Monitor Business Women in Saudi Arabia Dec 6 2010

8/3/2019 Monitor Business Women in Saudi Arabia Dec 6 2010

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Noura Alturki Rebekah Braswell

July 2010

Al Sayedah Khadijah Bint Khuwailid

Businesswomen Center

Characteristics, Challenges, and

Aspirations in a Regional Context

Businesswomen in

Saudi Arabia


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Noura Alturki Rebekah Braswell

July 2010

Characteristics, Challenges, and

Aspirations in a Regional Context

Businesswomen in

Saudi Arabia


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Al-Sayedah Khadijah Bint Khuwailid Businesswomen Centerwww.akbk.org.sa

Established at the Jeddah Chamber of Commerce and Industry in November 2004, Al-Sayedah KhadijahBint Khuwailid Businesswomen Center (AKBK) works in collaboration with the private sector andgovernment ofcials to lobby for the removal of obstacles facing women, in order to empower them

both economically and socially to become active participants in national development. It seeks toreform current legislations and policies to become supportive of womens advancement. In addition,the Center is keen on raising awareness and providing networking and educational opportunitiesfor female entrepreneurs, working women, job seekers, and potential entrepreneurs. The Center wasnamed after Prophet Muhammads (PBUH) rst wife Al-Sayedah Khadijah Bint Khawilid, a successfulbusinesswoman who remains a role model for Muslim women today. Known for her business skills,wisdom, and her values and ethics, she was also able to balance between her family and career. Withsuch a prominent gure as an inspiration, the Center aims to follow in Al-Sayedah Khadijahs footstepsto become a national and international resource for womens advancement in Saudi Arabia.

Monitor Groupwww.monitor.com

Founded in 1983, Monitor Group is a global rm that serves clients through a range of professionalservices strategic advisory, capability building and capital services. The rm employs or collaborateswith some of the worlds foremost business experts and thought leaders to develop and deliver specializedcapabilities in areas including competitive strategy, marketing and pricing strategy, innovation, nationaland regional economic competitiveness, organizational design, and capability building. Monitor Groupis focused on helping our clients lead in their eld and create sustainable competitive advantageand impact. To this end, and drawing on decades of experience advising governments on economiccompetitiveness, Monitor Group has studied and identied the crucial factors that encourage or impedeentrepreneurship throughout the world. Through its ofces in Dubai and Riyadh, Monitor Group hasexamined in particular how the public and private sectors can stimulate business formation throughshaping the policy and regulatory environment to drive competitiveness and to educate and engage theMiddle Easts next generation of business leaders.


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This report emerges to document the journey of female

entrepreneurs in Saudi Arabia at a time when we are

witnessing a rapid and increased investment in our countrys

human resources and economic development. This includes

the development of regulations that encourage greater

involvement of women in the workforce. The report also

shows the progress that Saudi businesswomen have made and

the evolution of their active participation.

The purpose of this report is to understand the environmentfor womens entrepreneurship in Saudi Arabia through

presenting accurate information about available business and

investment opportunities in the Kingdom. It also sheds light

on the talent and determination of businesswomen to take

advantage of available resources and invest them protably

to benet society.

I would like to express my thanks and appreciation to all

who contributed to this remarkable effort, which identies

the situation of women working in various elds of trade

and compares them to women in other Arab states; thisserves as a useful indicator of the progress made and the

challenges women still face. My wish is that this report will

be an illumination for businesswomen and for researchers

interested in the socio-economic development of our beloved

country.

May God give us success

HRH Princess Adelah bint Abdullah bin Abdulaziz Al-Saud

President of Al-Sayedah Khadijah Bint Khuwailid

Businesswomen Center


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Praise be to God and peace and blessings upon His messenger, our beloved Prophet Muhammad: There

is nothing more honorable and exalted than to recall verses from the Holy Quran, and in particular

one verse in which God commands the Prophet, Say to all: Work, and God will observe your work and

His Messenger and the believers. We deduce the love of work and the blessings that accompany the

pursuit of it.

It is these very words that came to mind when I received with great pleasure a copy of the study

Businesswomen in Saudi Arabia. This effort is no less than the embodiment of the status of women

in Saudi Arabia a topic that has received all the attention, appreciation, and consideration of the

Government of the Custodian of the Two Holy Mosques. The Kings support, may God protect him, has

enabled Saudi women to nurture their ingenuity and determination, and to receive the future with

utmost aptitude.

It is challenging to speak briey about this important subject of the status of women in Saudi society,

and in particular that of Saudi businesswomen. They have demonstrated many achievements and

laid the foundations for their success in many elds. We are nothing short of optimistic about their

continued contributions to the economy and to investment activities.

Certainly, this study serves as a conclusive testament to the accomplishments and vibrancy of Saudi

businesswomen, who appear to walk in a parallel line to men in this age of development and progress

and in this nation that is proud of its citizens and their contributions in all sectors. This is indeed a

remarkable study produced by Al-Sayedah Khadijah Bint Khuwailid Businesswomen Center, this Center

that owes its name to the very woman who created womens employment and gave businesswomentheir identity during the rise of Islam. There is no doubt that the history of businesswomen reaches into

the depths of time, from antiquity to modernity.

Who amongst us is not familiar with the character of Al-Sayedah Khadijah Bint Khuwailid? The Center

is honored to bear her name as a model and to immortalize her role in laying the foundations for

women in business. She was among the most successful women of her time in the eld of commerce

in Makkah, and widely known for her talents in business management.

I can only pray that God bestows Saudi businesswomen with good fortune as they continue on this

path, and as they follow the successes of women in various elds of work. Our nation needs such

successes in this era of progress and achievement.

FOREWORD

Sheikh Saleh Bin Abdullah Kamel

ChairmanJeddah Chamber of Commerce and Industry


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The historical election of two businesswomen and appointment of another two women to the Board

of the Jeddah Chamber of Commerce and Industry in 2005 fundamentally altered the face of business

and opened new doors for female economic participation in Saudi Arabia. This year, 2010, began with

a celebration of two businesswomens appointment to the board of the Eastern Province Chamber of

Commerce and Industry in Saudi Arabia, as well as the election for the rst time of a businesswoman

to serve as Vice Chair of the Jeddah Chamber. There was similar euphoria at the beginning of last year

when Custodian of the Two Holy Mosques King Abdullah appointed the rst female Deputy Minister

to his cabinet. Across the Kingdom, cultural acceptance of womens economic role has accelerated,

carving a deeper place for women in business and increasing the potential for future expansion. Indeed,

the active participation of women has been integral to the governments plans for spurring economic

development, with many old rules being annulled to support businesswomens advancement.

Since the establishment of Al-Sayedah Khadijah Bint Khuwailid Businesswomen Center in November

2004, we have strived to be facilitators of womens entrepreneurship and employment through

lobbying, research, and awareness. We engage in discussions with businesswomen and policy makers

alike to identify obstacles to womens advancement and help address these concerns. We also believe

in creating an enabling environment for women through raising awareness and doing research. This

latest report seeks to better understand the position of businesswomen in Saudi Arabia: who they are,

what types of businesses they run, and what challenges they face. By highlighting businesswomens

accomplishments and identifying areas for improvement, we aim to drive changes in policy and promote

the support services needed to take Saudi Arabias female entrepreneurs to the next level.

One of the reports strategic aims is to contextualize businesswomen in Saudi Arabia by comparingtheir proles, businesses, and the types of challenges and opportunities they face to the experiences of

other businesswomen in the region. Utilizing regional data from the International Finance Corporation,

a member of the World Bank Group, we compared Saudi female entrepreneurs to their counterparts

in ve countries: Bahrain, Jordan, Lebanon, Tunisia, and the United Arab Emirates. The next step in

understanding and assessing womens experiences in Saudi Arabia would be to compare them to mens.

Additionally, gathering gender-disaggregated data will allow us to work on bridging the gap.

This report is a testament of our commitment to supporting businesswomen and promoting female

participation in economic and social development. As evident in the report, female entrepreneurs in

Saudi Arabia are taking advantage of their education and the accelerated pace of reform to createbusinesses that play an increasing role in the nations economy. We believe the Kingdom is making

strides to support womens active participation and we have every reason to enter this new decade with

optimism, courage, and determination.

FOREWORD

Dr. Basmah Omair

General ManagerAl-Sayedah Khadijah Bint KhuwailidBusinesswomen CenterJeddah Chamber of Commerce and Industry


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7Businesswomen in Saudi Arabia

EXECUTIVE SUMMARY

1. BACKGROUND AND METHODOLOGY

2. GENDER AND THE REGULATORY ENVIRONMENT

2.1. Does Gender Matter?

2.2. Regulatory Challenges for Saudi Businesswomen

3. ACCESS TO CAPITAL

3.1. Current Business Financing Trends

3.2. Challenges and Successes

3.3. Increasing Understanding and Outreach

4. TOOLS AND SERVICES FOR GROWTH

4.1. Technology and Marketing Tools

4.2. Useful Services

5. CONCLUSION: THE WAY FORWARD

5.1. Outlook for Growth

5.2. Future Goals

6. APPENDIX

6.1. Personal Prole: Saudi Businesswomen

6.2. Business Prole: Female-Owned Businesses

REFERENCES

ACKNOWLEDGEMENTS

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Table of Contents


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This report is dedicated to the many businesswomen

in Saudi Arabia, past and present, to their families

who supported them, and to their daughters who

are following in their footsteps. Together, they arepaving the way for a more vibrant future for female

entrepreneurship in Saudi Arabia.


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Executive Summary


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PURPOSESaudi women are often perceived as isolatedfrom the world of business and economicspheres of inuence. They are virtually absentfrom the body of international literature onfemale entrepreneurship in the Middle Eastand North Africa. It is difcult to say howmany women own businesses in the King-dom, yet evidence suggests that they accountfor a small but growing share of total busi-ness activity. To address the lack of reliable

data and to better understand the challengesand opportunities facing Saudi business-women, Al-Sayedah Khadijah Bint KhuwalidBusinesswomen Center and Monitor Groupcarried out a study on current and aspiringfemale business owners. Based on these nd-ings and given the governments commit-ment to increasing womens participation inbusiness, the report also identies practicalways to support Saudi businesswomen andto facilitate the growth of their businesses.The recommendations are addressed to poli-cy makers, nancing institutions, and entre-

preneurship support organizations.

SUD OBJECIvES ADAPPROAC

This report examines the business-enablingenvironment for female entrepreneurshipin Saudi Arabia and highlights the person-al characteristics and business proles offemale business owners. The purpose of thestudy is three-fold:

1. To bolster understanding of the businessand regulatory environment for SaudiArabias businesswomen

2. To contextualize the situation of Saudifemale entrepreneurs by creating ameaningful comparison between themand other female entrepreneurs inthe region

3. To identify and address the businesschallenges these women face in order to

establish a more supportive environment

To realize these objectives, Al-Sayedah Khad-ijah Bint Khuwailid Businesswomen Center(AKBK) surveyed 202 registered business-women and 62 unregistered businesswomenwith varying levels of experience in Jeddah,Riyadh, and the Eastern Province (Dammamand Al-Khobar). The results are comparedacross ve Arab countries: Bahrain, Jor-dan, Lebanon, Tunisia, and the United ArabEmirates (UAE) through the use of a set ofcommon questions published in 2007 in areport by the International Finance Corpo-

ration (IFC) and the Center of Arab Womenfor Training and Research (CAWTAR) entitledWomen Entrepreneurs in the Middle East andNorth Africa: Characteristics, Contributions,and Challenges.

KE FIDIGS

The study revealed female business ownersin Saudi Arabia, as elsewhere in the world,to be positive, oriented toward the future,and committed to nding ways around the

challenges that they face. Furthermore, thesewomen have ambitious goals for the growthof their businesses. 69.3% were very opti-mistic about the future outlook of their busi-nesses, and a majority expressed their deter-mination to expand their businesses ratherthan maintain current levels, either throughdomestic expansion or regional and inter-national market entry. Yet the results alsoindicate that there are three main challengesto businesswomens aspirations and to thefuture growth of female Saudi businesses.

These challenges include:

Gender-specic obstacles in the regula-tory environment

Limited access to and use of formal capitaland nancing mechanisms

The need for increased integration ofsophisticated marketing and technologytools into business operations and greateravailability of key support services

Executive Summary


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The identied challenges represent com-plex socio-economic dynamics and practicesthat will take extensive collaboration andongoing commitment to address. However,the different dimensions highlighted in thisstudy begin to provide insight into the seriesof integrated steps needed to support SaudiArabias businesswomen to fulll their busi-

ness goals.

Oeriew of Saudi Female-Owned

BusinessesFemale-owned businesses in Saudi Arabia,both registered and unregistered, operatein a wide variety of elds. As detailed inthe Appendix, the most common businessesowned by surveyed Saudi women are art-based, including fashion, jewelry, interiordesign, and photography. Other areas witha large presence are beauty salons, retail/wholesale, professional services such as con-sulting, marketing, public relations, eventmanagement and education.

Saudi Arabias registered female-ownedbusinesses are among the largest in the sur-veyed MENA countries: 72.6% of registeredfemale-owned businesses operate outsidethe home and 92% have paid employees.However, female business owners in SaudiArabia are less likely than their GCC neigh-bors (Bahrain and the UAE) to be involved ininternational trade, with only 21.3% engagedin either import, export, or both activities.

With respect to Saudi businesswomen them-selves, three main ndings emerge. Firstly,Saudi businesswomen are signicantly morelikely to be the sole owners of their business-es than are MENA businesswomen. Secondly,they do not personally spend as much timeas their regional peers in the daily hands-on management of their businesses. Finally,Saudi businesswomen are a more highly-educated group than the general Saudi work-force: 58% of businesswomen have pursueda postsecondary degree, of which three out

of ten were completed abroad. Comparative-

ly, only 21.3% of the general Saudi workforcehas a postsecondary degree, according to theMinistry of Economy and Planning in 2004.However, the level of postsecondary educa-tion for Saudi businesswomen is not as highas that of their counterparts in comparableMENA countries.

Regulatory Enironment

Businesswomen must navigate all issuescommon to business owners operating in

Saudi Arabia, as well as female-specicchallenges. The female-specic challengesinclude regulations that both directly andindirectly constrain the business activitiesof Saudi businesswomen. For example, as ofthe publication of this report, businesswom-en registering public businesses (businessesthat serve both men and women) have beenrequired to appoint a male manager. Thelack of relevant business licenses for manypopular business activities, such as day-carecenters and beauty salons, further com-

plicates the registration process for Saudibusinesswomen. In addition, restrictions onwomens mobility due to the absence of pub-lic transportation and the ban on driving, aswell as restrictions on international travel,may cause delays, extra costs and/or limitedoptions for training abroad. Recruiting inter-national female specialists to provide train-ing courses within the Kingdom also poses

a challenge to business management, due torestrictions on obtaining business visas forforeign females.

Executive Summary

he study reealed female

business owners in SaudiArabia, as elsewhere inthe world, to be positie,oriented toward the future,and committed to ndingways around the challengesthat they face.


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Additionally, implementation of regulatorychanges aimed to ease constraints on Saudibusinesswomen has not taken full effect.Saudi businesswomen reported that somegovernment ofcials continued to insiston implementing laws that have alreadychanged, such as the prohibition to invest inreal estate, contracting and public services orthe requirement to hire a male intermediaryor power of attorney, wakeel. Furthermore,when implementation has taken place, ithas not always been effective. Saudi busi-

nesswomen cited inefcient access to gov-ernment services through female sections,stating that female sections add a layer ofbureaucracy and lack the decision-makingpower found in the main section.

These regulatory challenges result in busi-ness closures and also discourage womenfrom starting a business or leaving theinformal economy. Amending the regulatoryenvironment to eliminate direct and indirectconstraints on Saudi businesswomen and

fully implementing these changes will havea signicant impact on their ability to startand manage their businesses.

Access to Capital

Although accessing capital is fundamen-tal to the growth and productivity of smalland medium-sized businesses, Saudi busi-nesswomen reported rarely seeking exter-nal nancing. Instead, 82.2% of registered

businesswomen rely on personal savingsand 12.9% seek contributions or loans fromrelatives and friends. In contrast, MENA busi-nesswomen in general are much more likelyto seek external nancing.

Surveyed Saudi businesswomen perceiveaccess to capital as being more challeng-ing for women; however, the results indicatethat there are many more potential reasonswhy Saudi businesswomen do not extensivelyrely on formal capital for their business. For

example, a lack of familiarity with businessand nance tools and a preference for familynancial support also help explain this trend.

While further research is needed to betterunderstand the drivers of businesswomensnancing choices, survey results demon-strate that Saudi businesswomen have ahigh interest in getting support for the loanprocess and training that would help themidentify ways to expand their businesses intonew markets. Providing businesswomen with

these tools could help further integrate theminto the formal channels central to SaudiArabias core business environment.

ools and Serices for Growth

Saudi businesswomen do not always utilizeor have access to the range of tools andservices that are instrumental to businessdevelopment. From a communications per-spective, the marketing tools used tend to


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be low-tech and traditional in nature. Forexample, 55.9% of businesswomen do nothave a website, with the incidence risingeven higher for unregistered businesswomen(62.9%). Both as a result of the limited useof technology and perhaps contributing toit, the most common method of marketingis by word of mouth, followed by brochuresand leaets, and bazaars. It is through thesemeans that Saudi businesswomen promoteand share information about their productsand try to grow their businesses.

While many female-owned businesses may notrequire high levels of technology, and whileword of mouth is an effective marketing toolin Saudi Arabia, the lack of utilization of tech-nology and scalable marketing methods couldlimit the future scope of Saudi businesswom-ens outreach and efciency. This may be whyprospective businesswomen interviewed iden-tied the need to increase the use and sophisti-cation of marketing and technology tools usedas their businesses evolve.

To increase their access to tools and servicesfor growth, respondents identied informaland formal services that would be usefulboth to their growth as entrepreneurs andto the development of their businesses. Forexample, networking opportunities to learnand share experiences with other business-women ranked highly in terms of priorities,along with more formal training in nance,marketing, and use of technology. Withrespect to government services in particular,subsidized day-care and assistance with theloan process are the most important gov-

ernment services they would lobby for.

Results from the survey also highlightedthat businesswomen do not always use orknow whether a service they have identi-ed as useful exists. These ndings indicatethat in addition to the creation of some keysupport services, better outreach of existingservices is needed in order to provide Saudibusinesswomen with the tools they need toachieve their business goals.

RECOMMEDAIOSA combination of policies and services needto be implemented to address the chal-

lenges identied, help Saudi business-women achieve their growth aspirations,and encourage a new generation of femaleentrepreneurs. The following recommenda-tions are aimed at the level of policy makers,nancing institutions, and entrepreneurshipsupport organizations.

Recommendations for PolicyMakers

1. Establish a Ministry of Womens Affairs tomonitor the implementation of related royaldecrees and to devise a national strategyfor womens transition into the economyCurrently, regulations designed to supportbusinesswomen are passed but not alwaysimplemented across all levels of bureaucra-cy due to resistance and limited follow-up.A Ministry of Womens Affairs could ensuretheir execution and advise on areas for im-provement. The Ministry could also be in-volved in ensuring that laws passed by other

ministries take into consideration womens aswell as mens needs. Similar Ministries havebeen established in France and Malaysia.

2. Appoint Female Shoura Members toensure that the interests of Saudi busi-nesswomen and women in general arerepresentedCurrently, there are no female members ofthe Shoura Council, although there are nowseveral female advisors. Female members areneeded in the Shoura Council to representthe voices of women in business on a range

of socio-economic issues. In a positive move,Chambers of Commerce across Saudi Arabiahave begun to elect and appoint female boardmembers to ensure businesswomens interestsare represented.

Executive Summary

Female members are neededin the Shoura Council torepresent the oices ofwomen in business on a rangeof socio-economic issues.


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3. Eliminate the requirement for women toappoint a male manager in businessesthat serve both sexes

Currently, a male manager is required for fe-male-owned businesses that serve men andwomen, restricting businesswomens abilityto manage their businesses. Male and femaleentrepreneurs should be able to manage theirown businesses or to appoint the male or fe-male manager of their choice.

4. Ease restrictions on mobility for women,

in terms of public transportation, drivingand international travelCurrently, women are prohibited from driving,do not have access to public transportationand require the permission of a male fam-ily member to travel outside the country, allof which can negatively impact the ability ofbusinesswomen to run and grow their busi-nesses.

5. Create registration categories for thetypes of businesses that are in demandby businesswomen, such as beauty salons

and day-care centers, and identify theprocess for creating new registration cat-egories in the futureCurrently, registration categories are notavailable for many of the commercial activi-ties that female entrepreneurs are interestedin, which can discourage them from open-ing or registering a business. The absence ofrelevant licenses can also encourage them tooperate under a different registration cate-gory, such as tailor licenses instead of beautysalons, or lead to business closures due to

incorrect registration. Adjusting and addingregistration categories will open doors foressential business, such as day-care centers,that are a necessity both as a business op-portunity and as a support service for work-ing mothers.

6. Commission further research on how toincrease the effectiveness of business-womens access to government services byimproving female sections as well as themain centers in government agenciesCurrently, female sections in government en-tities are less efcient in processing womensrequests and may appear to be an addedlevel of bureaucracy for businesswomen,

rather than a direct channel for them to re-ceive government services. Further study isneeded to identify how to better service fe-male entrepreneurs, and requires evaluatingthe performance of female sections as wellas ensuring that male sections deal more ef-fectively with female requests.

7. Launch a nationwide public campaign topromote womens economic participationand support the implementation of exist-ing Royal Decrees

Currently, support for womens economicparticipation has increased at all levels: gov-ernment, private sector, society and media. Aconcentrated nationwide publicity campaigncould further promote the image of womenparticipating in the economy, both as work-ers and entrepreneurs. This also includesensuring that procedures are updated anddisseminated as soon as legislations are re-formed and making them available electroni-cally to the public.

8. Ease hiring practices for businesswomen

in areas that require international femaleexpertise or that are unable to be met bySaudi female labor. This includes studyingthe possibility of granting work permitsto non-Saudi women residing in SaudiArabia on non-work visasCurrently, procuring a work permit for non-Saudi women residing in Saudi Arabia, orvisas for businesswomen or female profes-sionals to enter the Kingdom, is exceedinglydifcult, and results in a lost opportunity tobenet from the knowledge and experience

of local and international resources. For ex-ample, Saudi businesses cannot take advan-tage of the skilled labor often found in thewives of expatriates working in Saudi Arabia.

Recommendations forFinancing Institutions

1. Commission further research to understandwhy businesswomen rely on personal savingsto nance their businessesCurrently, most businesswomen use personal

savings to start their businesses and do notpursue the external nancing sought by theirpeers in other economies. Given business-womens interest in expanding their busi-


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nesses and learning more about nancingtools, understanding the current nancingstructure of their businesses and perceptionsof non-personal nancing options is needed.Research should also assess the ease andclarity for entrepreneurs to obtain loans fromavailable nancing sources.

2. Increase awareness of different businessnancing options and facilitate business-womens access to appropriate fundingsources

Currently, banks, government funds, corpo-rations and entrepreneurship organizationsoffer different modes of nancing for en-trepreneurs that are often under-utilized bywomen. Increased awareness of these op-portunities could open new doors for busi-nesswomen and ensure they pursue the typeof nancing appropriate for their businessesneeds.

3. Ensure lending institutions are givenappropriate incentives and operate in aregulatory environment that encourages

lending to businesswomen

Currently, banks in Saudi Arabia assume dis-proportionate risk for lending to small andmedium enterprises, which limits their abil-ity to foster entrepreneurship. Agencies thatprovide loan guarantees to SMEs, as well aslending agencies, should refresh outreachstrategies to potential female entrepreneurs,in addition to setting targets for loans grant-ed to businesswomen. The requirements forlending to entrepreneurs should also be gen-

der-neutral and streamlined.

Recommendations forEntrepreneurship SupportOrganizations

1. Adopt programs to improve the visibility offemale role models for female high schooland university studentsCurrently, young potential businesswomenin Saudi Arabia have few public female rolemodels they can relate to; World Bank re-search on womens entrepreneurship sug-gests that the lack of female role models

contributes to the discouragement of female

Executive Summary


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entrepreneurial activity. Promoting initia-tives, such as the Top 20 Saudi Business-women Award in the Arab News annualsupplement on businesswomen, help to in-crease the visibility of female role modelsand should be promoted in schools and uni-versities

2. Provide practical courses and workshopsfor businesswomen to improve theirknowledge in nancing, marketing, tech-nology, and how to access new local and

international marketsCurrently, some businesswomen lack thetraining and tools needed to increase thescope and depth of their businesses. Courseson basic nancial training, latest marketingtools, website construction, and the processand requirements for international trade,among others, could help expand businessoutreach and facilitate business transac-tions.

3. Help new businesswomen navigate theregulatory environment by making gov-

ernment rules and regulations moreaccessible and by supporting their regis-tration processCurrently, regulations regarding starting andmanaging a business remain unclear to manybusinesswomen. Greater efforts to communi-cate rules and regulations simply and clearly(through websites, pamphlets, walk-in cen-ters, etc.) could help support businesswomenthrough the registration process.

4. Encourage unregistered businesswomens

entry into the formal economyCurrently, many businesswomen choose notto register their businesses either becausethey nd the process complicated, believethat their businesses are too small, or do notsee the benets of registration. Remainingin the informal economy, however, limits en-trepreneurs ability to grow and expand theirbusinesses. Mechanisms should be put inplace to encourage informal businesswomento register their businesses.

5. Provide opportunities for businesswomen tobuild networks with other business owners intheir country to share ideas and experiencesCurrently, businesswomen have very few fo-rums through which they can communicateand build networks with other business own-ers. Encouraging and facilitating womensinvolvement in established professional andentrepreneurial associations could increasethe ow of ideas and experiences.

I am trying to start my ownclothing line and it can bedifcult to know where to gofor things - the best fabric,designers, distributors. I knowsome of this expertise liesabroad but there is also anadantage and conenienceto keeping all productionwithin Saudi Arabia. It wouldbe so helpful to talk to other

women in this eld who haefaced these decisions before.

- Prospective Female Entrepreneur


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Background and Methodology

1.


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BACKGROUD

Women in Saudi Arabia have been activebusiness owners for decades. They navi-gate the usual sets of challenges that faceall entrepreneurs and also confront female-specic obstacles. With His Majesty KingAbdullahs ascendance to the throne in 2005as Custodian of the Two Holy Mosques, busi-nesswomen have received growing supportand attention. The Eighth National Develop-ment Plan (2005-2009) called for provid-ing [businesswomen] with loans, facilitatingsavings and credit procedures, and reducinginvestment and production risks. Womenare now present to varying degrees in theChambers of Commerce and have moreopportunities than ever before to participatein committees and public initiatives, such aseconomic forums, ofcial international gov-ernment delegations, and National Dialogueworkshops. Articles highlighting the determi-nation of women to succeed and to overcomesocial and regulatory challenges appear fre-

quently in local newspapers and magazines.

Yet, the absence of data on female entrepre-neurship in Saudi Arabia has contributed toan image of Saudi women as being particu-larly isolated from the world of business andfrom economic spheres of inuence. It hasalso led to Saudi womens under-represen-tation in the growing body of internationalliterature on female entrepreneurship, par-ticularly in the Middle East and North Africaregion (MENA). Contemporary research andnational policies on womens economic par-ticipation have largely focused on womenspresence in the labor market as employeesand thus do not tell the complete story. TheNational Development Plan suggests that4.7% (225,000) of total businesses at theSaudi Chambers of Commerce and Indus-try in 2004 were registered in the names ofwomen. However, as noted in a report pub-lished in 2003 by the Saudi Arabian GeneralInvestment Authority (SAGIA), commercialregistrations are an unreliable method ofestimating the number of female business

owners in Saudi Arabia. A large number ofregistered businesses are actually owned andoperated by men who use the names of theirfemale relatives, due to restrictions on gov-

ernment employees to pursue private busi-nesses. Some women also register using thenames of their male relatives to facilitate theprocess of obtaining certain licenses to opena business. Furthermore, Commercial Regis-tration licenses do not account for the manywomen who operate businesses in the infor-mal economy or receive permits from thelocal municipality for popular female busi-nesses, such as tailor shops and photographystudios.

To foster a supportive environment and topropose customized and implementable rec-ommendations that would support womenentrepreneurs, it is crucial to understand thespecic challenges, the regulatory frame-work, and the social context within whichwomen entrepreneurs in Saudi Arabia oper-ate. Central to this goal is the collection ofreliable, nationwide data.

MEODOOG

From October to December 2008, Al-SayedahKhadijah Bint Khuwailid BusinesswomenCenter (AKBK) administered a national sur-vey of businesswomen, in order to capturethe stories and experiences of a wide rangeof female business owners in different stag-es of business development, and across thethree major cities where most economicactivity takes place in the Kingdom. As thestarting point for its exploration into theSaudi context, the survey draws upon a jointreport published in 2007 by the Internation-al Finance Corporation (IFC) and the Centerof Arab Women for Training and Research(CAWTAR) on Women Entrepreneurs in the

Middle East and North Africa: Characteris-tics, Contributions, and Challenges. The useof a set of common questions allowed fora comparison of experiences, characteris-


It is crucial to understand thespecic challenges, the regula-tory framework, and the socialcontext within which women en-trepreneurs in Saudi Arabia op-erate. Central to this goal is thecollection of reliable, nationwidedata.


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tics, and aspirations between Saudi femaleentrepreneurs and those interviewed inthe other countries: Bahrain, Jordan, Leba-non, Tunisia, and the United Arab Emirates(UAE). Country-specic questions were alsoincluded in the Saudi survey. This approachprovides a useful benchmark and allows foran assessment of how businesswomen inSaudi Arabia fare compared to others in theregion. Comparing the experience of busi-nesswomen to businessmen would be animportant next step in understanding the

business environment in Saudi Arabia.The Saudi interviews, conducted by IpsosMarketing Research Company, covered 202registered businesswomen and 62 unregis-tered businesswomen with varying levels of

experience in Jeddah, Riyadh, and the East-ern Province (Dammam and Al-Khobar). Thesurvey was conducted face-to-face, ensuring

that all questions were answered completely.This sample size is a solid starting point tounderstand the characteristics, challenges,and aspirations of businesswomen in theKingdom. Including the experiences of ruralwomen would add an important dimensionin the future to support womens economicactivity outside the main cities.

The questionnaire focused on three key areasfor business formation: starting, managing, andexpanding a business. In addition, 50 prospec-tive businesswomen who were in the process

of starting their businesses were interviewedas a comparative sample. Their experiencesare referred to in different sections throughoutthe report, where relevant. The businesswomen

were identied from databases available at theChambers of Commerce in Jeddah, Riyadh, andthe Eastern Province and through referencesand snowballing techniques. In all three cit-ies, businesswomen gatherings were organizedto invite women to participate in the study.Women were also approached for interviews atvarious bazaars and exhibitions, or recruited viaphone calls, emails, faxes, and SMS text mes-sages. Additional supplemental research, inter-views and analysis were completed with rel-evant Saudi and international experts in 2009.

The ndings in this report are based on theexperiences and viewpoints of 314 women(see Table 1.A). Among them, 20 women wereselected for a longer qualitative interview.

Defining Businesswomen and Entrepreneurs

The terms businesswoman and entrepreneur have different connotationsin different parts of the world. In this report, a businesswoman refersto a woman who has an ownership stake in her business, regardless of

whether she started it herself, invested in it at a later stage, or inheritedit. This definition is broader than an entrepreneur, who has started herown business, but narrower than the North American and European usage,which includes a woman employed by large corporations or in other salariedpositions. The term businesswoman is used interchangeably in this reportwith entrepreneur and business owner to refer to the interviewed sample.



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20

A OE O AIOAI

84% of the women interviewed in the Saudisurvey are Saudi nationals; the remaining15% are Arab and 1% are European/NorthAmerican. Although the majority of the par-ticipants are Saudi, the nationality of thebusinesswomen was not considered to be animportant factor in the recruitment process,as the survey aimed to capture the experi-ences of businesswomen residing in Saudi

Arabia, regardless of their citizenship status.That said, the regulatory environment forentrepreneurs in Saudi Arabia differs great-ly for Saudis and non-Saudis, especially interms of requirements to register a businessand apply for a bank loan. Such differencesbetween the experiences of Saudi and non-Saudi businesswomen are beyond the scopeof the current report; it is important to notenonetheless as a possible area for furtherstudy.

The sample of native businesswomen inter-viewed in Saudi Arabia includes more expa-triates than in Bahrain, Lebanon or Tunisia,but fewer than in the UAE, where only 44%of the women interviewed are Emirati. Thereare more non-Saudis among the unregisteredbusinesswomen (24%) than among the reg-istered businesswomen (11%).

REPOR SRUCURE

The chapters in this report focus on differ-

ent areas of fundamental importance to thebusiness activities of female entrepreneursin Saudi Arabia. Chapter Two presents theregulatory challenges facing businesswomen

in the Kingdom, both as a result of female-specic restrictions and in terms of genderbiases outside the business environment.Chapter Three addresses access to capitaland nancing methods, which are criticalto the growth and development of any busi-ness. Chapter Four explores businesswomensuse of technology and marketing tools forbusiness growth. Chapter Five concludes thereport by charting the way forward for busi-nesswomen, emphasizing businesswomensdetermination and optimism to expand theirbusinesses and the need for appropriate sup-port to help them achieve their aspirations.

Finally, the Appendix provides rich dataabout the personal and business character-istics of Saudi Arabias female entrepreneurs,which may be of interest to policymakersand researchers alike. The personal proleof female entrepreneurs covers age, maritalstatus, education, and level of involvement inthe business eld (years of experience, hours

spent in daily management per week, andhow much of their businesses they person-ally own). The business prole highlights themain characteristics of Saudi womens busi-nesses: how long theyve been in operation,their areas of activity, location, number ofemployees, and involvement in internationaltrade. Both the personal and business proledistinguish between the characteristics ofregistered and unregistered businesswomenin Saudi Arabia, before putting the results ina regional context through a comparison of

female entrepreneurs in Saudi Arabia, Bah-rain, Jordan, Lebanon, Tunisia, and the UAE(MENA countries).

Jeddah

CityRegistered

BusinesswomenUnregistered

BusinesswomenProspective

BusinesswomenTotal

79 30 20 129

Riyadh

Eastern Province

otal

80

43

202

24

8

62

20

10

50

124

61

314

Table 1.A: Distribution of Surveyed Businesswomen in Saudi Arabia


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Gender and the Regulatory

Environment

2.


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22

Supportive business laws and regulations areinstrumental in the start-up and operation ofany successful entrepreneurial activity. Econo-mies that enact clear and efcient rules thatare simple to implement provide a more sup-portive environment for business formation.This chapter explores the experiences of busi-nesswomen in Saudi Arabia in dealing with therules and regulations related to starting andmanaging a business. It distinguishes betweenchallenges that are common to all businessowners and challenges specic to business-

womens experiences as women. Some of thechallenges that are due to gender are a result ofsocial issues outside the business environment;others are directly related to rules and regula-tions that are different for women and men inthe business eld.

In order to give a fully comprehensive pictureabout the regulatory environment for busi-nesswomen in Saudi Arabia, the ndings pre-sented in this chapter include data from thebusinesswomen survey and also draw on the

rich material found in conference proceed-ings, workshop materials, and ofcial regula-tions pertaining to business in Saudi Arabia.Together, these ndings indicate that Saudibusinesswomen:

Consider unclear regulations and poli-cies to be an important issue affectingtheir businesses

Believe that many social and regulatoryinteractions are more challenging forthem because of their gender

Rely heavily on their male relatives tocomplete the business registration process

Face female-specic challenges that area result of extra restrictions and require-ments for businesswomen that are notrequired of men

Female-specic obstacles in the regulatoryenvironment must, therefore, be addressed toprovide a level playing eld for businesswomen

and support female entrepreneurs to reach theirbusiness aspirations and ultimately contributeto economic growth in Saudi Arabia.

2.1. DOES GEDER MAER?Businesswomen in Saudi Arabia often facesimilar challenges to businessmen in dealingwith slow bureaucracy and unclear regula-tions in government procedures, but alsoconfront challenges specic to their experi-ences as women. 73% of businesswomen ndthat unclear regulations and policies have avery important or extremely important effecton their businesses. Moreover, both regis-tered and unregistered Saudi businesswomen

believe that gender impacts their ability todeal with most of the scenarios identiedin the survey (Figure 2.1.A). These scenariosinclude social and regulatory obstacles suchas:

Balancing work and family life

Joining formal networks, such as businessassociations

Networking and building informal rela-tionships

Dealing with bureaucracy and paperworkin government entities

Interference in their work and surveillanceby government entities

Personal safety issues, such as annoyancesfrom customers and government employ-ees

Only in two areas do Saudi businesswomennd no difference related to their gender:working with clients and customers, andmanaging female employees.

Gender and the Regulatory Environment


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In sharp contrast, and when comparing onlyregistered businesswomen, the female entre-

preneurs in the other MENA countries do notidentify these scenarios as being particularlyharder for them as women (Figure 2.1.B). Only

in the area of balancing work and family lifedo a majority of women in all the countries

including a similar number of registeredbusinesswomen in Saudi Arabia say thatthis is more challenging for them as women.

City differences

Saudi businesswomens perceptions vary from city to city. In Riyadh,businesswomen find it more difficult than their counterparts in Jeddahand the Eastern Province to manage male employees. 58.8% of registeredRiyadh businesswomen believe it is more challenging to manage maleemployees as a woman, compared to the average of 42.1%. In contrast,only 25.3% of businesswomen in Jeddah and 41.9% of businesswomen inthe Eastern Province believe this to be the case. However, businesswomenin Riyadh believe that there are fewer challenges managing femaleemployees: only 12.5% of Riyadh businesswomen compared to 21.3% of

registered businesswomen across the Kingdom think it is more challengingas a woman to work with female employees. Similarly, only 28.8% ofregistered businesswomen in Riyadh think it is more challenging ingeneral to work with clients and customers due to their gender, comparedto 30.7% of all registered businesswomen.

Figure 2.1.A: Saudi Businesswomens Perception of the Impact of Gender in Dealing with Different Scenarios


0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75

Joining formal networks More challengingas a woman

Easier as a woman

No differenceDealing with bureaucracyand paperwork

Interference in your paperwork

Personal safety issues

Percent of Surveyed Businesswomen

Networking and buildinginformal relationships

Balancing work and family life

Gaining access to capital

Managing male employees

Being taken seriouslyas a business owner

Working with clientsand customers

Managing female employees

6429.2

6.8

63.325.811.0

62.929.2

8.0

60.229.9

9.8

59.827.7

12.5

57.225.8

17.0

52.337.1

10.6

46.234.1

19.7

43.238.6

18.2

33.341.7

25.0

27.739.038.5


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the registration process and perceive thefemale sections of government entities tohave comparatively low levels of efciencyand authority.

For example, on average, only 38% of busi-nesswomen reported that they registered theirbusinesses themselves. While it is common forbusiness owners in Saudi Arabia to rely ona third party (also known as a governmentrelations ofcer or muaqqib) to handlegovernment procedures on their behalf, this

does not appear to be the reason for the lowinvolvement of businesswomen in this pro-cess. Rather, many businesswomen rely ontheir male relatives to complete the registra-tion process for them. There is also a variationbetween cities in terms of who completes theregistration process, as illustrated in Figure2.2.A. More than half of the businesswomenin Jeddah reported registering the businessesthemselves, compared to less than a third inRiyadh and one fth in the Eastern Province.Of those who did not register their businesses

themselves, the majority relied on their malerelatives in all three cities. The variation in thenumber of women registering their businessesthemselves may reect a variation in ease of

access to government services. For example, inlocations where access to government servic-es is made easy for women, women are morelikely to act independently rather than havingto rely on others to act on their behalf.

The perceived low efciency and author-ity of female sections in government entities

may contribute to the preference and needfor a male relative or muaqqib to completethe registration process. The Saudi Councilof Ministers sought to create access to gov-

ernment services for businesswomen in RoyalDecree 120, issued in early 2003, by requir-ing all relevant government entities to openfemale sections, including the Ministry ofCommerce and Industry, the Ministry of Labor,the Municipality, and the Saudi Arabian Gen-eral Investment Authority (SAGIA). Facilitatingaccess to government entities is in keepingwith the Kingdoms goal to improve the easeof doing business in Saudi Arabia. However,it is not clear whether these female sectionshave fully addressed businesswomens needs.

Although they provide a new window to gov-ernment services, many businesswomen con-sider the female sections to be an added layerof bureaucracy instead of a one-stop shopthat facilitates their requests. This addition-al bureaucracy for businesswomen must beaddressed, in order to boost Saudi Arabiaseconomic competitiveness for all businessowners, women and men. Some suggest thatthe employees in female sections have little tono authority to process womens applicationsand that they must be empowered to make

decisions. Further study is needed to assessthe effectiveness of these female sections andwhat needs to be done to improve the servicesprovided for businesswomen.


My husband had to goto the municipality andnalize eerything with thegoernmental department.hat was really hard for himas he had to excuse himselffrom his work.

- Registered businesswoman

Figure 2.2.A: Person Completing theRegistration Process for Female-Owned

Businesses in Saudi Arabia


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26

2.2.2. Requirement to Appoint aMale Manager

Another signicant obstacle restricting busi-nesswomens access is the requirement toappoint a male manager (mudeer), if a wom-ans business employs and serves men. Theregulations stipulate that the manager mustbe an unemployed Saudi man who does notown or run any business. This is not only anadded expense for businesswomen, but alsoleaves them susceptible to the manager tak-ing advantage of his position and pursuingpersonal interests. It also undermines busi-nesswomens ability to manage their busi-nesses on their own or appoint a femalemanager of their choice.

2.2.3. Absence of icensing forPopular Business Actiities

In recognition of the fact that women often

need extra support to start and manage theirbusinesses, the Saudi Council of Ministersissued Royal Decree 120 in early 2003 to pro-mote the expansion of job opportunities and

elds of work for Saudi women. For a num-ber of businesswomen, the biggest challengewas not the inability to access governmentservices but the absence of licenses for thebusinesses they wanted to establish. The rstpoint of Royal Decree 120 mentions businesslicenses directly:

All government entities that issue busi-ness licenses each entity according toits field of specialization must accept allapplications by women seeking licenses

and must issue them in accordance withIslamic laws and regulations.

Despite governmental support to help busi-nesswomen receive business licenses, theyface particular challenges in this area. Mostactivities that are popular among femaleentrepreneurs particularly those cater-ing to women and children, such as beautysalons, day-cares, and after-school activities are not recognized by the government enti-ties that issue business licenses. For example,

womens tness centers are only permitted ifafliated with a medical establishment. Thelack of exibility in creating new license cat-egories limits the creativity of female entre-preneurs. This challenge has resulted in threeunfavorable outcomes for businesswomen.

1. Missed Business Opportunities

The absence of licensing for popular busi-ness activities prevents female entrepreneursfrom pursuing their desired elds, resulting ina missed opportunity that could, if remedied,

provide benets to the Saudi economy andsociety. For example, many businesswomenhave sought to open day-care centers withextended hours of operation to help work-ing mothers balance between their work andfamily responsibilities. However, there areno clear regulations and standards for day-care centers and it is not apparent whetherthis would fall under the jurisdiction of theMinistry of Social Affairs or the Ministry ofEducation. Other neighboring countries suchas the UAE have already put together regu-lations for such day-care centers.Consultingwith best practices in the region would be animportant step forward.

Businesswomen must takeprecautions when appointinga manager for theirbusinesses. Many women

gie their managers fullresponsibility and control andthis relinquishment of controlhas serious consequencesfor them. hey gie thisauthority out of negligenceor ignorance, or, if it is arelatie, a businesswomanmight be feel embarrassedasking to limit his authority.But at the end of the day,when there is money to be

claimed, they dont look forthe manager, they go afterthe owner.

- Lawyer


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2. Informal ArrangementsMany female entrepreneurs who are deter-mined to pursue their business interests doso informally, thus avoiding ofcial channelsthat are perceived as problematic. Conse-quently, their businesses remain unregulatedand unlicensed, with limited potential forgrowth. These businesses are not subject toinspection, which has consequences for thehealth, safety, and quality of their productsand services. Unregistered businesses havefewer chances of gaining access to capi-

tal and are prevented from ofcially hiringemployees on their payrolls or registeringthem for medical and social benets.

3. Registration under a Different Category

Over time, Saudi businesswomen have foundways to circumvent the absence of theirdesired business license by registering undera different category. One example is beautysalons, which constitute 20% of the busi-nesses owned by female entrepreneurs in this

study. Although beauty salons are not a rec-ognized registration category, beauty salonowners have been registering their businessactivities as tailoring for decades. With theincrease in inspections of female-only busi-nesses and with continuing demand for workvisas, this false registration category has ledto conicts with the local municipality andlabor ofce. Making these registration cate-gories available would enable businesswom-en to comply with the relevant internationalhealth and safety standards and apply forthe correct work visa in the respective pro-

fessional category, such as requesting hairstylists instead of seamstresses.

2.2.4. ack of Enforcement ofSupportie Business aws

Businesswomen in Saudi Arabia face dispro-portionate challenges dealing with outdatedlaws that are still in effect. Despite beingupdated, many supportive government poli-cies are not enforced.

Until 2004, the Ministry of Commerce hadrequired every businesswoman to appoint a

legal intermediary (wakeel) to act publiclyon her behalf, regardless of the type of busi-ness she owned. This wakeel, who could bea relative or a stranger, had full power ofattorney and complete access to the busi-nesss assets. In April 2004, the Ministry ofCommerce eliminated the wakeel require-ment, but kept the manager (mudeer) forpublic businesses as outlined in section 2.2.2above. Still, businesswomen reported thatgovernment ofcials continued to requestthe presence of their wakeel for a number of

different procedures, even after the elimina-tion of this requirement. Businesswomen infemale-only businesses, who by law are notrequired to appoint a male manager, werealso frequently asked to send a male manageron their behalf. This demonstrates that sup-portive policies are not always implementedand that women must constantly negotiatewith government ofcials over benets thathave already been granted to them. The Min-istry and Chambers of Commerce and Indus-try need to ensure that government ofcials

are following government regulations, ratherthan acting on outdated regulations or indi-viduals beliefs.


I went to the Ministry ofabor and requested workisas for my business, which isin general contracting. heytold me that contractingis prohibited for women. Itried to explain to them it isnow permissible and that thecommercial license I hae isfrom an ofcial entity, theMinistry of Commerce. Butthey werent responsie,so now Im stuck betweenthe two ministries trying toresole this issue.

- Registered businesswoman


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28

Another case in point is the easing of restric-tions to invest in certain elds. At the endof 2008, the Ministry of Commerce andIndustry lifted the ban on women investingin business activities that were previouslyprohibited, including real estate, contractingand public services. Businesswomen centersin the three cities have registered complaintsby businesswomen that ofcials at the Min-istry of Labor and the local municipalitiescontinue to delay the procedures for busi-nesswomen investing in these elds because

they have not yet received the documenta-tion indicating that women are now allowedto invest in these elds.

Businesswomens access to governmentservices and banking facilities is, therefore,often highly dependent on the helpfulnessand exibility of the ofcial with whom sheis dealing. This makes businesswomen moresusceptible to bribes and corruption, a situa-tion that is both discouraging and potentiallydangerous.

2.2.5. Restrictions onWomens Mobility

Restrictions on womens mobility lead toanother set of challenges that business-women and their female employees mustnavigate. The ban on women driving and the

absence of safe and reliable public trans-portation generates extra costs and delaysfor both businesswomen and their femaleemployees. The need to have a guardianspermission to travel abroad also limits theability of businesswomen to attend confer-ences, seek training, foster business relationsabroad, and hinders their ability to train theirfemale employees.

Restrictions on bringing in female spe-cialists and consultants from abroad also

reduce the provision of word-class train-ing for local employees. According to theMinistry of Labor, it is prohibited to recruitlaborers from abroad for female retail storesor female physical therapy centers. Nor arebusinesses allowed to employ female workersfrom abroad in any administrative activitiesor administrative jobs, such as IT or supportservices for private schools. Being able to tapinto and fully utilize female talent, locallyand internationally, is important for thegrowth of businesses and for the economy

as a whole.


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Access to Capital

3.


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30

Access to capital is fundamental to thegrowth and productivity of small and medi-um enterprises (SMEs). It enables entrepre-neurs to start new businesses, invest in them,enter new markets, upgrade their operationsand expand their products and services. It isa tool that enables the formation of a start-up as well as its transition from a small to amedium-sized business. In turn, these invest-ments can create jobs, increase businesssophistication and competitiveness and driveeconomic growth within a country.

Despite commitments to economic diversi-cation and the promotion of entrepreneur-ship, access to capital a key component toboth of these efforts remains a challengefor male and female Saudi entrepreneursalike. An analysis undertaken by the SaudiNational Competitiveness Center (NCC) high-lights the fact that access to bank loans andcredit is particularly limited for Saudi SMEscompared to more competitive economies. Asthe NCC suggests, providing carefully struc-

tured loan guarantees to start-ups to reducethe lending risk to banks would play a vitalrole in reducing barriers to access to capi-tal. These reform initiatives would improveaccess to capital for all Saudi entrepreneurs.

Further efforts could also target the specicneeds and interests of Saudi businesswomen.Findings from the survey indicate that Saudibusinesswomen:

Rarely seek external nancing and insteadrely on personal savings and loans or con-

tributions from family and friends

Perceive accessing capital as being morechallenging as a female

Would value support in facilitating theloan process and training or services thatwould help them identify ways to expandtheir businesses into new markets

Further research is needed to understand thedrivers of Saudi businesswomens nancing

choices and identify the interventions thatcould help facilitate access to capital optionsfor businesswomen. For example, it wouldbe more challenging for Saudi business-

women to realize their aspirations to expandtheir businesses domestically or internation-ally without seeking some sort of externalnancing. The survey results indicate therecould be several reasons why businesswomenin Saudi Arabia do not seek external nanc-ing, such as a preference for family loans orlack of familiarity with business and nanc-ing tools, in addition to the perception thataccessing capital is more challenging for awoman. It is also possible that the surveyedbusinesswomen did not need a loan, suggest-

ing that only women who can afford to starta business do so.

What is clear from the survey results is thatbusinesswomen have identied access tocapital as an important part of starting andmanaging a business and have prioritizedtraining in this area. Increasing access tothese learning tools and raising awarenessof different nancing options could furtherhelp Saudi businesswomen achieve theirbusiness goals.

3.1. CURRE BUSIESSFIACIG REDS

In general, Saudi businesswomen rely onpersonal savings to fund their businesses anddo not seek external nancing. In the casewhere additional capital is sought, family orfriends most often provide the nancial sup-port (Figure 3.1.A).

The reliance on self- and family-nancing is

particularly prevalent in Saudi Arabia. Accessto capital is important to expand businessesbeyond the start-up stage although moststart-ups and small businesses around theworld are nanced by family and friends. Incontrast to the surveyed Saudi businesswom-en, the majority of businesswomen in therest of MENA have sought external nancingto start and manage their businesses (Figure3.1.B).

Saudi businesswomens lack of externalnancing and effort to secure capital couldbe attributed, in part, to their lack of famil-iarity and contact with common nancialand business tools. For example, 54% of

Access to Capital


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women surveyed did not complete a feasi-bility study before starting their businesses,stating either that they are condent in theirown experience and knowledge of the eldthey were entering (37%), or that conductinga feasibility study is only required for busi-nesses with large amounts of start-up capitaland is therefore a luxury and not a neces-sity (23%), or nally they are unfamiliar withthe concept of a feasibility study (21%).

Even when traditional steps in business andnancial planning are taken, friends and fam-

ily are the main source of advice and consul-tation. For example, if a feasibility study wascompleted, it was usually carried out by ahusband or friend. Furthermore, when askedwho Saudi businesswomen consult in mak-ing business decisions, family members weremost frequently cited whereas bank loanofcers, nancial advisors or lawyers werenever or rarely used (Figure 3.1.C).

Figure 3.1.A: Type of Finance Used by Saudi Businesswomen*

Access to Capital

Figure 3.1.B: Percentage of MENA BusinesswomenWho Have Not Sought External

Financing in the Past Year


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32

Figure 3.1.C: Frequency of Consultation among Saudi Businesswomen for Different Purposes

The frequent utilization of family and socialnetworks for business nancing and advicepotentially comes at the expense of Saudibusinesswomens exposure to other capi-tal systems, such as bank loans and lines

of credit. These systems could help themgrow their businesses at a faster pace andon a larger scale. Regardless of the reasonfor womens reliance on family and friends,there is a clear need to ensure that womenare receiving the formal support of key insti-tutions in the nancial and legal systems.

3.2. CAEGES AD

SUCCESSESAs highlighted above, Saudi female entre-preneurs identify gaining access to capital asan activity that is more difcult as a woman.They are also more likely to identify this asa challenge than their regional peers (Figure3.2.A).

This perception may be due to the belief thatthey will be unsuccessful in getting a loan.For example, it has been historically difcultfor women in Saudi Arabia to gain access to

capital, which may be a legacy that is dif-cult to overcome. Until recently, a maleguarantor used to be required to facilitatebanking for Saudi females and there have

If you think about it, who werethese women supposed tointeract with? In the past, therewere no female accountants ornancial adisors. hese werenot accessible professionsfor women for a numberof reasons. here are morefemales working in theseprofessions now, there arefemale sections in banks, butit is not surprising that womenhae relied on family malerelaties in particular whocould make transactions fornancial adice and support.

- Registered Businesswoman


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been and remain few Saudi female businesslawyers and accountants with whom Saudibusinesswomen can interact.

The lack of business registration and notbeing a Saudi national are two areas wherebusinesswomen articulate challenges. Anunregistered businesswoman with nine yearsof work experience was unsuccessful in herattempt to open a pre-school because shecould not get funding without a license for

her business, I applied for a business loanfrom a private fund, but my request wasrefused because I didnt have the appropri-ate licenses. In another case, an owner ofa beauty salon stated that she could notget nancing because she was a non-Sau-di, despite living and owning a business inSaudi Arabia for 19 years: I tried to applyfor nancial assistance or a loan in my namebut I faced some difculties because I amnot Saudi. These types of challenges mostlikely apply to men as well, which further

reinforces the need to adjust the regulatoryenvironment and make registering a businessan easier and more inclusive process.

However, there are some positive signalsthat indicate that accessing capital is notan insurmountable obstacle. The few Saudibusinesswomen surveyed that did seek exter-nal nancing appear to enjoy higher ratesof success than their regional counterparts,despite the perception of its difculty amongthe majority of Saudi businesswomen sur-veyed.

For example, Saudi businesswomen do notface as high interest rates, a large barrier formany entrepreneurs, as their regional coun-terparts. Furthermore, when they did seeknancing, they were denied less frequently(Figure 3.2.B).

Figure 3.2.A: Percentage of MENABusinesswomen Who Find Access to Capital to

be More Challenging as a Woman

Figure 3.2.B: MENA BusinesswomensExperiences with Access to Capital

Access to Capital


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34

3.3. ICREASIGUDERSADIG ADOUREAC

While the causes of the challenges forwomen to acquire credit and their preferencefor family nancing require further research,it is clear that access to capital is an issueof signicant importance to businesswomen:73% of survey respondents identify this asone of the most important issues affectingtheir business, and identify assistance andtraining in this area as a needed form of sup-port. In particular, 21% of respondents iden-tify assistance with the loan process as themost important form of support they require.

Training in nancial management is also aservice desired by the survey respondents:80% identify this as a service they most needand it is a subject in which Saudi business-women would like to increase their knowl-edge, skill and familiarity. Furthermore, busi-nesswomens determination to grow and

expand their businesses means that they willneed this capital to achieve their growth-ori-ented goals. One example is businesswomensdesire to engage in international trade. Sincetrade nance does not pose the same risk tobanks as providing growth capital or work-ing capital, international trade is an areathat Saudi businesswomen could potentiallytap into. Gaining this expertise and receivingassistance in the loan process could provideSaudi businesswomen with the tools neededto reach their business growth goals.

I try to do extensie outreachto let women know thatthere is funding aailable tothem to start a business. heyeither dont know about ourorganization and the supportit can proide or fear thatthe loan will come with toomany strings attached. I haeto be proactie to get more

female applicants for loans.We maintain our outreachin Saudis major cities buthae also reached out torural communities simply toadertise this opportunity.When women do apply, theirapplications are just as strongif not stronger than the otherapplications we receie. helower number of loans giento female entrepreneurs has

nothing to do with a loweracceptance rate, we just dontreceie as many.

- Female Director, EntrepreneurshipSupport Organization


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Tools and Services

for Growth

4.


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36

There are a range of tools and services thatare instrumental to business development.For example, technology and marketingtools help businesses grow at faster ratesand enter new markets. A website allowsbusiness owners to promote and sell theirproducts globally, lends greater credibility torms, and can help provide better customerservice (through feedback on products andservices, streamlined and faster service, etc.).Technology and marketing also increase theefciency of business operations through

the streamlining and automation of proce-dures and more focused and targeted out-reach. Furthermore, having access to training(in nance, marketing, and management),transportation, day-care centers, and othersupport services, fundamentally shape andfacilitate the management of a business.

For Saudi businesswomen, gaining accessto the tools and services needed to supporttheir businesses is a clear priority that theyare willing to advocate for. Survey ndingsdemonstrate that Saudi businesswomen:

Believe technology and marketing have avery high impact on their business opera-tions and plan further integration of thesetools in their businesses

Would value learning how to use nance,technology and marketing tools moreeffectively

Believe networking and other learningopportunities to exchange new businessideas are important services to have

Would advocate for subsidized day careand the activation of womens services inall government entities

Identifying channels for Saudi businesswom-en to utilize or gain access to these tools andservices could provide them with the lever-age they need to increase the efciency andoutreach of their businesses.

4.1. ECOOG ADMARKEIG OOS

The majority of Saudi businesswomen havelimited use of some common technology andmarketing tools in their businesses (Figure

4.1.A). For example, 56% of registered busi-nesswomen do not have a website, with theincidence rising even higher for unregisteredbusinesswomen at 63%. Instead, Saudi busi-nesswomen tend to rely mostly on mobilephones and personal computers to conductbusiness (Figure 4.1.B).

Figure 4.1.A: Percentage of Saudi

Businesswomen Who Have a Website

Tools and Services for Growth

I can now send the pictures ofnew dishes that Ie created ia

Bluetooth or MMS, in additionto making phone calls, sendingemails, and participating inthe internet forums.

- Unregistered Businesswoman


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The most common method for Saudi busi-nesswomen to promote and share their prod-ucts and grow their businesses is through

word of mouth, followed by brochures andleaets, and then bazaars (Figure 4.1.C).

Figure 4.1.B: Saudi Businesswomens Use of Technology Tools*

Figure 4.1.C: Saudi Businesswomens Use of Marketing Tools



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Compared regionally, Saudi businesswomenuse internet less than their peers, particu-larly those in the UAE, who use the internetand email much more frequently to commu-nicate and research business opportunitiesthan businesswomen in any other countrysurveyed (Figure 4.1.D).

However, despite overall lower internet usethan their peers, Saudi businesswomen areabout as likely to have a company website aswomen in other countries surveyed, with theexception of the UAE (Figure 4.1.E).

Figure 4.1.D: MENA Businesswomens Use of the Internet

Figure 4.1.E: Percentage of MENA Businesswomen Who have a Website


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While many female-owned businesses may notrequire high levels of technology, and while wordof mouth is an effective marketing tool in SaudiArabia, the lack of utilization of technology andscalable marketing methods could limit thefuture scope of Saudi businesswomens outreachand efciency. This may explain why prospectivebusinesswomen identied the need to increasethe use and sophistication of marketing andtechnology tools as their businesses evolved. Forexample, prospective businesswomen said theywould rely heavily on word of mouth (76%) and

less on a website (12%) at the early stages oftheir business. Over time, however, these womenplan to use more forms of marketing as theygrow their businesses, placing greater empha-sis on electronic marketing in particular. 28%of prospective businesswomen surveyed statedthey would use a website to market their busi-nesses at future stages (Figure 4.1.F).

Figure 4.1.F: Prospective Businesswomens Plans toUse Marketing Tools at Early and Future Stages


I think the print ersion ofour product will become moreand more just a symbol of ourorganization. What we reallyhope for is to use the brandof our publication to drieusers to our website. Ourscope of outreach becomes

so much larger through ourwebsite and so much easierto manage as a start-upwith few employees. Wereon Facebook and all sorts ofnetworking sites as well.

- Female magazine owner


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Figure 4.1.G: Prospective Businesswomens Plans to Use Technology at Early and Future Stages

A similar trend can be observed in the prospec-tive businesswomans plan for technology tools.

At the early stages of the business, prospectivebusinesswomen plan on using fewer tools, suchas mobile phones and personal computers, andtransitioning over time to use a higher num-ber of tools and more technologically complexservices, such as a network of computers andvideo conferencing (Figure 4.1.G).

Many businesswomen have already integrat-ed marketing and technology tools into their

operations; however, increased use wouldallow businesswomen to communicate moreregularly and creatively with their clients. Fur-ther training in and use of these tools couldaccelerate their integration into business.


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Figure 4.2.A: Saudi Businesswomens Use of Local Learning Opportunities

4.2. USEFU SERvICESWhether the challenge is developing a nan-cial plan or learning about a new marketingtool, it is clear that Saudi businesswomenare eager to take advantage of networking,training and other support services that willenable them to improve or facilitate theirbusinesses. When asked about services theybelieved are or would be most useful, busi-nesswomen emphasized both formal (train-ing) and informal (networking) learning

opportunities. However, for the majority ofservices businesswomen identied as useful,many respondents are unaware if the servicesare available and even fewer have used themwhen they knew they existed (Figure 4.2.A).

Comparatively, Saudi businesswomen aremore inclined than their peers to nd train-ing, interaction with other businesswomenand learning about policy issues to be very orextremely useful (Figure 4.2.B).


Ie always liked to cook but Ifound my passion in preparingfoods so that they can bephotographed professionallyfor print ads, etc. I couldntstudy this in any localinstitutes so I started readingbooks. I signed up for courseson the internet, I looked atthe work of internationalphotographers, and I watchedv shows so that I can buildup my talent to reach aninternational standard. Improud to say I work withsome of the most importantcompanies that produce andmarket food products inSaudi Arabia.

- Freelance entrepreneur


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When asked about government supportin particular, respondents were requested

to identify the most important service orchange in current government regulationsand policies that they would elect to lobbyfor. The provision of subsidized day-care ser-vices received the most responses for beingthe most important means of potential gov-ernment support, followed by assistance withloans and market and technical studies (Fig-ure 4.2.C).

These ndings suggest that a better under-standing of existing services is required and

that further resources should be devoted toservices that are currently unavailable, suchas day-care or training. For those servicesthat already exist, additional outreach andcommunication regarding their availabilityis needed. It is through creating an enablingand supportive environment that these busi-nesswomen will have the tools and skills thatare vital for them to realize their businessaspirations.

Figure 4.2.C: Most Important Government Services to Lobby For

Figure 4.2.B: Regional Comparison of Useful Services


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Conclusion:

The Way Forward

5.


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The results of this study paint a picture ofbusinesswomen in Saudi Arabia, similar totheir counterparts in the Middle East andNorth Africa, as capable entrepreneurs whohave successfully started and managed busi-nesses in a wide variety of elds. Thanks tothe support of the Custodian of the Two HolyMosques King Abdullah, businesswomenseducation, resolve, and the encouragementof their families, businesswomen in SaudiArabia have displayed their determinationto grow their businesses and to successfully

balance between work and family responsi-bilities. Survey results show businesswomensoutlook for the growth of their businesses tobe overwhelmingly positive and their futuregoals to be geared towards expansion.

5.1. OUOOK FOR GROW

Almost all (94.7%) of the surveyedbusinesswomen are very or somewhatoptimistic about the future of theirbusinesses in the next two years. In fact,Saudi businesswomen are among the mostoptimistic about their business prospects inthe MENA region (Figure 5.1.A).

Optimism is high even among prospective

businesswomen, 74% of whom reported thatthey are totally condent about their successin executing their business plans, while 24%reported they are somewhat condent. Theremaining 2% indicated that they do nothave feelings either way.

5.2. FUURE GOAS

Reporting on their future goals, business-women in Saudi Arabia are overwhelminglyunited in their plans to grow their businesses

rather than maintain present levels (Figure5.2.A). Additionally, 30.6% of unregistered

businesswomen plan to register their busi-nesses and obtain the relevant permits.

Figure 5.1.A: MENA Businesswomens Optimism About the Future of Their Businesses in theNext 2 Years *

The Conclusion: The Way Forward


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In contrast, women in other MENA countriesdo not unanimously have growth-orientedgoals (Figure 5.2.B). Between 49% and 81%of MENA businesswomen plan to expand

their businesses, while 10% to 45% prefer tomaintain current levels, and few (3 to 7%)plan on selling or closing their businesses.

Figure 5.2.A: Saudi Businesswomens Goals in the Next 2 Years

My father encouraged meto get inoled in his traelagency because he belieedI could do well in tourism.hats how I entered thisbusiness, but after moingwith my family to another city,I started to organize group

trips and trael packagesfrom home by coordinatingwith international traelagencies. I eentuallysucceeded in starting up atrael agency with two otherbusinesswomen from theGulf. We are now openingnew branches and seringcorporate clients.

- Registered Businesswoman

Conclusion: The Way Forward


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Figure 5.2.B: MENA Businesswomens Goals in the Next 2 Years *

It is perhaps this optimism and determina-tion that has driven businesswomen in SaudiArabia to pursue business activities despitethe challenges they encounter. Several of thesurveyed businesswomen are the pioneersof female entrepreneurship in Saudi Arabia,paving a path for the others that have fol-lowed in their footsteps. Yet businesswomenface real challenges to the growth of theirbusinesses and these stem from the businessenvironment, from businesswomens currentnancing trends, and limited use of market-

ing and technology in their day-to-day activ-ities. Policy makers, nancing institutions,and entrepreneurship support organizationscan play a signicant role in providing need-ed support for Saudi businesswomen. Givenfurther encouragement and attention, busi-nesswomen have the potential to become asignicant engine for economic growth inthe Kingdom of Saudi Arabia: as employers,as role models for future generations, and aseffective contributors to national economicdevelopment.


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Appendix :

Personal

Documents

Monitor Business Women in Saudi Arabia Dec 6 2010