There are a number of cultural challenges facing women in the Middle East who want to become entrepreneurs, but those belonging to the middle class face a peculiar financial hurdle, a forum in Dubai for regional businesswomen heard recently.

Whereas the poor in the region often rely on micro finance sources that provide funding with few strings, and wealthy women can access capital from banks and other financial institutions just through their family name, women from middle class backgrounds are shut out from either source, experts told attendees at the Middle East and North Africa Businesswomen's Network forum in April.

"The segment that is left behind is the middle class women who may not have assets of the upper class, but have the capacity to start a business," said Nadereh Chamlou, senior advisor to the chief economist for the Middle East North Africa (MENA) region at the World Bank, during a forum panel. "Both sides are squeezing this group. Part of the problem is the collateral thinking in the banking sector. Women suffer from this more because they establish businesses in diverse sectors that do not fit the banking model.'

Chamlou and other speakers advised middle class entrepreneurs to look at non-financial services and equity financing to help their businesses. It was just one suggestion voiced at the forum, which sought to highlight some of the issues facing women entrepreneurs in the region.

Some of the themes discussed would be familiar to anyone attending a regional entrepreneurial forum, such as overcoming the stigma of not succeeding. "Fear of failure sometimes is really what pushes you to do more," said the forum's keynote speaker, Sheikha Lubna Al-Qasimi, the United Arab Emirates' foreign trade minister.

But one of the key issues, speakers said, was the limitation women were putting on themselves. Though funds for local businesses are now generously available in the Gulf, would-be female entrepreneurs are not being ambitious enough in their business plans, experts said. Women need to produce more innovation and be involved in ICT startups, they said, instead of businesses concentrated in hospitality or retail.

Reducing Gender Gap

Al-Qasimi's reference to fear of failure is shared equally between men and women seeking to become entrepreneurs in MENA, where the security of a government or private sector job is regarded more highly than striking it on your own, according to several speakers at the forum. The banking and financial services sector in particular is not supportive to both men and women entrepreneurs and enforces the feeling of failure.

"There is discrimination against the self-made entrepreneur versus family-made entrepreneur,' said Afif Barhoumi, an investment promotion expert at Bahrain-based Arab Regional Center for Entrepreneurship and Investment Training. "All access to financial services is difficult, regardless whether you are a male or a female. This is generally what we face, based on practical experience.'

With the Arab Spring's evolution raising questions about the space Arab women will have in their economies for business and involvement in politics, the forum saw representation from countries such as Tunisia, where the revolutions have spurred change.

The need to support local business development in general prompted Tunisian non-governmental organization Enda Inter-Arabe to expand their policy from providing micro financing only to women to men. "We started with 100% women funding and then I discovered we need to look at situation in our country," said Essma Ben-Hamida, director of the Enda Inter-Arabe. "It is important to change society and reduce the gap between men and women." Ben-Hamida said the NGO has offered financing to over 340,000 beneficiaries.

The main difference between obstacles facing women and men are certain laws, panelists said, that curtail women's rights, such as those that prohibit women from working or travelling without the permission of family members and inheritance laws that deny women control of assets, which are needed sometimes as collateral against borrowing.

Often the laws may not discriminate against women, but the officials in charge of implementing these laws will interpret them in a way that denies women the tools to create a business, panelists noted. Poor education also prohibits women and men alike from knowing their rights and protecting them, noted Ben-Hamida. "If you are poor, you don't know the laws or your rights, so you don't ask for them,' she said. "We need political education and citizenship if we want our region to be democratic.'

Seeking Something Different

In the Gulf, which has largely been spared the Arab Spring revolutions, the challenge for women entrepreneurs is one of opportunities missed. Many social development funds are flush with funds, but want women to produce business plans that steer away from retail and fashion.

"The challenge is that women are not thinking big,' said Tamara Abdel Jaber, co-founder and executive board member of Jordan-based consultancy Palma. "We are not seeing women build up courage to venture into other businesses, not cooking and crafts.'

Ibrahim Al-Mansouri, chief operating officer of the UAE-based Khalifa Fund for Enterprise Development, which supports Emirati entrepreneurs, cited the example of an Emirati lady who came to the fund with the idea of opening an abaya (cloak) shop.

The fund advised her to search for a more innovative business idea since abaya shops are plentiful in the UAE, he said. The lady had a passion for photography and came up with the idea of taking photos for newborn babies in hospitals. The fund merely helped her establish contacts with hospitals in order to have clients there.

"Finance is not the only issue faced by entrepreneurs,' al-Mansouri said. "One of the main challenges we face in the U.A.E is that applications are usually based on opportunities not needs.'

The fund has approved 320 projects out of 7,500 applications it has so far received, he said, with nearly 30% of projects being developed by women entrepreneurs.

Entrepreneurs in the region also lack the ability to turn ideas into sound business plans. Al-Mansouri said one of the challenges facing Emirati entrepreneurs, including women, is making their business grow after the initial set-up.

His views were echoed by Claire Woodcraft, chief executive officer of Emirates Foundation, an Abu Dhabi government philanthropic organization that supports public-private funded initiatives. "The challenge is the sustainability of those projects,' Woodcraft said. "There is a lot of capital, but not business development assistance.'

But developing a business and facing the risks involved is easier said than done, Sheikha Al-Qasimi told the audience. She has gained pioneer status, first as the only female staff in an Indian software development company, then running Tejari, the UAE's first business-to-business marketplace, but she credits fear of failure and a stubborn streak for her success.

Al-Qasimi had to convince her family to allow her to go the U.K. and the U.S. to study computer science and she had an equally challenging task to persuade her family she should work in a private sector software development company rather than opt for a comfortable government post after graduation.

Her entrepreneurial spirit helped her become the first female to hold a ministerial post in the UAE, when in 2004 she became economy and planning minister. "I remember three weeks of sleepless nights, not knowing how to deliver and what I was supposed to do; and being out all alone there, having to succeed not only as a minister, but also as a woman to prove the point that this choice by the government was right."

Published April 30, 2012 in Arabic Knowledge@Wharton