This text is the transcription of the author’s participation at the Italian Forum for Women Entrepreneurs, held in Milan from 4th to 6th March 2007 and recorded by Radio Radicale.

I am here on behalf of the World Bank to present a few of the findings of an ongoing study that we are carrying out and which is going to be finalized probably in the next six months. The study that I would like to present is about women entrepreneurship in the Middle East and North Africa region, but first I would just like to summarize very quickly some of the challenges that our region – by which I mean the Middle East and North Africa region, which covers the countries from Morocco to Iran and from Syria to Yemen, so not all the countries but nonetheless that is roughly the essence of this region – is facing. First of all, what we have all in common in this region is that there has been a lot of very high degree of investments made in education: every men and women have entered primary and secondary schools, but more and more women have been entering not only the primary and secondary school but also tertiary school, that is university. So I think that today, in most countries women outnumber men at university level.

The second challenge that we face in the region is that, because of rapid population growth over the last 20 years, the labour force of the country has grown tremendously and that has lead to a very very large youth “bulge”, as people say, that is a large degree of the population being under the age of 30. But that also meant that the unemployment rate is very much focused and concentrated among the youth and among women predominantly. This is due to the fact that they have still some more difficulty in gaining employment. So where do we begin? To face the Mena region challenges, we need to create a lot of jobs. They have to be created through the private-sector led growth, as the public sector is no longer the answer to the job growth. In other words, we have to move away from the public-sector driven growth to promoting the private sector, which needs to be more diversified in many countries, where now it is based on natural resources (such as oil, gas and so on). It definitely needs to be more diversified and export-oriented. So that is one area of the challenges that the Mena region or the Middle East and North Africa region is facing.

The other challenge that the region is facing has to do with the increase of women’s empowerment and gender equality. And the way we want to combine these two challenges together is by promoting women’s economic rights and opportunities and, through this process, also increase women’s presence in decision-making bodies in order to raise empowerment. In carrying out the study that we are in process of doing, we looked around the region and came up with some very interesting myths and misperceptions that I would like to discuss. The misperception is that women entrepreneurs are mainly micro-entrepreneurs focused on smaller sectors, that women own their firm only in name and do not actually manage it (this is again a wrong perception and I will get into its details in a little while), that women entrepreneurs are less sophisticated than male entrepreneurs (again, I will show you some evidence that this is wrong), and that the business environment treats women and men entrepreneurs equally (and again that is also a wrong perception that I hope to show you).

We have carried out enterprise surveys for most regions, not every country but for a large number of countries across the region and we have randomly surveyed the private sector. So on the basis of this survey that we carried out we showed that, for instance, in Latin America, as you can see, about 20 percent of the enterprises are owned by women, compared to 13 percent in the Middle East and North Africa region. So this means essentially that 1 out of every 8 entrepreneurs, more or less, is a woman entrepreneur. Now, if you look on the surface there are fewer entrepreneurs in the Middle East and North Africa region than the other regions, but when we looked at the distribution of the enterprises and the size of these entrepreneurs, we actually see that in the Middle East region, in the Mena region the women entrepreneurs occupy much more the medium-to-larger segments of the business sector than the micro segment.

In other words, it is true that only 13 percent of the businesses are own by women, but this 13 percent is actually more distributed in the larger group of the businesses rather than the micro group of businesses and enterprises. Which means that women entrepreneurs’ businesses have a larger number of employees as well as a larger size. Just to show you the example of two of the countries in the region, Egypt and Lebanon, when we compared the male and female entrepreneurs we in fact saw that the female entrepreneurs also own a larger proportion of the enterprises than their counterparts, the male entrepreneurs. This was quite a surprising finding to us. In other words, women are not concentrated in the micro or smaller enterprises. They actually are much more concentrated in larger businesses.

When we look at the larger group of enterprises, which is between 100 and 250 categories, we see actually more women entrepreneurs. When we looked at the sectorial distribution of female and male enterprises, again we divided them by manufacturing, services and other categories such as financial services and so on. We saw again that the male and female distribution is roughly the same; in fact women tend to be a little bit more in manufacturing and services than the male entrepreneurs. But they are roughly occupying the same sectors. We have always heard that women entrepreneurs tend to have family-owned business, do not own their own business and are not individual entrepreneurs. So, again, we looked at the distribution of firms, whether the individual was the sole owner, whether the ownership was family, and it is true that women entrepreneurs tend to be managing firms that are more family-owned, but nonetheless by not so much difference. It is true that male entrepreneurs are more individual entrepreneurs, but there is a large distribution of women who are individual owners.

The other thing that we found very interesting is the composition of the workforce. I would like again to remind you that the Middle East and North Africa regions have made significant investment in human capital and education. But also that the young people and workforce do not have enough opportunity to find a job. We wanted to see to what extent women and male entrepreneurs differed in terms of employing skilled labour force. And we found that actually women entrepreneurs have a higher proportion of skilled workers in their businesses and enterprises. When you look at the distribution, you see that in terms of semi-skilled, unskilled or non-production staff, they are roughly the same but in terms of professional staff, the women entrepreneurs (represented by the green bar) hire or employ more. When we go a little bit deeper by asking what is skilled, what is unskilled and what is the level of education that they hire, we see that for instance women entrepreneurs hire more staff or their workforce contains more workers who have 10 years and more of education. In other words, they are able to attract a higher quality of the workforce, which we did not expect and seemed very unusual to us, so it is very important to report these findings.

Lastly, one of the things that I would like to highlight about the workforce composition is that women entrepreneurs also tend to hire more women. 15 percent of the workforce in female-owned businesses are women, vis-à-vis, for instance, about less than 10 percent women in male-owned firms. So in other words perhaps one way that we would like to meet the challenge of creating more employment for women – and moreover for educated women – is to promote women’s entrepreneurship as they seem to be able or maybe more willing to hire more women. Now, what does this mean? They hire more skilled labour, they hire more educated labour, they hire more women labour. So what? What does it mean in terms of the bottom line? What does it mean in terms of productivity and profitability? Here, again, we tried to show the productivity and profitability on the basis of two indicators. One was the value-added for worker and the second was the sales that were generated for worker. What again is surprising is that the women-owned businesses outperform the male-owned businesses. When we go to sales per worker, there again is very clear that in female-owned firms the sales-per-worker rate is higher. So this were very clears indicators that the profitability of the firm is higher. Again, this was surprising and we can discuss it a little bit further.

There are other important indicators that I think are interesting, which is that surprisingly women entrepreneurs are able to attract more foreign investors. Roughly 12 percent of businesses that are owned by women entrepreneurs have foreign investors, compared to roughly 8 percent of businesses that are owned by male entrepreneurs. So women entrepreneurs are somehow becoming more and more attractive partners in businesses with foreign companies. The other thing that was again very surprising to us is that women entrepreneurs export more than male entrepreneurs. Roughly a third of firms that are owned by female entrepreneurs export on an average of about 34,5 percent, while businesses run by male entrepreneurs’ export amounts to a little bit over 30 percent. So that 3 or 4 extra percent could actually translate into several billion of dollars of export between the Mena region and the rest of the world. But again, it was surprising to see that there is a larger degree or a larger participation in the trade sector.

Lastly, what I would like to say is that whenever we talk about women entrepreneurs we could say that women do only own their companies, they do not manage them and are only owners in name. But when we looked at ownership vs management, we found that actually, of the businesses that women own, more than half are actually managed by women entrepreneurs themselves. So in other words they are active participants, they are in control of their business, they manage day-to-day. Now, given the fact that we established that women are in the same sector, they are roughly of the same size, they export more, they have more foreign ownership, why is the trend that there are not more women entrepreneurs?

Partly because of the fact that, as Minister Bonino mentioned, the world is not really flat, not totally flat for women and there are still some hurdles that women face in terms of entering, staying and growing in business. And the enterprise surveys that the World Bank has carried out have tried to test the perception of male and female-owned business vis-à-vis the investment climate. As you can see, women have consistently rated the investment climate being more cumbersome, more difficult for them compared to the male entrepreneurs. In particular, they have for instance rated policy uncertainty, macro-economic environment and corruption to be much of a problem for women and male entrepreneurs. So again, if we want to address the policy environment, these are perhaps some of the areas that need to be tackled in order to increase the number of women entrepreneurs.

Anyway, promoting women entrepreneurship is a very important step to meet the challenges of the region, that is job-creation and women’s empowerment, that women comprise a sizable, diversified and productive segment of the private sector in Mena and that they are not negligible but very significant. Despite the similarities with their male counterparts, women entrepreneurs face considerable barriers, and now most of the Mena countries are in the process of reforming the investment climate. It is important actually to focus on removing barriers that women entrepreneurs face because that is ultimately going to translate into more jobs and opportunities for everybody, men and women. Partners like Italy and other countries can play an important role through Forums like this or through direct relationship with their countries in pushing the gender agenda and the reform agenda.