Archive for the ‘Arab Entrepreneurship’ Category

In a brief interview with Abu Dhabi Chamber of Commerce and Industry, Tahseen Consulting’s Wes Schwalje talks about Abu Dhabi’s race to become a global FinTech hub. This race is not just about superlative bragging rights, though Abu Dhabi Global Market’s Reglab is the first FinTech regulatory sandbox and framework in the MENA region. The economic stakes are real and significant with FinTech having the potential to become a key pillar of the Arab World’s socio-economic development.

Abu Dhabi Chamber of Commerce and Industry: Why is Abu Dhabi so attractive to FinTech companies?

Schwalje: In 2016, the Financial Services Regulatory Authority published a consultation paper seeking industry views on a FinTech legislative framework. This consultation led to Abu Dhabi Global Market establishing the Arab World’s first FinTech regulatory regime and regulatory laboratory. The initiative follows in the footsteps of similar competing FinTech regulatory sandboxes in countries such as UK, Singapore, Hong Kong, and Australia which are all vying to become FinTech hubs. These cities are all providing a safe space for FinTech businesses to test innovative products, services, and business models without having to initially comply with more traditional legal and regulatory requirements for the financial services sector.

The more recent commitment Abu Dhabi has shown to embracing FinTech as well as its traditional role as a strong player in the regional financial services sector make it a very attractive base for more established financial institutions exploring Fintech as well as startups experimenting with innovative financial products or services. The embrace of FinTech in the UAE is an evolution of the initial vision to position the country and its constituent Emirates as a unified international financial services hub offering a full spectrum of financial services comparable to other leading global financial centers. Abu Dhabi provides the regulatory framework, safe space to innovate, strong government support, and commitment to a long-term vision that financial services companies look for when it comes to pushing the innovation frontier. Additionally, there are several regional factors which make Abu Dhabi attractive. Though estimates vary significantly, the unbanked population in the Arab World is estimated at upwards of 80%. Traditional commercial banks continue to dominate lending with weak service provision for small and medium sized businesses which make up more than 90% of most Arab economies. Estimated at $7 billion, e-commerce across the Arab World is booming with a youthful, technology embracing demographic which are first movers when it comes to embracing technological innovation.

Abu Dhabi Chamber of Commerce and Industry: How could FinTech help improve the Middle East and Abu Dhabi?

Schwalje: It is not clear at this time what the full range of possible use cases for FinTech will be in the region, but a few macro trends are emerging based on the startups in region and competitive pivots of more established financial services firms. The payments industry is becoming more competitive with FinTech players challenging traditional payment firms’ intermediary role by offering more direct, faster, and cheaper services. We are seeing significant innovation in mobile wallets, crypto-currencies, and block chain technology as well as mobile banking surging. Digital and mobile-based payments will likely replace traditional card-based payments and make some traditional payment channels like ATMs and point of sale technologies obsolete. Block chain-driven payment infrastructure, which Dubai is pioneering, have the potential to significantly reduce payment processing costs. Web-based insurance aggregators are challenging the dominance of more traditional market players. We will see the increased use of big data by financial institutions to more effectively serve SMEs and previously unbanked populations with tailored deposit and lending facilities. Online platforms have already caught on as an alternate funding platform for entrepreneurs seeking early-stage finance to counter the lack of risk capital and commercial loan options for startups and SMEs in the region. Right now we are at very interesting stage in the evolution of FinTech regionally in which there remains significant big addressable markets that are currently untapped.

Tahseen Consulting recently explored how the telecom industry in the Arab World is supporting technology-driven startups and small and medium sized businesses. We interviewed executives and innovation leaders at 55 telecom companies to get their perspectives on how companies are supporting technology entrepreneurship and what can be improved. Here are our results.

Telecom Industry Support for Technology Entrepreneurship in the Arab World

Abu Dhabi Chamber of Commerce and Industry (ADCCI) recently sat down with Wes Schwalje, COO of Tahseen Consulting, to discuss the role of small and medium sized enterprises (SMEs) in Abu Dhabi and the region’s development.

ADCCI: How critical are SMEs to the development of a sustainable economy?

Schwalje: SMEs are not just important to regional economies – across the region SMEs ARE the economy. So it is impossible to separate the industrial structure of the Arab World from a discussion about sustainability. Tahseen Consulting conducted a study in 2012 which showed that, if the European Union’s definition of what constitutes an SME is applied to the region, SMEs represent 92% of companies in the Arab region with micro firms <10 employees making up 25%, small firms of 10-49 employees making up 44%, and medium-sized firms with 50 – 250 employees making up 23% of firms. Across the region, these firms employ up to 65% of the workforce depending upon the country. In Abu Dhabi, 95% of the total enterprise population are SMEs which employ 24% of the workforce. While in Dubai, SMEs make up 95% of the enterprise population and employ 42% of the workforce. At the national level, SMEs constitute 94% of the total enterprise population and employ 86% of the workforce.

ADCCI: In particular, which Abu Dhabi sectors would benefit from more SME participation?

Schwalje: The Khalifa Fund estimates that 73% of SMEs in the UAE are in the trade and retail sector, 11% are in services, and 11% are in manufacturing. The Global Entrepreneurship Monitor shows that the UAE has one of the lowest rates of total entrepreneurship activity of innovation-driven economies, and only 2.3% of new ventures are medium-tech or high technology ventures. So technology is a key sector for potential SME growth. It is also important for Abu Dhabi to enhance enterprise creation in the priority sectors highlighted in the Economic Vision 2030. A few Emirates are introducing interesting programs in which large firms in priority economic sectors are working to upgrade SMEs to indigenize their supply chains. These initiatives, which were pioneered by the extractive sector, hold significant promise in building a strong SME base which can not only generate long-term benefits for larger parastatals in the UAE but also broaden the SME base from its traditional focus on trade and retail. Trade and retail cannot provide the high skill, high wage jobs that the UAE aspires to provide for its citizens and residents. Only knowledge-based industries have the potential to do this. However, SMEs in priority knowledge-based industries can’t rely on government contracts alone – they must also be innovative and globally competitive.

ADCCI: What could encourage more SMEs to set up shop in the capital?

Schwalje: Several of Tahseen Consulting’s clients have become interested in the ongoing experiment of Chile in implementing Startup Chile. This initiative has a mission to attract early stage, high-potential entrepreneurs to bootstrap their startups in Chile. It is similar to what the Dubai Future Accelerators initiative is trying to achieve but on a much larger scale. To date, Startup Chile has invested $40 million in accelerating 1,309 startups. These firms are now worth $1.3 billion, have a survival rate above 50%, and created 5,162 positions worldwide. In essence, Chile has achieved a 34x return on its investment while also positioning itself as a global startup and SME hub. We expect to see a lot more Startup Chile type initiatives in the GCC. So national acceleration programs and supply chain indigenization are key strategies that could help attract SMEs to Abu Dhabi and position it as a global startup hub. Such programs would be in addition to resolving the bureaucratic obstacles and barriers to operating an SME in the UAE. It is not enough to gauge progress relative to the quite methodologically flawed World Bank Doing Business Rankings. It is typically the processes which are not measured by such indices that cause SMEs headaches. One particular challenge that comes to mind is cost businesses in eth UAE pay for internet – at an average price per megabyte of download speed of approximately $18, the common entry-level fiber broadband packages offered in the UAE cost 5 times more than similar packages offered by the leading countries in the World Bank’s Ease of Doing Business Ranking.

ميريام نجم: كيف تطور دور المرأة الخليجية في مجال ريادة الأعمال في خلال السنوات العشر الماضية؟

وليد العرادي: ساهم التطور الكبير الذي شهدته المرأة منذ عام 2000 على الصعيد التعليمي والاجتماعي في زيادة مشاركة المرأة في الاقتصاد الخليجي مما نمى مهاراتها وزاد من قدرتها على الاستفادة من الفرص المتاحة في السوق المحلي حيث انضم ما يزيد على 1.5 مليون مرأة إلى سوق العمل بين عامي 2001 و 2010. وبينما اقتصرت مشاركة المرأة في الماضي على الوظائف الحكومية وريادة الأعمال المرتبطة بالمشاريع الصغيرة المنبثقة من المنزل، استطاعت المرأة تطويع المهارات المكتسبة من مشاركتها في سوق العمل وتسخير التقنيات المتوفرة مثل الشبكة المعلوماتية لتوسيع نطاق مشاركتها في ريادة الأعمال لتشمل المجالات المرتبطة باقتصاد المعرفة كالتعليم والصحة على سبيل المثال.

وتشير الإحصاءات إلى أن مشاركة المرأة في ريادة الأعمال يزيد من التنويع الاقتصادي ويساهم بشكل إيجابي على الأداء الاقتصادي للدول حيث أن المرأة هي أكثر ميلا لإعادة استثمار دخلها في المشاريع التي تفيد المجتمع بشكل عام والأطفال بشكل خاص. وأدركت الحكومات ومؤسسات المجتمع المدني النفع العام المنبثق عن زيادة نسبة النساء في ريادة الأعمال حيث ظهرت في الآونة الأخيرة عدة مبادرات وبرامج لتمكين رائدات الأعمال وتفعيل دورهن في القطاع الخاص والمساهمة في استدامة أعمالهن كبرنامج صوغة التابع لصندوق خليفة لتطوير المشاريع في الإمارات ومركز روضة لريادة الأعمال والابتكار في قطر وبرنامج سند في عمان بالإضافة إلى مجالس سيدات الأعمال في عدة مدن خليجية. وسعت هذه المبادرات لتقديم الاستشارات وخدمات الاحتضان في حاضنات الأعمال وتنظيم المؤتمرات والندوات لنشر الوعي حول ريادة الأعمال مما سيساهم في رفع عدد رائدات الأعمال في المستقبل.

ميريام نجم: هل من عوائق اقتصادية تقف في وجه تطوّر دور سيدات الأعمال الخليجيات؟

وليد العرادي: على الرغم من التطور الذي شهدته المرأة في الخليج في مجال ريادة الأعمال إلا أنها ما زالت تواجه عدة تحديات مثلها مثل الرجل. ولكن توجد هناك عقبات اقتصادية واجتماعية خاصة بالمرأة. فعلى سبيل المثال يصعب على المرأة الحصول على تمويل مصرفي في قطر بدون الحصول على ضمانات مالية من أحد أقاربها. وتشير دراسة أعدت مؤخرا في السعودية أن 82% من النساء يعتمدن على مدخراتهن الشخصية لتمويل الأعمال نظرا لصعوبة استقطاب رأس المال عبر شركات الاستثمار في الملكية الخاصة أو البنوك الاستثمارية. كما تشير الدراسة إلى الصعوبات التي تواجهها المرأة في تعاملاتها التجارية بدون الاعتماد على الأقارب من الذكور لأسباب اجتماعية. وفي الإمارات العربية المتحدة أظهرت الاستطلاعات أن غالبية رائدات الأعمال اللواتي قمن بإغلاق شركاتهن قمن بذلك لأسباب عائلية. ويشير ذلك إلى وجود بعض الضغوطات الاجتماعية على المرأة ما يمنعها في بعض الأحيان من الانخراط في مجال ريادة الأعمال.

ميريام نجم: ما هي نسبة السيدات في مجال ملكية المشروعات الصغيرة والمتوسطة في الإمارات وقطر؟

وليد العرادي: تمتلك النساء 13% من إجمالي الشركات الخاصة في العالم العربي. وتعد هذه النسبة منخفضة مقارنة بالمعدلات المسجلة في أنحاء أخرى من العالم مثل أوروبا وآسيا الوسطى والتي تصل نسبة امتلاك النساء للشركات الخاصة فيها إلى ضعف المعدلات المسجلة في العالم العربي. وقد لا تمثل هذه المعدلات النسب الحقيقية لانخراط المرأة بريادة الأعمال نظرا لاختلاف سبل جمع المعلومات من دولة لأخرى وصعوبة التقاط المعلومات المتعلقة بالمشروعات التي تبدأ من المنزل.

أما بالنسبة لدول مجلس التعاون وبالأخص دولتي قطر والإمارات العربية المتحدة، تشير إحصاءات غرفة تجارة قطر إلى أن 17% من رواد الأعمال في قطر هم من النساء بينما لا تتجاوز نسبة ريادة الأعمال بين النساء 8% في الإمارات حسب إحصاءات المرصد العالمي لريادة الأعمال. والجدير بالذكر أن نسبة ريادة الأعمال بين النساء تنخفض في الإمارات من 8% للمشاريع في مراحلها المبكرة إلى 0.9% للمشاريع القائمة بينما تنخفض هذه النسبة بين الرجال بنسبة أقل (من 12% إلى 7%) ما يشير إلى تدني فرص النجاح بين النساء في ريادة الأعمال. ولا يدل ذلك على تدني قدرة المرأة في إنشاء وإدارة الشركات وإنما يدل على كبر حجم التحديات التي تواجهها وقلة البرامج التي تعنى بمساعدتها على مواجهة تلك التحديات.

ميريام نجم: ما هي المجالات التي تلمع فيها رائدات الأعمال بشكل ملفت وهل ترى طفرة من الشركات الصغيرة في تلك المجالات؟

وليد العرادي: اقتصرت مشاركة رائدات الأعمال في الماضي على المشاريع الصغيرة المنبثقة من المنزل. وركزت تلك المشاريع على الحرفيات والصناعات التقليدية والطبخ. ولكننا لاحظنا في السنوات العشر الأخيرة زيادة ملموسة في المشاريع التي تطلقها النساء في قطاعات التعليم والصحة والثقافة والتجزئة والقطاع الخدمي بشتى مجالاته والريادة الاجتماعية. وتشير دراسة أعدتها مؤخرا منظمة التعاون والتنمية الاقتصادية على أن أنشطة الشركات التي ترأسها رائدات الأعمال تركز بالدرجة الأولى على خدمة الأشخاص بدلا من الكيانات التجارية.

ولا تزال رائدة الأعمال غائبة نوعا ما عن بعض المجالات كالعلوم والتكنولوجيا والهندسة والرياضيات التي تعرف ب STEM وهي ظاهرة ليست بغريبة حيث أن المرأة تمثل نسبة ضئيلة من الطلاب الجامعيين في هذه المجالات وكثير من النساء لا يسعين بالضرورة إلى العمل في المجالات ذات الصلة بعد التخرج.

The World Government Summit hosted annually in Dubai is emerging as a key forum to define the agenda for the next generation of governments. Tahseen Consulting is honored to have contributed its thoughts on how Arab governments can innovate to solve some of the most significant challenges facing the region.

In the following interview, Tahseen Consulting’s Chief operating Officer, Wes Schwalje, spoke with representatives from the World Government Summit regarding his thoughts on building entrepreneurial ecosystems in the UAE and Arab World.

World Government Summit: Why is entrepreneurship important for the UAE?

Schwalje: The UAE Vision 2021 establishes entrepreneurship as a vital enabler of the UAE’s transition to a knowledge-based, highly productive, and competitive economy. For this reason, entrepreneurship ecosystem development at the national and Emirate levels has been prioritized as a key economic development policy priority. The UAE views a vibrant entrepreneurship ecosystem as essential in order for startups and small and medium-sized enterprises (SMEs) to grow, thrive, and commercialize innovative ideas. To assist SMEs, UAE policymakers have primarily focused on cultivating a healthy risk-taking culture, easing access to finance, implementing better regulation, and enabling SMEs to reach international markets. As in other countries, the UAE is targeting small firms due to their potential to create jobs and grow into profitable companies that can serve as engines for employment and economic development. The UAE Ministry of Economy recently estimated that SMEs contribute more than 60% of the UAE’s GDP and provide 86% of all private sector employment. The immediate goal of the UAE’s entrepreneurship development policies is to establish assistance programs that support fledgling ventures in the early, vulnerable stages of their development so that they are able to grow and become engines that sustain growth for long-term development. Over the longer term, nurturing and supporting entrepreneurs is important to the UAE for creating jobs, encouraging nationals to join the private sector, economic diversification, boosting innovation, increasing productivity, and commercializing research.

World Government Summit: How can the government help to create a new generation of entrepreneurs?

Schwalje: Many entrepreneurs in the UAE still struggle with starting and growing their businesses because significant resources have been devoted to limited, singular interventions at either the national or Emirate levels rather than devoted to system wide change. Though it has expanded rapidly, the UAE entrepreneurial ecosystem, which includes upwards of 330 different public and private stakeholders, currently lacks critical institutions and cooperative platforms which could make it more effective. Some Emirates have been much more effective at developing vibrant entrepreneurship ecosystems than others. While there is no one-size-fits-all model for building a competitive entrepreneurship ecosystem, more work must be done to catalyze an inclusive dialogue where policymakers, entrepreneurs, and other stakeholders come together to discuss barriers and find solutions at the national and Emirate levels.

Institutions tasked with implementing entrepreneurship development policies must work in closer coordination to build a conducive culture for entrepreneurial risk taking, enhance access to new venture finance, ensure venture-friendly markets for products, and improve institutional and infrastructural support for entrepreneurs. While some progress has been made, entrepreneurship policies must also be more closely aligned with national technical and vocational education and training policies. This will require integrating entrepreneurship more effectively into the education system from an early age. There is also an urgent need for career guidance to accommodate entrepreneurship so that it might be possible for students to differentiate between choices after secondary schooling like starting a business, joining the armed forces, seeking a job immediately, attending a technical program, or continuing their studies at the higher education level. Based on the scarcity of initiatives which specifically target aspiring female entrepreneurs, more entrepreneurship education and training for women is needed in the GCC. While most GCC nations have supported entrepreneurship centers to improve the environment for entrepreneurship including providing funding and training, reducing bureaucracy, and establishing business incubators, very few of these centers specifically cater to women’s needs.

World Government Summit: Which other stakeholders can get involved too?

Schwalje: Policy frameworks and institutions play a particularly important role in entrepreneurship ecosystem development. Some Emirates have made significant progress in developing institutionally rich entrepreneurship ecosystems while other Emirates offer much less support for entrepreneurs. A key risk in designing national and Emirate level entrepreneurship development policies is proceeding without systematic input from entrepreneurs and other stakeholders. While identifying the particular needs of entrepreneurs in each Emirate is essential, international experience offers prescriptive guidance for developing entrepreneurial ecosystems and the key institutions and stakeholders that should be involved.

Policy makers must ensure the regulatory framework supports entrepreneurs. Public and private sector stakeholders must work to ensure the presence of early customers and, once fledgling business begin to grow, they can reach regional and global markets. Access to a full spectrum of financial services is critical to entrepreneurial success. This include the presence of financial institutions which provide SME finance, venture capital funds, corporate venture capital funds, government grants and loan programs, and angels and angel groups. A vast array of support organizations ranging from incubators and accelerators to competitions to export assistance centers is required for a competitive entrepreneurial ecosystem. These institutions must work together to help entrepreneurs turn an idea into a business, launch, and then grow by providing training, mentorship, networking, expert guidance, and inspiration. The private sector is important due to philanthropic giving and corporate social responsibility programs support entrepreneurship, identifying opportunities in their supply chains that can present opportunities for entrepreneurs, commercializing academic research, and in opening up exit opportunities for entrepreneurs. The institutions that govern the education and training system must work to ensure emerging skills needs are met and provide quality, entrepreneurial training. Finally, the media is important to ensure entrepreneurial successes are highlighted to inspire the next generation of entrepreneurs.

World Government Summit: Is there a need for different approaches in other Arab countries?

Schwalje: In many Arab countries, economic integration, the need for economic diversification, occupational preferences for public sector employment, and high youth unemployment rates have prompted the adoption of economic reforms to improve the enabling environment for entrepreneurship. However, understanding the determinants of self-employment and how they might differ across the region is critical if entrepreneurship is to be a solution for the region’s youth unemployment challenge and can ultimately lead to desired economic outcomes. Differing determinants of entrepreneurship across the region have significant implications for national policies and support programs that might be offered to regional entrepreneurs. The distinction between necessity and opportunity entrepreneurship is becoming increasingly relevant as countries in the region are largely pursuing undifferentiated entrepreneurship policies that are primarily aimed at opportunity entrepreneurs.

World Government Summit: How are the needs of entrepreneurs different across the Arab region?

Schwalje: An emerging body of international empirical literature suggests that necessity and opportunity entrepreneurs differ significantly in socio-economic characteristics; motivation and the types of opportunities pursued; and the potential for their entrepreneurial endeavors to create jobs and motivate private investment.

Category of Comparison Opportunity EntrepreneursNecessity Entrepreneurs
AgeOn average approximately 5 years younger according to empirical studies based on international dataUp to 5 years older than opportunity entrepreneurs in empirical studies based on international data
EducationTend to be more highly educated with education and general labor market experience having a positive impact on earnings and reducing exit ratesTend to be less educated and benefit more from specific vocationally oriented education found to be related positively to earnings
Industry ExperienceMore likely to have working experience from regular employment in the same industry they are enteringLess likely to have experience from regular employment in their focus industry
MotivationVoluntarily attracted into self-employment by the identification of opportunities; They often leave wage employment or pursue opportunities alongside full time employmentOften driven into self-employment after involuntary job loss or scarcity of employment opportunities
CyclicalityMore likely to create ventures when economic conditions are good and unemployment is low; They also choose to create businesses regardless of their employment statusNegative economic shocks that are more likely to affect small firms or increase unemployment push individuals to create businesses
Quality of Opportunities PursuedCreate larger businesses in knowledge-based industries which require significant amounts of invested capital and employees generate higher earningsLess likely to have business ideas with significant growth prospects and more likely to exploit entrepreneurial opportunities in low-income, low knowledge-content sectors
Potential for Job CreationHigher probability of creating additional jobs Job creation, Investment, and Survival
Primarily focused on employing themselves and have lower probability of creating additional jobs
Firm Survival Higher survival and lower failure and closure ratesFace a higher risk of failure, or, if they survive, they may produce only marginal businesses,
invest insignificant amounts of capital, fail to create further jobs, and earn minimal incomes
Capital Investment and Risk ToleranceInvest higher amounts of capital into their venture and are more risk tolerantLower amounts of invested capital and lower tolerance for risk
Tendency to Seek External SupportMore likely to have built their network to include people valuable in the process of venture creation such as potential customers, cofounders or financiersLess likely to seek support in the form of professional or personal assistance during venture creation

These findings present strong evidence that national training and support programs for entrepreneurship require significant tailoring to meet the needs of both necessity and opportunity-driven entrepreneurs. By not accounting for particular needs of different types of entrepreneurs, some national entrepreneurship policies in the region are designed around a one size fits all approach which is particularly lacking in regards to serving necessity-driven entrepreneurs.

International evidence suggests a strong case for more tailored national entrepreneurship policies in the Arab region which reflect the mix of necessity versus opportunity-driven entrepreneurs operating in particular countries. Entrepreneurship in countries at a high opportunity entrepreneurship equilibrium, which includes all of the Gulf countries, is presumably much different entrepreneurship in countries like Egypt, Palestine, and Yemen in a low opportunity entrepreneurship equilibrium. Necessity and opportunity entrepreneurs differ in socio-economic characteristics; motivation and the types of opportunities pursued; and the potential for their entrepreneurial endeavors to create jobs and motivate private investment. These differences are potentially unexploited policy levers which might serve as guidance for more targeted national entrepreneurship policies. Instead of classifying all entrepreneurs as a homogeneous group driven by opportunity and offering undifferentiated support, regional governments can introduce targeted training programs and support, contingent financing, and subsidies which might better serve both necessity and opportunity entrepreneurs. If entrepreneurship is to continue to be championed as a panacea for the region’s youth unemployment challenge and resolving structural economic and labor market issues, then such tailored policy measures appear long overdue. The table below presents a summary of potential components of regional entrepreneurship policy which may need to be reconsidered to more effectively meet the needs of both opportunity and necessity entrepreneurs.

Components of Entrepreneurship PolicyTypical Opportunity Entrepreneur Approach in the Arab RegionWhat Might be Needed to More Effectively Reach Necessity Entrepreneurs in the Arab Region
Entrepreneurship Policy ApproachPolicies view entrepreneurs as a segment of the national economy who can take advantage of all programs and may not distinguish between small business support and policies which support entrepreneurial venturesDefined policies and programs to meet the specific needs of necessity entrepreneurs and other country specific challenges
Entrepreneurship EducationEarly and post-secondary entrepreneurship education and business skills training at university and non-university based business incubatorsSupport for training in specific technical and vocational areas potentially below the post-secondary level in addition to early and post-secondary entrepreneurship education and business skills training
Access to FinanceIncreasing the supply of capital through direct loans and venture fundsPublic financing programs that may target a broader range of industries along with a stronger focus on helping entrepreneurs access capital by focusing more on business issues such as management skills and evidence of a solid business plan
Optimizing the Regulatory EnvironmentMacroeconomic approach to tax and regulatory policy focused on changes in laws (e.g., general tax reductions) and regulations that affect everyone doing business Policy impact analysis to determine if regulatory changes are sufficiently focused on the needs of necessity entrepreneurs; Policies that most benefit these businesses are those that defer expenses, allow companies to convert tax incentives into cash, and lower development costs
Technology Exchange and InnovationCluster development and leveraging public funds that encourage university-private sector collaborationBenchmarking and evaluating the benefits associated with state investments on necessity entrepreneurs and whether they are adequately served by such initiatives

The embrace of the Smart City concept is a key cornerstone of the UAE’s national development policy. Strong government commitment has been made to the use of Information and communications technology (ICT) to transform life and work in the UAE in fundamental ways. These investments in human capital and ICT infrastructure are expected to generate sustainable economic growth as well as lead to a higher quality of life.

Developing an affordable, high-speed communications network as an infrastructure backbone to enable smart cities has long been an objective of the UAE government. In 2006, the General Policy for the Telecommunications Sector in the State of the United Arab Emirates set out the goal of providing universal, affordable access to ICT services. Though the UAE has not set specific targets for ICT access and use at the national level or specific targets for gender equity, evidence suggests that the UAE is targeting 100% access for all individuals. Based on a recent household survey conducted by the UAE Telecom Regulatory Authority, 99% of UAE nationals have mobile phones, 95% of households have computers, and 84% of households have an internet connection. These statistics point towards a universally high level of ICT access and use in the UAE with sufficient resources and will to achieve full national ICT penetration.

Broadband Affordability is An Emerging Policy Imperative

While nearly universal internet access has been achieved, an additional imperative for public leaders remains ensuring affordability. This challenge is particularly critical in enabling entrepreneurship and ensuring the global competitiveness of the nation’s small and medium-sized businesses. In a global comparison of the prices of entry-level fiber broadband packages for small and medium-sized businesses, Tahseen Consulting’s analysis shows that UAE businesses are being charged significantly more than small and medium-sized businesses globally.

Global Comparison of Entry-level Fiber Broadband Packages for Small and Medium-Sized Businesses

Doing Business RankingCountryCompanyPackageDownload SpeedCost per monthData Limit
1SingaporeSingteleVolve for SMEs30 Mbps$69.70Unlimited
2New ZealandSparkBasic Business12 Mbps$52.11200 GB
3DenmarkTDCTDC BizBase15 Mbps$43.06Unlimited
4KoreaSK BroadbandOptical LAN100 Mbps$28.62Unlimited
5Hong KongHong Kong Telecom@Work Broadband30 Mbps$38.45100 GB
6UKBritish TelecomBT Infinity Unlimited38 Mbps$48.16Unlimited
7United StatesComcastStarter16 Mbps$69.95Unlimited
8SwedenTeliaTelia Office10 Mbps$57.21Unlimited
9NorwayTelenorBroadband Enterprise6 Mbps$40.27Unlimited
10FinlandSoneraSmall BusinessUp to 200 Mbps$37.60Unlimited

An analysis of entry-level fiber broadband packages for small and medium-sized businesses in the top 10 highest ranking countries on the World Bank’s Ease of Doing Business Ranking shows that the average price per megabyte of download speed is $3.61 (excluding Korea and Finland which have national broadband policies that have promoted extremely fast broadband access at prices that are far cheaper than global comparators). At an average price per megabyte of download speed of approximately $18, the common entry-level fiber broadband packages offered in the UAE to small and medium-sized businesses cost 5 times more than similar packages offered in the leading countries in the World Bank’s Ease of Doing Business Ranking. Businesses in the UAE also pay up to 2 times more than similar broadband packages offered to residential consumers.

Making Broadband More Affordable for Small and Medium-Sized Businesses

The price of broadband access for small and medium-sized businesses is critical to realizing the UAE’s smart city ambitions as well as enabling the nation’s entrepreneurs to compete effectively on a global scale. According to the International Telecommunication Union (ITU), increased competition is an effective mechanism to lower prices. ITU research shows that   duopolies lead to limited price competition which can reduce prices, but markets with more than three licensed operators experience the greatest falls in prices. Policy makers can also address affordability by regular monitoring, price regulation, and tiered services that ensure the revenue maximization objectives of telecom operators are aligned with broader national development strategies. Based on an international benchmark average price per megabyte of download speed of $3.61, implied monthly fees for entry-level broadband services for small and medium-sized businesses which would align the UAE with the most business friendly countries globally are shown below.

Implied Monthly Fee Schedule for Entry-Level Broadband Packages for Small and Medium-sized Businesses Based on International Benchmarks

Download/Upload SpeedImplied Monthly Fee (AED)
10Mbps/2MbpsAED 132.49
12 Mbps/3 MbpsAED 158.98
20Mbps/5MbpsAED 264.97
24 Mbps/6 MbpsAED 317.97
40Mbps/10MbpsAED 529.95
50 Mbps/12 MbpsAED 662.44
60Mbps/15MbpsAED 794.92
72 Mbps/20 MbpsAED 953.91
100 Mbps/25 MbpsAED 1,324.87

What’s At Stake

There are a growing number of SMEs using ICT to establish and grow their businesses. The UAE is the home to several ICT-based startups in the fields of internet search, employment, group buying, payment gateways, online retail, and real estate. While national studies such as the Global Entrepreneurship Monitor have quantified the approximate rate of entrepreneurship and employment impact in the UAE, they have not focused specifically on the additionally of ICT-based businesses on economic growth and employment generation.

The Global Entrepreneurship Monitor shows that the UAE has one of the lowest rates of total entrepreneurship activity of innovation-driven economies, and only 2.3% of new ventures are medium-tech or high technology ventures. Only 14% of entrepreneurial ventures created more than 20 jobs. These rather incomplete statistics suggest that the majority of firms in the UAE do not leverage ICT as the basis for their businesses, and the low number of such technology-driven ventures may not have a significant impact on employment creation without more focused government support. A good place to start is increasing affordability of entry level broadband packages to support the nation’s emerging entrepreneurship ecosystem.

Sources for Pricing Information
Singtel (Singapore): https://smemobile.bizportal.singtel.com/business/broadband/index.jsf
Spark (New Zealand): http://www.spark.co.nz/business/shop/internet/plans-and-pricing.html
TDC (Denmark): https://erhverv.tdc.dk/loesninger/internetabonnementer
Comcast (United States): http://business.comcast.com/internet/business-internet/plans-pricing
SK Telecom (South Korea): https://biz.skbroadband.com/data/data/Page.do?retUrl=/data/data/OpticLan
Hong Kong (Hong Kong Telecom): http://www.biz.netvigator.com/eng/bc_at_work_broadband_services.php
United Kingdom (British Telecom): http://business.bt.com/broadband-and-internet/fibre-broadband/
Sweden (Telia): http://www.telia.se/foretag/losningar/produkter/telia-kontor?intcmp=foretag-telia-kontor-host2015
Norway (Telenor): http://www.telenor.no/bedrift/bredband/
Finland (Sonera): https://www.sonera.fi/yrityksille/tuotteet+ja+palvelut/internetyhteys+toimistoon/yritysinternet/
UAE (DU): http://www.du.ae/smallbusiness/fixed/broadband/broadband-professionals
UAE (Etisalat): http://www.etisalat.ae/en/business/products-and-services/products/internetdata/business-super-overview.jsp

Underrepresentation of GCC women in science, technology, engineering, and mathematics (STEM) fields is increasingly a problem that compromises regional economic and social development. Although national education and employment policies have been directed at increasing female interest and participation in technical and vocational fields, women continue to shun STEM sectors. Why, with so much effort directed at attracting women to STEM fields, are the results so dismal and what should be done?

GCC nations face similar challenges in transitioning towards knowledge-based economies — they remain heavily dependent on natural resources, employ large numbers of nationals in the public sector, and rely on foreign workers to fill the private sector. While demand for technically trained labor in the GCC countries is very high, traditionally much of this demand has been filled by foreign labor. However, further public sector employment generation aimed at absorbing growing national populations may strain national budgets by increasing already high government wage bills. For this reason, GCC governments are gradually restructuring national technical vocational education and training (TVET) systems in concert with introducing labor market reforms to reorient national employment towards the private sector and in-demand STEM fields associated with knowledge-based economic development ambitions.

In the GCC, TVET currently faces an identity crisis in which people are unhappy with the name, the image, and reputation. GCC nations are particularly struggling with increasing the enrollment and employment of women in STEM fields. While some GCC countries, such as Saudi Arabia and Bahrain, have viewed TVET as a key element of educational policy for many years, other GCC nations have only relatively recently focused their attention on improving TVET systems. Educational reforms have been accompanied by social and labor market policies aimed at directing women towards emerging STEM fields. However, the success of females in accessing higher education, in which females now make up the majority of enrollments in nearly all of the GCC countries, to some degree has masked the emerging regional challenge of attracting women to STEM programs and their subsequent labor market entry into emerging high skill, knowledge-intensive, STEM fields.

View Our Other Work on Technical Vocational Education and Training in the Arab World

Promoting Entrepreneurship in the Arab World: The Need for Tailored National Approaches

Tahseen Consulting’s Work on Female Participation in Technical and Vocational Education and Employment Featured in Qatar Today

Why Aren’t There More Female Entrepreneurs in the GCC?

Given their high levels of education, women are a substantial underutilized resource for GCC economies. Several international studies have shown increased female labor market participation has a large, positive, and significant impact on economic growth and social development. Although labor force participation amongst GCC females remains amongst the lowest in the world, there is potential to attract highly educated females into the labor market and high growth STEM fields in particular. A challenge in the GCC countries is that many of the emerging industries which have fueled recent growth and job creation, including construction, wholesale and retail trade, transportation, financial services, petrochemicals, and the extractive sectors, are fields which are dominated by males and which tend to employ large quantities of low wage, foreign workers.

CountryLabor Market Participation
Male Nationals (%)
Labor Market Participation
Female Nationals (%)
Bahrain68%33%
Kuwait 61%30%
Oman*45%20%
Qatar 65%35%
Saudi Arabia 63%16%
United Arab Emirates58%20%
OECD Average69%51%
Female labor market participation rates in the GCC significantly lag the OECD average and, in some cases, are amongst the lowest in the world
Source: National Statistical Agencies of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE
Notes: * Based on working population age 20 to 60 with the remaining participation rates based on the working age population age 15 to 65.

In recognition of the potentially powerful addition that women can play in regional economies, GCC governments have set ambitious goals to expand the number of women enrolled in TVET programs and working in STEM fields. However, women are still much less likely to study STEM fields, and, when they enter employment, they tend to be concentrated in fields that are inconsistent with national economic ambitions for transitioning to diversified, knowledge economies. While much previous research that has focused on gender-based inequalities in education in the GCC has examined why men are less likely to continue on to higher education, there is significantly less research that has examined why females in GCC nations tend to shun STEM education and employment.

Why So Few? Barriers to Engaging GCC Women in STEM Education

Cultural ideas about what is appropriate work for women specifically limit opportunities to study STEM fields. In many GCC countries, women need support from family members to pursue higher education or work outside the home. Women are often directed by family members away from pursuing STEM programs, despite their interest or aptitude, due to ingrained cultural ideas about appropriate educational pathways and career tracks for women. While female role models can provide aspirational examples for women’s education and employment decisions that might challenge existing cultural ideas, there are very few female role models presently who received TVET training and are employed in a STEM industry who might positively influence females. The lack of female faculty available to teach TVET programs in the GCC may also implicitly send the message that STEM fields are either not appropriate career choices for females or that women are less successful in STEM fields. A growing body of evidence also suggests that educational curricula in the GCC may contain implicit biases that portray women in administrative rather than STEM positions which socializes women to occupy different social and economic roles than males from very young ages.

The secondary level is a crucial transitional period for young people in the GCC – whether they will transition to the labor market after graduation or continue on to university is largely decided by what they study in secondary school and how they perform. However, educational policies that sort students based on grades tend to reinforce existing notions that academic tracks are superior to vocational pathways. By not offering secondary TVET options to girls, the structure of academic pathways in GCC countries also contribute to female preferences for non-STEM programs. For this reason, female enrollment in secondary TVET has remained significantly lower than males across the GCC. While career guidance is one informational resource that can help girls consider broader education and employment paths, career guidance is often focused on coaching students towards non-STEM higher education fields. Higher admissions standards for academic programs than some technical fields feed perceptions that particular academic tracks carry higher social prestige. While GCC nations have launched ambitious sponsorship and scholarship programs, many of these programs perpetuate gender-biased labor market segmentation by incenting women to study fields such as clerical and administrative work over STEM fields.

At the higher education level, enrollment statistics show that women tend to pursue concentrations such as nursing, education, arts, and social sciences, rather than technical or scientific fields. While socio-cultural factors and parental influence play a role in students’ choices of major, GCC higher education policies can serve to limit female students’ options for study. Particularly in emerging STEM fields, many GCC nations suffer from inexplicit licensing and accreditation standards and unclear quality procedures. While formal channels of licensing and accreditation are generally covered by national ministries of education, nationwide quality bodies, or specific TVET regulatory bodies, regulatory gaps exist in TVET systems. For instance, in many countries, private institutions are not adequately regulated. The lack of clear standards for licensing and accreditation undermines public quality perceptions of TVET providers. To improve quality and align curricular standards to international norms, many countries have instituted accreditation reforms. However, the number of institutions involved in licensing and accreditation can often lead to overlapping authorities and complex regulatory environments that confuse potential students and parents regarding the value and employment opportunities associated with particular qualifications.

KuwaitUAEQatar
Major% of total female students enrolled% of total female students enrolled% of total female students enrolled
Arts and Sciences28%19%48%
Education27%3%4%
Business and Economics15%11%23%
Law9%3%6%
Food and Agriculture0%3%Data not available
Engineering17%7%15%
Medicine and Health Sciences3%2%4%
Information TechnologyData not available2%Data not available
Female public university enrollment patterns in the GCC show strong concentration of females in arts and sciences, education, and business rather than STEM fields critical to knowledge-based economic development
Source: National Statistical Agencies of Kuwait, UAE, and Qatar
Note: Data is presented only for countries which have publicly available statistics

What Holds Women Back? Barriers to GCC Female Employment in STEM Fields

A significant body of regional research has found that socio-cultural beliefs about female employment encourage women to pursue professional and administrative positions in the public sector. Jobs that do not fit this cultural ideal are more likely to be deemed inappropriate for females. Broadly speaking, professional and administrative positions in the public sector are considered more prestigious in Gulf countries, which means that women interested in STEM fields will likely be exposed to negative social pressure to avoid such professions in favor of more culturally acceptable roles in the public sector and state owned companies. In addition to generally being confined to employment in only a handful of select industries, women are also much less likely to work in senior management positions. In some GCC countries, occupational segregation puts specific demands on employers which are often unwilling or unable to provide separate facilities for females. Due to the prevalence of small-and-medium sized business in the GCC, many employers are lack the resources to provide the facilities required by occupational segregation. In this way, gender segregation can perpetuate labor market segmentation by decreasing the number of jobs available to women in emerging economic sectors.

Women also encounter difficulties finding employment due to structural labor market features which limit the fields they can enter. While the general direction of knowledge-based economic development is articulated in national level strategic documents in many Arab countries, such documents are less precise about the particular occupations within knowledge-based fields that may emerge as economies develop. In many cases, the rapidly emerging GCC industrial structure and economic planning limitations result in lack of labor market demand signals that lead to widespread skills shortages and gaps in GCC labor markets. In most GCC countries, the extractive industries remain the major economic sector. However, the extractive industries tend to be heavily male-dominated fields that attract few women. High percentages of foreign males in the private sector labor force also encourage women to seek more culturally and socially acceptable employment in fields with more women or those in gender-segregated environments.

The attractiveness of public sector employment is a primary factor behind women’s unwillingness to work in STEM fields. Jobs in the public sector are relatively well paid, not physically demanding, and provide substantial benefits over the private sector. The high concentration of females in the public sector makes it more difficult for females to enter the private sector and more diverse STEM fields because high levels of clustering reinforce social views that the public sector is the only appropriate employer for females. Emerging research also suggest that women face much more significant challenges securing employment than men which makes them seek the job security of the public sector. Women have more difficulty finding their first job in the GCC, and studies have shown that women generally use very few non-government facilitated methods for finding employment. The difficulty women experience transitioning to the labor market and between jobs make them more likely to become discouraged and voluntarily remove themselves from the labor market or retain jobs in the public sector.

Country% of Female Nationals Employed in the Public Sector% of Female Nationals Employed in the Private Sector
Bahrain50%50%
Kuwait*94%6%
Oman65%35%
Qatar88%12%
Saudi Arabia63%37%
UAE89%11%
Across the GCC, females are generally employed in the public sector
Sources: National Statistical Agencies of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE
Note: * Some studies suggests that in 2010 79% of females now work in the public sector. However, a definitive publicly available data source is not available

Personal status laws, although recently reformed in many of the GCC countries, also restrict women from entering particular employment fields. The importance of fathers and husbands making decisions about their daughters’ and wives’ choices to work out of the home means that some women who might be interested in pursuing a career in a STEM field may be prevented from doing so. Female employment in particular fields can also be limited by vague language in national labor laws. While all GCC nations have undertaken nationalization policies to increase the number of national workers in the labor force and specifically in crucial private sector professions, nationalization initiatives have historically targeted male dominated industries such as oil and gas. While nationalization initiatives have the potential to open up new avenues to female employment, they may not have the intended effect if nationalization efforts are not focused on industries which women are likely to enter.

What GCC Countries Can Do

Progress towards increasing female enrollment and employment in STEM fields will need to target a variety of national education and training system, labor markets, and individual challenges.

Overcoming Policy, Planning, and Systemic Challenges to Equitable TVET Provision

In order to supply qualitatively and quantitatively sufficient levels of technically trained females to the labor market, national education and training systems must provide females with accessible technical pathways that are responsive to evolving socio-cultural norms concerning female labor market participation and employment in technical fields. Females’ access to STEM fields in many of the GCC countries is limited in part due to few providers who specifically serve women and government and institutional decisions to offer select programs to women that fail to fully cover STEM fields of importance to emerging knowledge-based industries in the region. Across the GCC, some STEM options are not open to women, including many advanced engineering sub-disciplines critical to regional development. Addressing the supply of TVET programs means not only increasing the number of options available to women but also ensuring that institutions are female-friendly and offer high quality programs attractive to females.

Increasing Female Enrollment in STEM Programs

While many females from GCC countries are studying in TVET programs at the post-secondary level, several studies across the region have found that some STEM fields are viewed as a second-best option. To increase the number of females studying in STEM programs at the secondary and tertiary levels, GCC countries will have to institute reforms that increase demand for technical and vocational education by addressing socio-cultural barriers to enrollment. Addressing these barriers will involve interventions and policies that positively influence persistent beliefs about the kinds of students who attend TVET and the post-graduation opportunities available to them. Reforms must center on information and reputation management that increase women’s access to information about STEM education, encourages women to enter STEM fields, and improves the perceived status of STEM education.

Encouraging Women to Enter Employment in STEM Fields

Ease of entry, effective labor market and social policies, and female-friendly workplaces are critical to attracting outgoing technically trained females from national education and training systems to employment in STEM fields. As with the decision to enroll in technical programs, encouraging women to work in technical fields requires incentivizing and providing information to women to motivate particular labor market choices. Barriers to female employment are varied and include such issues as family responsibilities, female preferences for certain work environments, and expectations about what types of jobs offer the best pay and benefits. Effective reforms will likely involve structural labor market policies that make technical positions and private sector employment more desirable options.

Increasing Employer Demand for Technically Trained Females

Increasing female employment rates in technical fields will require increasing employers’ demand for female labor in a way that overcomes existing preferences for public sector employment. The focus must be on encouraging private sector companies to hire females. Companies must be convinced of the desirability of hiring females despite some employers in the region viewing females as more expensive and requiring special accommodations. In several GCC countries policy experiments with training and wage subsidy programs have proven effective in incentivizing companies to hire more women.

Dear Readers,

As 2013 draws to a close, here is a look at our most popular content of the year. We hope you are enjoying Tahseen Consulting’s Research and Insights, and we look forward to continuing to engage with you in 2014.

Best wishes for a happy and productive new year,

The Tahseen Consulting Team

Tahseen Consulting’s Walid Aradi Interviewed on Dubai TV’s Money Map

Tahseen Consulting’s CEO Walid Aradi appeared on Dubai TV’s Money Map to discuss the role of entrepreneurship policy in economic development and meeting the region’s youth unemployment challenge.
 
Women Wanted: Attracting Women to Technical Fields in Qatar

In this article, we discuss the difficulties Qatar faces in terms of promoting technical and vocational education amongst females. Over the past several decades Qatar has dramatically reformed its education and training system to align it with macroeconomic policies aimed at advancing towards a knowledge-based economy. However, technical vocational education and training (TVET) has not been a significant focus of educational reform.

   
Promoting Entrepreneurship in the Arab World: The Need for Tailored National Approaches

Understanding the determinants of self-employment and how they might differ across the region is critical to meet the region’s youth unemployment challenge

   
An Arab Open Government Maturity Model for Social Media Engagement

While embrace of social media as a component of open government initiatives is still in its infancy in the Arab World, there is much expectation that public sector social media use will have a transformative impact on citizen participation in government, policy formation, and the way public sector entities conduct business. However, existing evolutionary models of e-government and open government maturity based on the experiences of Western democracies offer little support to Arab entities that operate in an institutional environment characterized by much different governance traditions.

   
Arab Knowledge Economies Require More Effective Skills Formation Systems to Generate High Skill, High Wage Employment

As Arab countries pursue knowledge-based economic development, national skills formation policies require significant rethinking says this report from Tahseen Consulting in collaboration with the Sheikh Saud bin Saqr Al Qasimi Foundation for Policy Research.

   
Skills Shortages and Gaps May Limit the UAE’s Islamic Finance Hub ambitions

Based on our projections that a another $87 to $124 billion could potentially enter the Islamic banking system in the UAE by 2015, approximately 7,800 new jobs will be created at Islamic banks in the UAE assuming current asset concentration ratios remain similar.

   
Arab Corporate Social Responsibility Rapid Appraisal Diagnostic

Given the scattered use of Global Reporting Initiative standards in the region, Tahseen Consulting has developed an Arab Corporate Social Responsibility Rapid Appraisal Diagnostic based on analysis of a representative sample of 128 regional CSR initiatives and previous literature.

   
The Arab World’s Most Generous Philanthropists Could Mobilize $24 billion by Signing the Giving Pledge

If the Arab World’s billionaires signed a pledge to donate their wealth to philanthropy, an estimated $24 billion would be mobilized.

   
Arab Students Studying Abroad Contribute $77 Billion to Other Economies

Arab students studying abroad have generated $77 billion in income for other countries over the last decade without even considering other economic externalities.

   
Only 11% of Arab Educators Regularly Use Educational Technologies in their Classrooms a Tahseen Consulting Study Finds

Due to the region’s youthful demographics and widespread use of mobile technologies, Arab educators face the challenge of meeting new expectations of learners who want engaging, interactive, and individualized learning experiences.

 

Tahseen Consulting’s CEO Walid Aradi appeared on Dubai TV’s Money Map to discuss the role of entrepreneurship policy in economic development and meeting the region’s youth unemployment challenge. Aradi sat down with Zeina Soufan, host of Money Map, to discuss Tahseen Consulting’s work on entrepreneurship policies and programs in the Arab World.

The Arab World generally has low rates of female entrepreneurship. Region-wide, women own 13% of firms, which is lower than most other regions including Europe, Central Asia, East Asia, and Latin America (Chamlou, 2008). One reason for low official rates of female entrepreneurship in the region is that a considerable amount of female entrepreneurship is conducted informally through home-based businesses which are not captured by official statistics. Traditional beliefs about the role of women and familial obligations remain a barrier to increased levels of entrepreneurship (Aradi, Buckner, & Schwalje, Forthcoming).

In the GCC, evidence suggests that female entrepreneurship rates are substantially lower than male entrepreneurship rates. In Qatar, for example, female owned businesses constitute only 3.5% of all businesses (Organization for Economic Cooperation and Development, 2009). Among respondents to a Global Entrepreneurship Monitoring report on entrepreneurship in the UAE, 11.8% of male respondents were early stage entrepreneurs while only 7.6% of women were early stage entrepreneurs. However, male respondents in the UAE were much more likely to be established entrepreneurs – at 7%, while only 0.9% of females were established entrepreneurs (El-Sokari, Vanhorne, Zeng-Yuhuang, & Alawad, 2013). In Saudi Arabia, approximately 12% of males are engaged in early stage entrepreneurship while only 6% of women are engaged in early stage entrepreneurial activities (Global Entrepreneurship Research Association, 2013). Such findings suggest males in the GCC have generally higher rates of entrepreneurship and are more likely to own businesses which persist beyond the startup stage.

View Our Other Work on Entrepreneurship and Technical Vocational Education and Training in the Arab World

Promoting Entrepreneurship in the Arab World: The Need for Tailored National Approaches

Tahseen Consulting’s Work on Female Participation in Technical and Vocational Education and Employment Featured in Qatar Today

Women entrepreneurs face a number of obstacles which serve to depress female entrepreneurship rates. A study of female entrepreneurship in the region found that while networks of support have been successful in some countries such as Tunisia, Morocco, and Lebanon, such networks have been less successful in other Arab countries. The study finds that “businesswomen networks are in their infancy and face several obstacles such as attracting funding, in the face of donor priorities for provision of microfinance, and growing the network” (Organization for Economic Cooperation and Development, 2009, p. 5). Nonetheless, networks that support female businesswomen, such as the Bahrain Businesswomen Society, Business and Professional Women – Kuwait, Omani Women’s Association, Dubai Business Women’s Council, and the Qatar Women Business Forum, have been quite active over the past few years promoting female participation in business with events and development programs (Organization for Economic Cooperation and Development, 2009). Support from such organizations may prove an effective strategy for encouraging more women to become entrepreneurs and to overcome cultural resistance to female entrepreneurship. Across the GCC, initiatives aimed at supporting women entrepreneurs are much more likely to take the form of professional associations or committees housed within chambers of commerce. Qatar and Saudi Arabia appear to be the only countries in the GCC with dedicated business centers and incubators that exclusively serve women (Organization for Economic Cooperation and Development, 2013).

Females in many GCC nations also face unique obstacles to obtain funding to start their businesses. In addition to the lack of seed and venture funding that affects the majority of countries in the Arab region, research indicates that females in Qatar require guarantors in order to obtain business loans from banks. In Saudi Arabia, surveys and interviews with female entrepreneurs found that 82.2% of registered businesswomen rely on personal savings to fund their businesses and do not seek external funding (Ahmad, 2011). These female entrepreneurs also stated that they “believe that many social and regulatory interactions are more challenging for them because of their gender,” and, as a result, they relied substantially on male relatives to complete business transactions (p. 612).

In the UAE, a survey with entrepreneurs who had closed their businesses found that the majority of female entrepreneurs who closed their business did so because of personal reasons. This contrasts sharply to males, the majority of whom stated that they closed their business because they were not profitable (El-Sokari et al., 2013). It is not clear from the report what personal reasons are causing women to close their businesses, but the report calls for more research to understand why women are more likely to discontinue their business for non-business related matters.

Low rates of female entrepreneurship should not be thought to imply that women are not interested in entrepreneurship. According to interviews in Qatar, entrepreneurship is an appealing career choice for women because it allows them to have flexibility over their schedule and can often be pursued in addition to full-time public sector work. High levels of domestic staff employed in Gulf homes also means that women often have time for entrepreneurship. Interviews suggested that many female entrepreneurs in Qatar maintain their day job in the public sector while they pursue entrepreneurial endeavors to ensure a steady income and retain rights to a pension. However, it is not well understood what circumstances must be present in order for such entrepreneurs to make the step to pursue their entrepreneurial endeavors full time (Aradi et al., Forthcoming).

A recent survey of Gulf residents also found that women have many of the characteristics needed to be successful entrepreneurs, but they are less oriented towards entrepreneurship. The survey found that women in GCC countries are generally as likely as men to report being optimistic, profit-oriented, and persistent (Bugshan, 2012) ). Nonetheless, women in GCC countries are significantly less likely to say that they have access to mentors who could offer advice about managing a business. Figure 13 shows that the gender gap is substantial in some countries, at 15% in the UAE and 19% in Bahrain. This study suggests that the needs of male and female entrepreneurs differ slightly, and one role for regional entrepreneurship initiatives is to link females with business networks and possible mentors.

Emerging Support Systems for Female Entrepreneurship

Many GCC nations have recently developed entrepreneurship education programs to develop young people’s interests and capabilities in entrepreneurship. Increasingly, these programs focus on women either explicitly or implicitly due to program design. Although the UAE offers no specific programs that target the needs of female entrepreneurs, women entrepreneurship is being supported through the Sougha initiative which was founded by the Khalifa Fund for Enterprise Development “with the aim to create socio-economic opportunities for Emirati artisans and preserve the Emirati heritage by providing the needed support to achieve social good” (El-Sokari et al., 2013, p. 23). Because the focus of the program is handicrafts, participants tend to be women. Sougha has resulted in sales over $1 million and provided income to 148 Emirati families (El-Sokari et al., 2013). Similarly, in Saudi Arabia, the government “offers 3,000 Saudi Riyals a month for women to start new businesses” (Dubai Women Establishment, 2009, p. 40).

In 2006, Oman’s new Vision for Education was launched which included the specific objective of developing students’ entrepreneurial skills. One of the programs launched under the new vision, SANAD, was established to help “job seekers among citizens with opportunities to gain their living and to support self-employment projects and develop small businesses” (Ministry of Manpower, 2013). The program includes training on business skills and also allows would-be entrepreneurs to submit proposals for small start-up loans. As of 2010, the program had supported over 28,000 Omani youth with start-up funds and had provided at least 7,000 Omanis technical and vocational training (Ministry of Manpower, 2013). However, no public data is available on the percentage of beneficiaries who are female or whether the program has led to female firm creation and increased employment. Prior research in non-GCC Arab nations has found that entrepreneurship and labor market programs often tend to “lack the necessary mix of design features that make programs effective” (Angel-Urdinola, Semlali, & Brodmann, 2010, p. 1).

Despite widespread support for entrepreneurship training and assistance programs in the GCC, very little data on the participation or success of women has been collected. Programs such as SANAD offer crucial support for entrepreneurship, but, without an explicit engagement with women’s communities, it is likely that women are not fully benefiting from such initiatives. As of now, SANAD does not offer any training programs specifically for females nor does it appear to track the number of women trainees, projects supported by women, or the percent of women beneficiaries. The example of SANAD from Oman is indicative of a widespread issue across the region concerning the infrequent use of performance monitoring and evaluation of public sector training and active labor market programs. Across the region, more data should be disaggregated by gender and participants tracked over time to understand who is benefiting and how female entrepreneurs’ proposals and businesses fare compared to those of men. This level of data collection would allow policymakers to more effectively target trainings to the specific needs of women entrepreneurs.

Based on the scarcity of initiatives which specifically target aspiring female entrepreneurs, it appears that more entrepreneurship education and training for women is needed in the GCC. While most GCC nations have supported entrepreneurship centers to improve the environment for entrepreneurship including providing funding and training, reducing bureaucracy, and establishing business incubators very few of these centers specifically cater to women’s needs. Moreover, without a critical presence of other women, females who desire to be entrepreneurs may not feel comfortable in such centers. There are few entrepreneurship centers specifically targeted to the distinct types of businesses women may found or designed to support their distinct needs. One example that is potentially replicable in the GCC is the Roudha Center in Qatar which is a business incubator specifically focused on training and enabling female entrepreneurs.

Due to the high number of females who exit the labor market in their thirties, one potential population segment for entrepreneurship training is college educated women who have exited the labor market after child birth and want to open a business to have flexibility in their working hours. Another area of focus may be female secondary school leavers and high school graduates who could benefit from entrepreneurship training to supplement their incomes. Female students are also a potential training beneficiary group that is often overlooked. According to interviews in Qatar, entrepreneurship training is rarely offered in K-12 schools due to lack of an approved curriculum. Rather than complementing existing curricula, females are exposed to entrepreneurship much later in their school or have to seek out such training at specialized institutions outside the formal education system (Aradi et al., Forthcoming). In the UAE, the Khalifa Fund for Enterprise Development has initiated two types of training programs in both government and private schools to “create a dynamic entrepreneurial culture”(Khalifa Fund for Enterprise Development, 2013). However, it is unclear how many students actually benefit and what the long-term outcomes of the program are.

Prior interviews suggest that, in GCC countries, entrepreneurship policies and educational policies are not necessarily aligned and are infrequently viewed as complimentary under national TVET policies. For example, policy makers and institutional administrators in Qatar mentioned the need to integrate entrepreneurship more effectively into the education system from an early age. Study participants also pointed to a need for career guidance to accommodate entrepreneurship so that it might be possible for students to differentiate between choices after secondary schooling like starting a business, joining the armed forces, seeking a job immediately, attending a TVET program, or continuing their studies at the higher education level (Aradi et al., Forthcoming).

References

Ahmad, S. (2011). Businesswomen in the Kingdom of Saudi Arabia: Characteristic, Growth Patterns and Progression in a Regional Context. Equality, Diversity and Inclusion: An International Journal, 30(7), 610-614.

Angel-Urdinola, D., Semlali, A., & Brodmann, S. (2010). Non-Public Provision of Active Labor Market Programs in Arab-Mediterranean Countries: An Inventory of Youth Programs.  Washington, DC: World Bank.

Aradi, W., Buckner, E., & Schwalje, W. (Forthcoming). Female Access to Technical Vocational Education and Training and Labor Market Outcomes in Qatar.  Paris: United Nations Educational, Scientific and Cultural Organization.

Bugshan, F. (2012). Lack of Mentors May Hinder Women’s Entrepreneurship in GCC. Washington, DC: Gallup.

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