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The Environment for Female Entrepreneurship in the MENA Region

Women account for nearly half of the human capital in the MENA region, but legal barriers prohibit them from being active participants in the economy.

Article by Samia Kakar December 12, 2018 //   4 minute read

The Middle East and North Africa (MENA) region faces the challenge of creating jobs for an increasingly educated female workforce and moving the economy toward knowledge driven sectors. While over half of women in the United States hold jobs, less than a quarter in MENA countries are active in the labor force. And the female youth unemployment rate is the highest in the world at 41 percent.   

Women account for nearly half of the region’s human capital. The International Monetary Fund estimates that from 2000 to 2011, $1 trillion in cumulative output could have been realized across MENA economies had the gender gap been narrowed. A McKinsey report indicates an additional $600 billion could be added to global GDP by 2025 if the gap is closed. Research also indicates economically productive women reinvest income into the health, nutrition, and education of the next generation— creating a multiplier effect where strong and resilient families grow into more stable and prosperous societies.

However, for women to be equal partners in the economy they first need to be equal members in society. Currently, they face unbalanced access to employment opportunities, entrepreneurial activity, courts, and credit and asset ownership.

Some MENA countries practice male guardianship over women in the family. Meaning, females are required to get permission from male family members to work or travel. Under family, criminal, and nationality law, women have the civic status of a ‘legal minor’— a woman’s interactions with the state and society are determined and mediated through her male relatives. And in court, cases such as payment disputes commonly result in favor of the male plaintiff on the basis that men are responsible for income.

Although the social, legal, and business environment in MENA confines women’s economic choices, trailblazers are breaking barriers and working tirelessly to change the landscape.

For example, George W. Bush Institute WE Lead scholar Riham Adel is the founder and CEO of Job Nile, a specialized recruitment and Human Resources (HR) consultancy firm based in Egypt. Adel’s firm offers recruitment, HR consultancy, training, and development services to organizations in the region. Similarly, WE Lead scholar Homa Usmany is the executive director of the nonprofit Zardozi, and works to support rural Afghan women through business-oriented programs by engaging them in local markets.

But these businesses were not easily created. While access to capital through external investors has improved, it is difficult for women to get financial support from local banks and finance institutions.

Businesses primarily seek financial support through debt financing which requires collateral. Traditional property arrangements in MENA countries impact a woman’s ability to provide the collateral for these much-required loans. Furthermore, to ensure a woman’s activities do not interfere with the wishes of her family, some banks require her husband cosign the loan even if he lacks credit or is not involved in the business. Should financing be provided, females are crippled with high interest rates as they have no track record of owning other businesses.  

There is a strong need for policies that expand opportunities for women, invest in productive sectors, and promote entrepreneurship across the board. Eliminating barriers will help entrepreneurs and businesswomen connect to local and international value chains that bolster growth and inclusion.

An increase in female entrepreneurship will ensure stability and global economic gains. If governments around the world take firm steps to enact policy decisions that strengthen female participation in the economies of the MENA region, they stand to benefit greatly.

Samia Kakar is Niemi Fellow at the George W. Bush Institute.