sector that inhibits economic growth.
The evidence shows that to confront these challenges it is necessary to give ample support to the private sector, so it can remove a hefty burden from the shoulders of governments, create jobs and grow the economy.
But consider a situation in which about half the population was consistently denied a fair opportunity to contribute to that growth.
That situation is a global reality, but it is particularly evident in emerging markets such as Mena, where women’s participation in the labour force is the lowest in the world at 26 per cent, half the average global rate.
What's more, women who do own or run their own company frequently struggle to get the finance they need to expand their business and create jobs. A 2013 survey by International Finance Corporation titled Vital Voices found that 64 per cent of women who own small and medium enterprise (SMEs) in Mena have tried to get credit — and that most of them have encountered difficulties. In fact most female business owners depend on private sources of funding, like friends and family.
The survey let female business owners rank the challenges in obtaining credit; 67 per cent cited high interest rates as the main problem; 36 per cent did not have appropriate collateral; 31 per cent were put off by a confusing and complicated process; 17 per cent were not considered experienced enough; and 16 per cent believed they were not taken seriously because of their gender.
Those challenges do not pertain to women only. Access to finance is a challenge across the region. However, the fact that these women do have access to financial institutions, but are not getting their hands on the money they need, is a significant and profitable opportunity of which banks seem unaware. Financial institutions should be made to understand that expanding lending services to female entrepreneurs is profitable for all concerned.
Further up the chain, female representation at the senior management level is even more limited in the region, and research suggests that many women struggle to get plugged in to the relevant business networks to succeed. Men and women are subject to a different set of rules in every Mena economy, and fewer than 20 per cent of companies employ a high-level female manager. At large companies this figure is even bleaker, with only about 3 per cent female representation on boards (compared to around 12 per cent in Europe).
Even before women enter the world of work, they need to develop skills to find jobs and succeed in business. Women in Mena are now more likely than men to attend university, but there is still a skills gap that means employers are not satisfied with graduate applicants. According to World Bank gender statistics, the region’s unemployment rate among women with tertiary education hovers at 40 per cent, higher than that of the Latin America and the Caribbean region and the Eastern Europe and Central Asia region. In Egypt, for instance, nearly 30 per cent of female university graduates in Egypt are unemployed; that is nearly three times the rate for educated Egyptian men.
The Vital Voices survey showed that women know what they are missing. They want greater access to information and training. They want to learn about general business management skills, the use of financial products and how to sell to multinational corporations.
To give the economy all the help it can get, women need support to set up, run and grow their own businesses.
This support is available from three main sources.
Firstly, international financial institutions can provide targeted loans to local lenders and microfinance institutions. They can also provide expertise in best practice. This will provide a pool of capital as well as a rich reservoir of experience for both the lender and the beneficiary.
Secondly, support must come from banks and microfinance lenders. They need to be stronger in areas like adapting to the needs of borrowers, especially women. Strategies can be put in place to help women with little experience to build their knowledge, understand the ins and outs of borrowing, and develop healthy credit histories based on realistic collateral.
Finally, national governments need to play a big role in supporting women in business. It is only through the willingness of the public sector that the private sector can put in place the right incentives for women to play a more active role. This means creating a financial and regulatory infrastructure that is transparent, easy to access and filled with opportunities for women to pursue their entrepreneurial spirit.
A lot is being done for women in business and much has been achieved. One surprising success story in the region is that Mena has more internet-based female entrepreneurs than anywhere else in the world. According to some recent reports, only 10 per cent of all internet entrepreneurs are women, while in Mena it is estimated at 23 per cent and in the Arabian Gulf states at 35 per cent. But we need to do more to help women achieve a level playing field, avoid complacency and give the economy all the help it needs.
Mouayed Makhlouf is director for the Middle East and North Africa at International Finance Corporation (IFC), a member of the World Bank Group
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