Empowering Women and SMEs Dr. Caroline Freund Chief Economist Middle East and North Africa Region The World Bank AIWF Conference, Sharjah, UAE May 15, 2012

Overview MENA’s Twin Development Challenge MENA’s Twin Development Challenge Weak Private SectorWeak Private Sector Bigger firms create better jobs Bigger firms create better jobs In MENA, most firms are SMEs In MENA, most firms are SMEs SMEs don’t grow SMEs don’t grow A lack of female empowermentA lack of female empowerment High female unemployment, especially amongst the educated High female unemployment, especially amongst the educated Low rates of female ownership, especially in SMEs Low rates of female ownership, especially in SMEs The Solution: Empowering Women The Solution: Empowering Women Women’s Entrepreneurship Women’s Entrepreneurship Women create more jobs for women Women create more jobs for women Women create better jobs for women Women create better jobs for women

Bigger Firms Create Better Jobs More jobs … higher paying jobs… and greater value added

But Most Firms are SMEs

Very few SMEs Grow

The private sector is underdeveloped Relatively few firms per capita Relatively few firms per capita Low entry rates: competitive pressure of entrants is low Low entry rates: competitive pressure of entrants is low Many old firms: competition does not weed out the weak Many old firms: competition does not weed out the weak

What does this mean for today‘s discussion?

Female unemployment is higher than male unemployment….and especially high amongst the educated Source: World Bank WDI, latest years available

The Solution: Empowering Women Through the Private Sector

First and foremost, …improve incentives for hiring women and for women to look for work… First and foremost, …improve incentives for hiring women and for women to look for work… Jordan New Opportunities for Women (NOW) pilot 1400 young female community college graduates participated in a pilot: Jordan New Opportunities for Women (NOW) pilot 1400 young female community college graduates participated in a pilot: Soft skills and employability skills trainingSoft skills and employability skills training Short term incentive for firms to hire young women (Voucher). Women given voucher & find own employer!Short term incentive for firms to hire young women (Voucher). Women given voucher & find own employer! While the vouchers were in place, employment increased from 16% to 38% While the vouchers were in place, employment increased from 16% to 38% Vouchers increased labor force participation by 10 percentage points more participants are continuing to look for work even after the vouchers expired Vouchers increased labor force participation by 10 percentage points more participants are continuing to look for work even after the vouchers expired

Second, …promote female entrepreneurship… …female ownership in MENA about half the world average…

…but encouraging…those who make it over the barriers succeed as well as male-owned firms… …and a high share of medium to large female firms… Source : Enterprise Surveys

… …except Libya and Yemen… Hence, women-owned firms can grow and perform similar to male-owned firms. …similarity in size holds true at the country levels… …similarity in size holds true at the country levels…

Female-owned firms hire more women Worldwide, female-owned firms hire more women than male owned firms..but the bulk of jobs go to men. Worldwide, female-owned firms hire more women than male owned firms..but the bulk of jobs go to men. However, in MENA female owned firms hire far fewer women than the female-owned firms in other regions (18% in MENA vs 44% in AFR, 49% in ECA, 42% in LAC and 21% in SAR) However, in MENA female owned firms hire far fewer women than the female-owned firms in other regions (18% in MENA vs 44% in AFR, 49% in ECA, 42% in LAC and 21% in SAR)

…and female-owned firms hire slightly more women professional and managerial positions… Share of non-production workers in male and female owned firms Source: World Bank Enterprise Surveys

…but, firms managed by women in MENA hire considerably more women in professional and supervisory positions…

Main conclusions Promoting women owned firms in MENA achieves three goals:  Increasing a more dynamic private sector by bringing new players and ideas  More entry fosters competition  Creating MORE JOBS for women  Providing BETTER JOBS for women  thereby providing jobs for highly educated women – whose skills are currently underutilized