How Women Entrepreneurs Are Driving Business in the Middle East
Reema Bint Bandar Al Saud is an
Arabian princess with an entrepreneurial streak. As president and
CEO of ALFA International and AL HAMA LLC, two leading luxury
retail corporations in her native Saudi Arabia, and cofounder of
Yibreen, a women's day spa in Riyadh, she is eager to defy the
misconception that Saudi women are unsophisticated consumers who
will buy any product put in front of them. Saudi women are not only
well-informed about their purchases, but they also seek out
entrepreneurial opportunities to serve the needs of other women,
she believes.
As if to prove that point, ALFA International owns the license for
Harvey Nicols Riyadh, the U.K.-based luxury lifestyle store's first
overseas location, which employs Saudi women to be its lead buyers.
Yibreen has gone beyond offering health and wellness services to
providing women a place to network since its opening in 1999.
Recently the spa hosted a fashion show where Saudi female designers
launched new clothing lines. "It is a misconception that women have
a long way to go," Al Saud notes. "Our plight is not that far
behind any other society in health and work."
Her passage from palace to marketplace is a metaphor for a broader
change: All over the Middle East, women are continuing to cross
boundaries, going from being heads of households to small business
owners to CEOs. While women entrepreneurs are a minority in most of
the world, their presence in the Middle East and North African
region (MENA) has been much lower in comparison to not only other
middle-income regions but also predominantly Muslim countries such
as Indonesia and Malaysia. As the cost of living steadily rises in
the region, though, and the need emerges for job creation for a
growing labor force, women entrepreneurs are playing a role in
creating new employment opportunities.
Women such as Basmah Al Omair, executive director of the AlSayedah
Khadijah Bint Khawilid Businesswomen and Lobby Center have found an
ally dating back 1,500 years to push for reforms in the Kingdom in
support of female entrepreneurship. Named after the first wife of
Prophet Muhammad, Khadijah, a powerful international trader who was
pivotal in the expansion of Islam, the Center has worked with King
Abdullah and Saudi ministries. Housed in the Jeddah Chamber of
Commerce, it has pursued initiatives to change laws so that women
can have the right to work in mixed environments and serve as CEOs
and as head of boards. The Khadijah Center also aims to remove
restrictions that previously limited what business licenses women
could obtain.
Although women are making major strides as entrepreneurs, cultural
challenges remain in the MENA region. "Socializing on a business
front is difficult after hours. If two families are talking over
dinner, for instance, a woman likely won't be part of that
conversation," says Al Saud.
Lamia Boutaleb, who cofounded Capital Trust, a Casablanca-based
investment bank, believes these barriers can be overcome. "In
investment banking, information is everything," she says. While it
may not be culturally acceptable for men and women to sit together
in social gatherings, they still have opportunities to network.
Boutaleb schedules appointments with her male counterparts in the
industry during working hours and has found this approach to be
effective.
Egyptian entrepreneur Shereen Allam founded her second business,
EcoTek - a printer cartridge recycling company - 10 years ago. She
serves as president of the Association of Women's Total Advancement
and Development, a network hub for businesswomen in the MENA
region, and notes, "As long as women have education, they cannot be
marginalized." Allam tells the story of a woman she recently met
who attended an international business course. The woman wears a
nikab - a full-face cover - and manufactures goods at home. "She
has hired many women and has a fantastic export business." While
this way of doing business may not be what Europeans or Americans
perceive to be totally free, says Allam, it is still possible to do
business in this way.
More than 95% of enterprises in the MENA region are family-run, and
it is more socially acceptable for women to run businesses they
have inherited. While many family enterprises are operated by
women, Allam notes that this does not make the hurdles any easier
for women to overcome. She recalls meeting a woman who inherited 13
medical centers from her father. During board meetings, all the men
turned their chairs away from her because they did not want to
accept her as their leader. Still, she refused to let herself to be
intimidated by their behavior. "She said, 'I'm sorry, but you are
not going to get anyone else except me.'"
Al Saud points out that in her experience, rather than turning
their backs, sometimes people do not disclose full information.
When doing business for the family firms she heads, the Princess
says she does not personally experience the same sort of treatment
because everyone knows that her male cousins and uncles are backing
her.
Legal Barriers
While Allam acknowledges that starting a business in Egypt is
easier than it was 20 years ago, women entrepreneurs can still
inadvertently fall into traps of unknowingly breaking the law. For
example, while working with a lawyer and an accountant to launch a
clothing business, she learned half way through the season that she
was breaching the law by having the "Made in Egypt" tag written in
English instead of Arabic. "Even today, you never know what law you
could break by mistake, and you can immediately get into a lawsuit
without even receiving a warning. It is one of the major hindrances
for anyone that wants to get into a business. It is a scary thing,"
she says.
Other issues that confront entrepreneurs across the MENA region are
financing, learning to better manage cash flows and obtaining
access to information. Allam says Oman and the United Arab Emirates
are good examples of governments helping to create a one-stop-shop
for entrepreneurs to collect data.
In Qatar, Aysha AlMudehki and two other women are helping develop
the Roudha Center in partnership with universities and
organizations to do just that. "We realized that there was a huge
need to support women who wanted to launch a business," she says.
The Center hopes to guide women through the process of developing
business and marketing plans as well as obtaining financing.
Although Her Highness Sheikha Moza, wife of the emir of Qatar, has
been encouraging women to cross boundaries and work, entrepreneur
Mona Fadel, who helps bring international fashion labels to the
region, says that many people do not want to become entrepreneurs,
preferring the safety of employment. "They would rather just go
work for the government sector and not deal with the challenges of
entrepreneurship," she says.
With state jobs becoming more competitive and harder to obtain,
Middle Eastern governments are pushing citizens to go into
business. Fadel notes that they could offer greater support for
entrepreneurs so they can better understand what it means to have
their own business. "What about those who do not have connections?"
she asks. "If you have an idea, there needs to be a specific place
within the government that can help you carry it out."
Funding Challenges
In Saudi Arabia, women hold more than $13 billion in local bank
accounts that could potentially be invested in the local economy.
More needs to be done across the region, though, to fund new
startups so that women do not have to rely just on funding from
their families. While Saudi Arabia has various funds to help small
businesses, communication about the opportunities that are
available needs to improve, according to Al Saud. "A community or
information center in the Chamber of Commerce or information online
can help you find support," she says.
Some of the challenges her firms face are labor issues. For
example, bringing in fitness and beauty staff from Europe and South
Africa is possible only because she has access to a group of
financers through family contacts. Despite that, the visa process
for employees, even for someone with strong connections in
government, is long, bureaucratic and could affect business
opportunities. "At the moment, the focus is on Saudization and big
business that can support the training of staff," she says. "It is
good if you are a Cisco or an IBM that has infrastructure to
support this, but for small businesses, it is hard to balance out
Saudization and not fall back on the services you are trying to
provide customers."
During the next five years, many foresee several possible changes
and challenges. For example, in Saudi Arabia, many women find
driving to be an issue of finance rather than mobility. Half a
woman's salary can go towards a second car and driver, and it has
to be economically viable for her to work. It is not simply
changing a law but also infrastructure issues such as hiring women
to drive and staff ambulances as well as be trained as policewomen
to facilitate Saudi women on the road. Learning to network and
promote their businesses is another critical issue for women
business owners. Allam recently was in Jordan participating in a
session with other female entrepreneurs on public speaking
training.
"Even those who have owned businesses for 20 years did not know how
to sell their ideas in order to get investment and grow," she says.
With just a small amount of training, she saw a major change in
confidence and hopes more emphasis will be placed on teaching women
to form actual business networks. "There are female entrepreneurs
who have been friends with each other for years but may never talk
about business problems," states Allam, who believes business
support networks are vital for any entrepreneur.
Mauro Guillen, director of the Joseph H. Lauder Institute for
Management and professor at Wharton says that governments must
support women in rural areas where illiteracy is still high. The
Jeddah-based business group Abdul Latif Jameel has recently
partnered with the Grameen Bank - founded by microfinance pioneer
Muhammad Yunus - to create The Grameen-Jameel Pan-Arab Microfinance
Limited. They hope to support low-income and rural women and have a
target of providing one million loans to clients across the MENA
region by 2011. There are 100 microfinance institutions reaching
some 3.5 million borrowers with an outstanding loan portfolio of
$1.3 billion. Experts estimate that $4 billion is needed to meet
demand for the entire region.
With Abu Dhabi alone averaging daily revenues of $800 million from
oil, Wharton management professor Raphael (Raffi) Amit believes
that many Gulf countries could be more proactive in supporting all
entrepreneurs, both male and female. He says Singapore might be a
good model to follow since the government there has been supporting
entrepreneurs through providing startup grants of $50,000 to
$100,000.
Within the next five years, Al Saud hopes that funds will not only
go towards good business plans but also the development of angel
investor groups with strict structure support programs. Once these
programs take off, she suggests, gender will not be an issue in
determining who gets funding.