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Reasons why women are running more and more businesses in Gulf Arab states
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Reasons why women are running more and more businesses in Gulf Arab states

Reasons why women are running more and more businesses in Gulf Arab states
Money
It’s been a matter of some concern—and debate—that there haven’t been enough women entrepreneurs in the Gulf Arab states.

Fortunately, there’s some heartening news: there are more women running businesses now than ever before.

According to a report from Al Masah Capital titled “GCC Women—Entrepreneurs in a New Economy,” women entrepreneurs in the region increased from 4 per cent to 10 per cent in the period 2011–2014, significantly narrowing the gender gap in this area.

SMEs LED BY WOMEN IN THE GCC MANAGE ASSETS WORTH $385 BILLION AND ARE AT THE FOREFRONT OF THE ECONOMIC TRANSFORMATION OF THE REGION

How did this come about?

According to the report, the shift has been spearheaded by the government policies in the GCC that recognize and encourage the growth and development of female entrepreneurship.

The report also says that women are backed by increased literacy and educational opportunities, slowly changing cultural attitudes and government policies aimed at reducing dependence on foreign labour.

In addition, the availability of diverse employment opportunities, technological advances and the democratization of information are inspiring several women to start their own businesses.

Group of multi ethnic business people at work. Photo: Shutterstock/ Zurijeta

HOWEVER, SOME PRACTICAL OBSTACLES REMAIN. ACCESS TO FUNDING REMAINS THE PRIMARY OBSTACLE FOR ENTREPRENEURS.

For example, SME lending in the GCC is very low—about 4 per cent of total bank lending.

It is significantly lower in countries such as Saudi Arabia, Kuwait and Oman at 2 per cent, while in Bahrain and Qatar it is 1 per cent and 0.5 per cent respectively.

As per the World Bank’s Financial Inclusion Index, which measures the participation of women and men in formal financial institutions, a significant gender gap exists across all MENA countries, though GCC is slightly better off.

With limited access to formal finance, women often resort to support their businesses through personal sources such as savings, friends and family and reinvesting business earnings.

There is also a need for increased formal entrepreneurial education and training that will help women to successfully own and manage established businesses. It is seen that the UAE is a leader in the MENA region in terms of women’s education and their representation in workforce.

Female Total Entrepreneurial Activity (TEA)

Female Total Entrepreneurial Activity (TEA)

Here are the key takeaways from the report:

  • Regionally, the Arab states have the lowest participation in women’s labour force.
  • Only 24 per cent of businesses in the region are owned by women.
  • GCC women are taking leadership roles in family businesses, which contribute as much as 80 per cent of the GCC’s non-oil GDP.
  • Women are fast approaching gender equality in entrepreneurial intentions in the GCC.
  • US continue to lead in the global entrepreneurship index with the GCC countries gaining momentum.
  • Nearly 50 per cent of the world’s entrepreneurs are between the age group of 25 and 44.
  • Entrepreneurial activity by women has increased by 7 per cent across 61 countries since 2012.
  • Women form 40 per cent of the global labour force and own and manage about 34 per cent of businesses worldwide.
  • Women now control $39.6 trillion or about 30 per cent of the world’s private wealth.
  • In 2014, 15 per cent of all women-run companies succeeded in raising capital compared to 22 per cent by male-run firms.