This article first appeared in May’s print edition of Business Monthly.
With women representing nearly half of the region’s population, according to the World Bank, MENA nations have a valuable human capital resource that could foster economic growth. Yet, gender gaps in the financial sector are stark. “The region is home to the largest gender gap in the world, evidence of the urgent need to unlock the potential of women in order to promote widespread growth,” according to the Union for the Mediterranean (UfM), an inter-governmental organization.
Nasser Kamel, UfM secretary-general said less than 5% of businesses in MENA are led by women, far below the global average of 23% to 26%. The region’s female unemployment rate is 15.5%, compared to 6.7% for men.
The UfM estimates the lack of female economic participation in the MENA region results in an annual economic cost of $575 billion. Accordingly, MENA countries should work to close those gender gaps, starting with the financial sector. “It would be foolish to throw away the talents of half the population,” noted Paul Donovan, chief economist at UBS Global Wealth Management in September.
Unlocking the full potential of the female economy is vital for achieving higher levels of GDP growth. The World Economic Forum in June 2023 stated that “Increased female participation in the workforce could add $2.7 trillion to the [MENA] region’s economy by 2025, so a growing trend of female entrepreneurship could be a game changer for job creation and the expansion of workforces.”
Perks of inclusion
Financial inclusion is vital when tackling the informal economy. Heifer International, a nonprofit organization, said, “Financial inclusion serves as a bridge to full-scale participation in the formal economy.”
Financial inclusion can foster entrepreneurship and support the growth of micro, small, and medium-sized enterprises (MSMEs). “Increasing access to finance for MSMEs and women-owned businesses can help to create jobs, boost economic growth, and reduce poverty,” Sérgio Pimenta, IFC vice president for Africa, said in October,
That could greatly benefit low and middle-income nations, like Egypt. In August, Anthon Garcia, a journalist at Economy Middle East, reported, “Access to financial services lifts people out of poverty by providing them with opportunities to save, access credit, and build assets.” This, in turn, helps them invest in education, healthcare, and businesses.
“A well-functioning and inclusive financial system promotes stability by reducing reliance on informal and unregulated financial channels,” Garcia noted. “This would allow people to effectively manage financial risks, build resilience, and withstand economic shocks.”
Untapped wealth
On the sidelines of the International Women’s Day regional conference in March which UfM and the Union of Arab Banks (UAB) organized, Kamel estimated the lack of participation by women in the financial sector reduces MENA GDP as much as 14%, or about $600 billion.
Gender gaps also exist in terms of pay and access to jobs. NBS, a human resources management company said in a blog post published in May 2023 on Linkedin, that women in the MENA region typically are employed informally or in low-paying sectors and “earn 23% less than men.”
Women entrepreneurs also face challenges in scaling up their businesses. NBS noted that “only 7% of the women in the MENA region have access to financial services.”
A 2022 research report by Wamda and TiE Dubai found that 66% of women who start businesses in MENA say investors exhibit less interest in funding their startups. “Female startups received less than $50 million in investments during the first nine months of 2022, constituting approximately 2% of total startup investment in the region,” the report said.
MENA nations need to establish empowering environments for women entrepreneurs. “Mediterranean women entrepreneurs have an even more pivotal involvement towards economic and social development but they need better opportunities and better access to financing to help ensure a more equitable, sustainable role in business development in the region,” said Ahmed El Wakil, president of the Association of the Mediterranean Chambers of Commerce and Industry. “We need to promote potential mechanisms to bring together investors, regulators, and financial institutions to accelerate lending to women-led firms.”
The goal, he said, is to foster collective action and “challenge the regional and international financial community to commit to tracking and growing financing to women”.
Jeni Mundy, global senior vice president of Visa told AmCham members in February that “women-led small businesses need extra help.” She added that barriers to starting a small business are declining. Mundy cited a study by She’s Next, a Visa-supported initiative to digitize women-owned startups, that found 95% of applicants were interested in learning more about digital payments.
Visa cooperated with Commercial International Bank to launch the She’s Next program in 2023 to support the digitalization of women-owned businesses in Egypt. Visa’s statement said the program aims to overcome “unequal funding distribution, limited access to capital, weak digital infrastructure and lack of mentorship” for Egyptian women entrepreneurs.
Conforming to this, one way to accelerate women’s inclusion in the financial sector is through fintech services. Leveraging fintech makes financial services more accessible, affordable, and user-friendly, according to Abdul Qavi, managing editor at Rasmal, a digital media agency.
A 2023 report from First Abu Dhabi Bank and WealthBriefing attributes the rise of women’s wealth across the region to digital channels, which “empower women with greater access to information, diverse cultural perspectives and participation opportunities within the workforce and financial systems.”
Egypt’s inclusion
In Egypt, the Financial Inclusion Datahub indicators showed a significant increase in the percentage of citizens aged 16 years and above who have access to bank accounts, Egypt Post saving tools, mobile wallets, and pre-paid cards. In December, that percentage reached 70.7%, a 174% growth from 2016 to 2023.
According to the Central Bank (CBE), the indicators showed the number of women with access to formal financial services reached 20.3 million out of 32.3 million women at the end of 2023, with a growth rate of 244% compared to 2016. That signifies an inclusion rate of 62.7%.
Despite these positive numbers, Egypt ranked 134th out of 146 countries in the World Economic Forum’s 2023 Gender Gap Report.
The report said women comprise 19.7% of board members in Egypt, the lowest among 47 countries. According to the report, “the total early-stage entrepreneurial activity (TEA) rate is 31.3%,” less than half of that seen for men. Saad Sabrah, senior country head of IFC Egypt, also noted in the UfM and UAB’s regional conference that the finance gap for women-led MSMEs in Egypt is estimated to be $15 billion.
This year in Egypt has already been busy with initiatives that support women-owned businesses. Basil Rahmi, CEO of the Micro, Small, and Medium Enterprise Development Agency, a government body, announced the launch of the “Aziza” initiative in March to bolster women-owned MSMEs.
The initiative offers low-interest loans with relaxed terms and conditions to women seeking to enhance existing enterprises or start new ventures. The initiative also extends comprehensive support in terms of technical expertise, training, and marketing.
Also in March, the CBE initiated a six-month program called “Women for Women in Fintech” to provide intensive training and workshops highlighting the significance of fintech and guiding entrepreneurs in integrating solutions into their ventures.
CBE Deputy Governor Rami Aboulnaga said the initiative’s goal is to “equip women with the skills to use fintech applications and achieve the right matchmaking between startups and banks via embedded finance solutions.”
Maximizing participation
The key to increasing women’s access to finance and closing the existing gender gap in the region is to provide them with educational training and business opportunities. “There is a need for conversation, education, and systemic support for women in the MENA region to better engage in discussions around finance, investment, and entrepreneurship,” said Emma Wheeler, head of women’s wealth at UBS Global Wealth Management.
The UBS report showed that “Women in the MENA region were moderately experienced with financial information (53%) and investment information (42%), but less so regarding different investment forms.”
The report also showed interest among women in the Middle East in taking a more active role with finances, with 62% indicating they would like more information on how to invest, 55% on sustainable investing, and 39% on private markets.
Furthermore, lack of education about finances and investing was cited as an obstacle by 52% of those surveyed, and a lack of investment opportunities was cited by 56%,” the report noted.
In the Middle East, the Institute of Chartered Accountants in England and Wales (ICAEW) launched a mentorship initiative in March titled “Future Female Leaders Programme,” which hopes to develop the next generation of female finance leaders in the region.
“By offering a platform for seasoned female finance leaders to share their experiences and insights with emerging professionals, ICAEW is helping to create a supportive ecosystem where women can empower each other to thrive,” said Amanda Line, an ICAEW chartered accountant. “It’s through women supporting women in finance that we will move closer to bridging the gender gap within our industry.”
