Start-Ups in the Arab World: One Woman at a Time

By Kelly Ommundsen and Khaled Kteily

It may surprise some to learn that one in three start-ups in the Arab World is founded or led by women- a higher percentage than in Silicon Valley.

Indeed, women are a force to be reckoned with in the start-up scene across the Middle East. Because the tech industry is still relatively new in the Arab world, there is no legacy of it being a male dominated field. Many entrepreneurs from the region believe that technology is one of the few spaces where everything is viewed as possible, including breaking gender norms, and is therefore a very attractive industry for women.

Despite a multitude of challenges, including societal pressures on women to stay at home, a digital gender gap, and structural disadvantages in fund-raising and investments, women entrepreneurs are finding new and creative ways to overcome barriers to entering the workforce and starting their own business.

Photo credit: Dominic Chavez

Key to these efforts has been their ability to leverage the internet and engage through online platforms to reach new markets and be able to work from home if they wish. As Saadia Zahidi argues in her book Fifty Million Rising these digital platforms allow women to be unimpeded by cultural constraints or safety issues and lowers the implicit and explicit transaction costs of transportation, child care, discrimination and social censure.

Finding a way to tap into this valuable resource of highly educated women could be a game changer for the region. And given the market power of women’s participation in the workforce — which could add an estimated $2.7 trillion to the region’s economy by 2025, a growing trend of women in start-ups can be a transformative force for the Middle East.

Unlocking the Potential of Female Start Ups

The rise of women in the Arab world starts early with girls outperforming their male peers in school. In Jordan for example, girls in school do better than boys in nearly all subjects and at every age level, from grade school to university. When it comes to STEM subjects — skills that will be critical for launching and running a start-up in the fourth industrial revolution, women in the Arab world represent some of the top global leaders in the proportion of females graduating in each class. According to UNESCO, 34–57% of STEM grads in Arab countries are women, which is much higher share than universities in the US or Europe.

Despite the fact that many Arab women are succeeding in school and graduating with advanced degrees, this has not necessarily translated to the job market or the start-up world, with many women instead selecting to stay at home — by choice or by cultural, social, or familial pressures. In fact, 13 of the 15 countries with the lowest rate of female participation in the workforce are in the Arab World according to the World Bank.

Restrictive laws in many countries across the region put women who wish to join or start their own businesses at a disadvantage, including prohibitions against women opening up a bank account or owning property, limited freedom of movement without a male guardian, or constraints on interactions with men who are not in their family, in addition to cultural and attitudinal stigmas.

In fact, even women who do found a company face structural disadvantages. On average, female-led start-ups receive 23% less money than male-run firms and are 30% less likely to have a positive exit according to the OECD.

Changing the Ecosystem, One Woman at a Time

Photo credit: Dominic Chavez

To solve this gap, the ecosystem needs more women in the entrepreneurship ecosystem. One data point makes this clear: in venture firms where you have one or more female partners, the firms are twice as likely to invest in a start-up which has women in the management team, and three times more likely to invest in the company is the CEO is female

This is also true for female founders. According to the World Bank, female-owned businesses hire more women (25%) than their male counterparts do (22%). Female-owned firms also employ a higher percentage of women in managerial roles, helping women to climb up the ladder, compared to those who are only hired for lower, unskilled positions. To top it off, women-led businesses are hiring more workers in general. In Jordan, Palestine, Saudi Arabia, and Egypt, firms run by women are growing their workforces at higher rates than those run by men.

Womena, an investing platform based out of Dubai, dedicated to encouraging gender diversity and inclusion in tech believes that in order to have more women tech entrepreneurs you need to build networks of women that can help support one another to grow and thrive, as well as role models like HE Sheikha Lubna Al Qasimi, who studied computer science and went on to open one of the region’s first B2B marketplaces, and is best known for being the first woman to hold a ministerial post in the UAE as Minister of Economic and Planning, Minister of State for International Cooperation, and then Minister of State for Tolerance.

And Womena co-founder Elissa Freiha also believes that investing time, energy, money into female entrepreneurs will pay huge dividends.

“Women from the Arab World need to fight — the struggles they face in society, in their communities, and sometimes even their families, create an amazing resilience that makes these women incredible entrepreneurs. And if given the right platform, these women can become the business owners and leaders for the future of the region”

Go Digital, Young Woman

Digital represents a key opportunity for women in the region to solve technical and societal challenges. Egypt-born Rana El Kaliouby, for example is the co-founder of Affectiva, which has developed cutting edge AI technology to help computers recognize human emotions based upon physiological responses and facial cues. Loulou Khazen Baz, meanwhile, founded Nabbesh, the Middle East’s first freelance marketplace as a way to help tackle the region’s youth unemployment challenge, and was recognized as one the World Economic Forum’s ‘100 Arab Start-Ups Shaping the Fourth Industrial Revolution’.

As Zahidi posits in her book, ‘If the narrative of the American expansion was ‘Go West, young man,’ the new narrative for up-and-coming women in the Arab World may well be “Go digital, young woman.”

Evidence points to this being the case. A study conducted by Accenture showed nearly 60% of women who are not currently employed believe that flexible hours and working from home, full or part-time, would help them find work, which digital can enable. The digital economy is also opening up opportunities for women looking to get back into the job market. The same study points out that more than 60% of women who have left and want to rejoin the workforce have entrepreneurial aspirations to start their own business.

Crucially, studies from the US demonstrate that gender pay gaps are lower in industries where there are more flexible work arrangements and women who gain ICT skills increase their wages by 12%, which is higher than equivalent gains in men’s salaries. With a large market potential, a limited amount resources need to get started, and productivity efficiencies which technology can enable, digital opens up a whole new world of opportunities and possibilities.

Paving the Way Forward

Many incredible women across the region are paving the way forward, like Joy Ajlouny, who recently helped close a $41M Series B funding round for UAE-based Fetchr or Gaza Sky Geeks, the first tech hub in Gaza providing mentorship to start-ups with a focus on women. Yet there is still a long way to go. The digital gender gap in Arab states remains at 17.3%, down from 19.2% in the last 4 years, according to the ITU, and women are still a minority across the entire start up ecosystem.

But as more women throughout the Arab World start their own businesses, break down gender barriers, and push through the glass ceiling, these pioneers become an example for other women and can inspire them to imagine what’s possible for an Arab woman in the Fourth Industrial Revolution.

Kelly Ommundsen
Lead, Digital Economy and Society, World Economic Forum

Khaled Kteily
 Lead, Middle East North Africa & Global Leadership Fellow, World Economic Forum