Summary
Saudi Arabian economy is over-dependent on oil reserve and petroleum based revenues. Recently the Saudi government has recognized the importance of developing other industrial sectors and small and medium size businesses for the country's economic growth. The development of entrepreneurial sector would remain incomplete unless men and women join hands to contribute to the growth of the country's economy. Almost half of the population in Saudi Arabia is women and therefore, the government in recent times has undertaken a lot of positive measures in support of Saudi women's entrepreneurial endeavors. This paper has discussed upon the role of Saudi businesswomen in the growth of the country's economy, the various challenges faced by them and how they overcome those challenges and the governmental policies and support initiatives in favor of the women entrepreneurs.
Introduction
The Kingdom of Saudi Arabia, popularly known as Saudi Arabia, is the largest Arabic state in Western Asia and the second-largest country in the Arab world only next to Algeria. Founded in 1932, the Kingdom of Saudi Arabia which is the place of birth for Islam has been ruled by the Islamic monarchy from its very inception and the kingdom is considered as a holy land because of the presence of two holiest places in Islam, Mecca and Medina. Saudi Arabia is home to the second largest oil reserves of the world much of which are concentrated in the Eastern Province accounting for over 95% of exports and 70% of government revenue (PMO, 2013). Needless to say, Saudi Arabian economy, to a large extent, depends mainly on oil production and oil byproducts. Only 28% GDP of the country comes from small and medium size corporations in which almost 80% of Saudi Arabian people work to earn their livelihood. These small and medium size enterprises often deal with the problems of getting bank loans and lucrative business orders because their services and products fail to meet the requirement of international business standard (Minkus-McKenna, 2009). The entire country is in the need of developing its entrepreneurial sector if it wants to get rid of its over-dependence on oil revenues. However, the entrepreneurial sector cannot be fully developed unless men and women take cumulative efforts for the country's economic development. Saudi Arabia being a Muslim country has a very conservative society in which men and women are expected to play stereotypical roles of man being the provider and woman being the follower. In such a conservative society, women are to go through a lot of struggles to break free of the social and religious restrictions imposed on them. However, in recent times there are a lot of changes taking place within the country concerning the status of women, entrepreneurism and business development. With women constituting 45.5% of Saudi population, the government of Saudi Arabia has started considering the potential growth of economy if women take part in the mainstream businesses and contribute their bits to the development of the country. This paper will discuss upon the role of Saudi businesswomen in the country’s economy, the challenges faced by them and how they deal with those challenges and the availability of governmental support for their development.
Literature Review
- The Role of Women Owned Businesses in Saudi Economy
In recent times, the subject of women entrepreneurship has received a wide-ranging attention from all corners in Saudi Arabia. Several studies have been made and developed regarding how to encourage more and more Saudi women to make entrepreneurial ventures. Women constitute about 45.5% of Saudi Arabian population (Minkus-McKenna, 2009). However, the actual percentage of female population is difficult to get as about 5.6 million foreign nationals work in the Kingdom and the majority of them are male. Female literacy rate in Saudi Arabia is 71% and about 58% women study in University(Minkus-McKenna, 2009). Education is compulsory for females. Increasingly, Saudi women are contributing to Saudi Arabia's economy and development and are making endeavors to fully utilize their skill and potential to become successful in their entrepreneurship.
As estimated in 2005, there were about 23,000 women involved in business in Saudi Arabia. About 4% of the total registered businesses are owned by Saudi women, 97% of those businesses are either in finance, construction, retail, wholesale or business services. 12% of firms operating in the country are registered in women owners' name and 16% of these firms are impressively big manufacturing firms (Welsh, Memili and Al-Sadoon, 2012). In 2007, Arab News published the top 20 list of businesses owned by Saudi women. The changing trend of viewing women as potential contributors to growth is noticeable in the statement made by the newspaper which takes pride in the success of Saudi women, “Saudi men have traditionally been the entrepreneurs but our women are no longer standing in the shadows. They have stepped into the light and have become the backbone of society. We in the Kingdom are fortunate to have well educated, financially powerful women” (Almaeena, 2007). Much of the wealth in the country being under the control of women, women entrepreneurs have easy access to informal funding. Since many Saudi women take part in running the family businesses, they own about 40% of those companies run by families as silent partners. Overall, Saudi women are estimated to have cash funds worth SR45 billion, much of which is, however, is deposited in banks (Minkus-McKenna, 2009). Women of Saudi Arabia are contributing to the overall GDP of the country in many ways by making investment in the development of industries, generating employment and by their liquidity and bank deposits. But given the chance, they could do much more than what they are doing now if the barriers and challenges they face in conducting businesses can be overcome. Already Saudi women outdo Saudi men in arts, education and science and with given opportunities they will do the same in business and industry as well.
- Challenges Faced by Saudi Women Entrepreneurs
Saudi women entrepreneurs face a lot many challenges as women entrepreneurs face in the world, especially in conservative countries where women are looked upon as mother and wife primarily and are expected to stay indoors. They face challenges in terms of getting required training and skills, gender discrimination and obtaining capital. Especially in countries like Saudi Arabia which has a male dominated society, women face innumerable challenges, cultural barriers and family resistance while starting a business. Till date, Saudi women are prohibited to drive a car, start a business on their own, invest in real estate and purchase a home (Minkus-McKenna, 2009). They cannot even lodge a crime at the police station without a male guardian. However, the biggest obstacle of all faced by women entrepreneurs in Saudi Arabia is the obligation to acquire a permission from the 'wakil' before going ahead with any business venture. 'Wakil' is a male guardian who can be a relative or a total stranger acting publicly on behalf of the businesswoman and has full authority and power to take business related decisions and access to the business assists (Welsh, Memili and Al-Sadoon, 2012). Besides, the educational system in Saudi Arabia does not educate women with business skills and business relevant education to support economic growth of women in the country. For instance, a survey conducted by Alturki and Braswell came up with the finding that 80% Saudi business women were in need of learning financial management.
There are other obstacles like the requirement to appoint a male manager despite the removal of this requirement by the Ministry of Commerce in 2011. This requirement subjects the women entrepreneurs to intense humiliation and mental stress resulting out of constant interference and harassment by male managers. This requirement also costs an added expense and limits the businesswomen's freedom to make individual decisions. Women entrepreneurs also face very limited licensing options with many business activities popular among women not being listed in the official licensing categories (Lavelle and Al Sheikh, 2013). Further, they are barred from starting a business from homes and as a result of their agonizing experience in obtaining a license for their business many women-owned businesses remain unlicensed and unrecognized in the economic system.
Furthermore, Saudi women are imposed a slew of restrictions on their mobility. They are barred from driving and in the absence of safe public transportation they often need to hire a chauffeur, bearing an extra cost. They also need to acquire their legal guardian's permission for travelling overseas and this requirement puts them at considerable disadvantage as they cannot move freely. Due to the lack of effective implementation of the government policies in support of Saudi women entrepreneurs, they often need to get into a negotiation with government officials on whose whims the success of their deals largely depends on. Many a time they become subjected to personal danger and corruption of bribes (Lavelle and Al Sheikh, 2013).
- How Saudi Women Deal with the Challenges
In their enthusiasm to succeed as entrepreneurs, Saudi women are defying the challenges and cultural barriers strategically. Since socializing between men and women after business hours is not permitted in Saudi Arabia, some women are taking a strategic approach to overcome the barrier. For example, Lamia Boutaleb who is a cofounder of Capital Trust, an investment bank based in Casablanca, tries to schedule appointments with her male business counterparts during working hours so that she can exchange information as information is instrumental to success in investment banking and can establish networks without offending the cultural stalwarts (WUP, 2010). Since obtainment of loans from banks is often a challenging process for Saudi women to start a business, they either cash in on their personal savings or family funding or borrow from close friends to start their business ventures. 8 out of 10 women fund their businesses with personal savings and 14.5% women take loans and financial help from either family or close friends. 8.6% women get loans or grants from government funds or philanthropic organizations while only 7.6% women take personal loans from external sources (Troemel and Strait, 2013). Most of the women business entrepreneurs either involve husbands or uncles as their business partners or advisors so that they can easily get the legal paper works and licensing done without much hassle.
Saudi women understand the importance of education for self-aggrandizement; especially women aspiring to be entrepreneurs take initiatives to learn the technical, financial and communication skills to successfully run their businesses. Many Saudi businesswomen pursue courses that are helpful to make them learned in specific business skills. As per the 2006 statistics of Ministry of Education in Saudi Arabia, 28.2% of women focus on learning business disciplines in comparison with 2.9% men (Troemel and Strait, 2013).
Despite the strategic initiatives adopted by the women entrepreneurs, there is no denying the fact there are many hurdles that cannot be overcome strategically. For example, driving being banned for women in the country, Saudi businesswomen are to hire a driver for moving around which often adds to the expense. Unless and until women are allowed similar footing and freedom like men and Saudi government makes and enforces favorable policies for women, the cultural and legal challenges are hard to be fully overcome.
- Availability of Governmental Support for Saudi Women
Saudi government understands the economical disadvantages if half of the population of the country remain unproductive and therefore, the government has taken positive initiatives to support women in the workforce. There are three conventions that have been confirmed by the Saudi government to remove gender discrimination in the labor market. These three conventions include 1) The United Nations Equal Remuneration Convention which demands payment of equal wage to people, irrespective of gender, of equal merit; 2) The United Nations Convention on Elimination of All Forms of Discrimination against Women (CEDAW) which prohibits women discrimination in employment and occupation and 3) The International Labor Organization’s Discrimination (Employment and Occupation) Convention which confirms a nondiscriminatory nation labor policy (Welsh, Memili and Al-Sadoon, 2012).
The Eight Five Year Development Plan undertaken by the Saudi government reinforces the need of women participation in Saudi economy. This plan, if properly implemented, seeks to conduct an investigation study to find about the needs of women in the market, hold awareness campaigns to educate people about the need of women employment, increase the presence of females in private as well as government sectors and licensing support services to help women juggle their official as well as personal duties. The Council of Ministers in Saudi Arabia have approved a policy called 'Regulation No. (120)' in 2004 which aims at improving the role of women in Saudi economy (Welsh, Memili and Al-Sadoon, 2012). Crown Prince Sultan Al Saud has stated in 2007 for one third of government jobs to be assigned to Saudi women.
Al Barakah Loans Center of King Abdulaziz in Buraidah, Al Qassim, has funded over 800 projects for widowed, divorced and low-incomes women. The Centennial Fund offers loans to give financial assistance to young entrepreneurs in rural cities and also provides mentoring services to them for three years. 26% of the funds donated by the Centennial Fund have helped women in starting businesses in the areas of restaurants and food supply, arts and design, beauty salons and clothing lines (Welsh, Memili and Al-Sadoon, 2012). Prince Sultan Fund is another significant effort made by the Saudi government. This fund is meant to support women entrepreneurship and initiatives. Recognizing the need of practical training, this fund provides financial as well as technical support through various vocational training programs and capacity building initiatives. The 'Work Plan Project for Women Employment at Home' initiated by Prince Sultan Fund provides support to women to start working from home.
Conclusion
Saudi Arabian economy is over-reliant on oil reserve and petroleum based revenues. However, in recent times the Saudi government has recognized the importance of developing other industrial sectors and small and medium size businesses for the country's economic growth. The development of entrepreneurial sector would remain incomplete unless men and women together make cumulative efforts to develop the Saudi economy. Almost half of the population in Saudi Arabia being women, the government in recent times has made a lot of initiatives to support women in their entrepreneurial endeavors. This paper has discussed upon the role of Saudi businesswomen in the growth of the country's economy, the various challenges faced by them and how they overcome those challenges and the governmental policies and support initiatives in favor of the women entrepreneurs. Of late, the subject of women empowerment and entrepreneurship has become a focal point of discussion with the government and the intellectuals of the country acknowledging the importance of women contribution for the growth of the country's economy. Women in Saudi Arabia are making efforts to take entrepreneurial initiatives and some of them have successfully acquired a place in the top 20 list of businesses owned by women. However, there are a lot of cultural as well legal challenges encountered by Saudi women. The ban on women driving, the requirements of a male guardian, appointment of a male manager and other such rules and regulations have constricted the freedom of Saudi women to run business independently. Therefore, the Saudi women have taken a strategic approach by taking loans from family and friends and relying on their personal savings to start a business. Further they appoint a male relative as their partner or business advisor to have all the paper works and licensing done smoothly. The Saudi government in recent times has taken a slew of positive initiatives like several funding programs and policies to support the women labor force. If all the policies undertaken by the government are enforced successfully, then more and more Saudi women will come forward to take up entrepreneurial initiatives.
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