The Banking Executive Magazine - February 2025 Issue

Access to Credit Over the last 50 years, the average per capita income in the Middle East and North Africa (MENA) has been weak, increasing by only 62%. Numerous surveys mention the need to improve the regions business climate, including access to finance, to take advantage of the significant untapped potential and broaden eco- nomic diversification, boost innova- tion and sustain growth. This includes narrowing the gender gap. And although women’s education at- tainment has significantly increased and the representation in profes- sional roles is evolving, the overall gaps between men and women re- main significant in aspirations, op- portunities, and outcomes. The MENA region has also the sec- ond-lowest global share of firms with female participation in company ownership at less than 3 percent and has the highest gender gap in the world for entrepreneurship: 12 per- cent of women are entrepreneurs compared with 31 percent of men. Women’ lagging in entrepreneurship is due to the specific challenges they face in establishing, managing or de- veloping a business. Although from a legal standpoint, men and women face the same requirements for regis- tering a business, in practice, they may encounter specific obstacles re- sulting from legal and socio-eco- nomic provisions embedded in the family or labor laws. For instance, work experience and business con- tacts are critical for business success, yet both are limited for many women in the region. Access to finance, so essential to es- tablish and grow a business, is equal in principle for men and women. However, a smaller share of women than men hold accounts at a finan- cial institution or have credit cards in their own name. Furthermore, vari- ous factors – such as limits on women’s property rights and assets, unequal inheritance laws and banks requiring husbands to co-sign loans – contribute to women having less available collateral to secure external financing than men. The lack of access to finance is seen by women entrepreneurs as a major and often primary obstacle to creat- ing and developing businesses. De- spite specific support programs adopted by some banks and microfi- nance institutions, bank financing re- mains a stumbling block. This is due to factors such as collateral require- ments that cannot be met by young start-ups. More advanced systems granting funds to women entrepre- neurs such as equity investment and profit-sharing appear to be lacking. Testimonies from women entrepre- neurs in the region suggest that many projects struggle to secure the fund- ing needed for their growth and op- erational effectiveness. Obtaining grants or investments tailored to small-scale projects, particularly in rural areas, remains difficult. Women then generally turn to other options such as borrowing from fam- ISSUE 194 FEBRUARY 2025 the BANKING EXECUTIVE 35 - International Sustainability and Gender Equality Advisor - Former Head of the MENA- OECD Competitiveness Pro- gramme - Lecturer at Sciences Poltiques - Paris NICOLA EHLERMANN