Why the Middle East needs more female entrepreneurs

The majority of Middle Eastern and North African Countries (MENA) have a problem with female unemployment. While male unemployment has been falling in countries such as Bahrain, Iran, Jordan and Tunisia, female unemployment is growing. The country with the largest gap is Egypt, where female unemployment is four times that of male.

For a region that is cutting unemployment rates faster than any other developing region, this may at first seem surprising. Equally, the Middle East has made a huge amount of progress enrolling more girls into primary and secondary schools as well as universities. It would seem that as more jobs are on offer overall, and more women are educated and therefore employable, female unemployment should be falling.

However, rising female unemployment can simply be explained with rising female workforce participation: more and more women want to work, but the economy is struggling to adapt to provide suitable jobs. Although there has been a surge in job creation, the type of jobs on offer are centered around construction and other manual labour, areas that are often inaccessible for women.

This is why promoting female entrepreneurship is key. Not only do more start-ups equate to more jobs for everyone, firms run and owned by women are more likely to employ other educated women then firms run by men. While there is an imbalance between men and women creating start-ups around the world, this issue is particularly acute in the Middle East and North Africa. According to The Female Entrepreneurship Index, MENA countries rank in the bottom 20%, so essentially have the worst environment for women starting up companies.

If the Middle East pushes for more companies run by women, then creating the estimated 54 million extra jobs the region will have to in order to keep up with the ever-increasing population can be realised more easily. Families would benefit from an extra source of income, and educated women would no longer face a life of dependence and unemployment ahead of them.

It is also possible that by adding more female start-ups to the economy, pre-existing companies will up their game. The Global Entrepreneurship Monitor’s Report on Women and Entrepreneurship found that “the distribution of women entrepreneurs across broad industrial sectors … is comparable to those of men”, suggesting women and men basically create the same kinds of companies and compete alongside each other.

This competition boosts productivity: big gaps between countries in terms of the number of female start-ups can explain big gaps between the same countries’ productivities. A Sheffield study found that the Middle East suffers a total income loss of 27% (higher than any other region) as a result of high levels of exclusion of women from working.

The social benefits of improving women’s statuses in the workforce are not to be underestimated either. Women being poorly represented in business feeds through to them being poorly represented in politics, as money often equals influence. Women having their own source of income – independent from any relatives – is important domestically too in enabling them to take their own risks to maximise their personal happiness. If we begin to conceptualise a world in which women are just as likely to hold the highest paid, most senior jobs as men, then perhaps we will place more significance on girls’ educations in countries where it remains undervalued.

It is evident that harnessing more female entrepreneurship makes sense for everyone; it would make the population richer, more productive and would reduce gender disparities. The question is what can we do to help women in the Middle East start up companies?

One solution would be to reduce bureaucracy and corruption. According to the World Bank, simplifying businesses processes is likely to create more first-time female owners at a 33% faster rate than men. The countries with the best environments for female entrepreneurs (The U.S, Australia, the U.K, France, Denmark) all rank highly on transparency indexes too.

Secondly, women are still considered ‘legal minors’ in certain Middle Eastern countries, so are forced to, for example, ask for a man’s permission to travel. Often only men can receive tax and employment-related benefits intended for families.

The final, biggest and most uncomfortable reason why so few women are starting up businesses is for social reasons. It’s important to distinguish between the differing challenges women face in Middle Eastern countries, as life as a secular Jewish woman in Israel is very different to life as domestic worker in Saudi Arabia. There isn’t an obvious solution to this, as there is little that the governments or the markets can do to change a mindset that often does not encourage women to work.

But perhaps the first step is for more women to recognise their own potential as entrepreneurs. Helping women become entrepreneurs and employees doesn’t improve the lives of women at the expense of men, it makes the whole economy more productive, more competitive and wealthier for everyone.