Hire more women to boost economic growth in the Middle East

Region has yet to use what could be its most transformative asset: the talent of nearly half the population

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Countries in the Middle East and North Africa have made considerable progress in reforming and diversifying their economies recently, laying the foundation for a pickup in growth in the next few years. But they have yet to use what could be their most transformative asset: the talent and aspirations of nearly half the population.

Across the region, women participate in the economy at a strikingly low rate. Just one in five working-age women work, compared with 70 per cent of men. In Mashreq countries, the participation rate of women is lower still, ranging from 14 per cent in Jordan and 15 per cent in Iraq to 25 per cent in Lebanon. Just 4 per cent of businesses in the formal sector are majority-owned by women - far lower than the global average of 16 per cent.

These numbers constitute a drag on regional growth. Women generate just 18 per cent of the region’s GDP, compared with the world average of 37 per cent. Studies show that if women were to participate in the labour force at the same rate as men, economic output could be boosted by nearly 50 per cent.

National governments and private sector would be wise to seize this opportunity for growth. Gender equality is smart economics. It helps reduce poverty, strengthens resilience and boosts shared prosperity. But it takes perseverance to achieve. Even where women do work, they are often concentrated in informal or lower-pay sectors. Women who have children face difficulty entering or staying in the work force – largely because access to high-quality, affordable, safe child care is scarce.

Fortunately, we know the challenge is not insurmountable. Across the Middle East and North Africa, private businesses are increasingly developing business models that create jobs and income for women previously left out of the economy. Working with national governments, the private sector is doing impressive work to close the gender gap and enable women to contribute to the region’s economic growth.

In Lebanon, for example, BLC Bank introduced an entire line of business that provides financial services aimed at supporting women entrepreneurs increase their access to capital. It also allowed BLC to reach new markets by tapping into an underserved segment: women borrowers.

BLC found that its loans to women generated higher returns than loans made to men - while the risk of default proved to be lower. Ultimately, the bank benefited not just from improved profitability but also from greater innovation in products and services and greater market growth.

In Jordan, MAS Kreeda Al Saf, the manufacturing arm of MAS Kreeda, found ways to retain its mainly female workforce by supporting child-care solutions. It created an on-site child-care center that provides free, high-quality child care, in addition to a space for breastfeeding mothers, health services, and free transport to and from the factory. Factory efficiency increased after the center was established.

The private sector can also help plug the skills gap by tapping into the female talent pool. An estimated 400,000 young people enter the labor market in Lebanon, Jordan and Iraq every year, including a high percentage of young women. Yet substantial amounts of private sector vacancies remain unfilled. Hiring women can help strengthen the talent pool, stabilise the workforce and contribute to better business performance.

Let’s think about how we can overcome the lack of safe, affordable transportation options for women—especially in this region. My organization, the International Finance Corporation, studied the business models of ride-hailing companies around the world and found that retaining more women drivers can help address safety concerns. Smart ride-sharing companies are beginning to realise that more women drivers can help grow their business and the overall market.

We need more of these business models. They empower women - and they help grow the business. Boosting women’s participation in the economy boosts productivity and competitiveness - and it boosts shared prosperity.

It’s a long overdue win-win for all.

Sérgio Pimenta is vice president for the Middle East and Africa for the International Finance Corporation, part of the World Bank Group, based in Washington DC.