A SNAPSHOT REPORT BY
NASEBA INSIGHTS FOR WIL ECONOMIC FORUM
WOMEN: THE FASTEST-GROWING GLOBAL ECONOMY
A SNAPSHOT REPORT BY
Women can change the world, but empowerment is a two-way street
Around 870 million women, who aren’t already part of the mainstream economy, will enter the workforce or start their own businesses by 2020, with the global income of women predicted to reach US$18 trillion by the end of 2018.
Women’s participation in the world economy could add as much as US$28 trillion to annual global GDPby 2025. Women drive 70-80% of all consumer purchases and the multiplier effect of female empowerment on overall economic growth, only strengthens all aspects of the value chain.
In 2016, there were 1.75 billion women in the labour force, and 68% of the world’s gender gap is now closed, however, there is still a parity gap in crucial areas, including the workplace.
Klaus Schwab, founder and executive chairman of the World Economic Forum, has said that we are moving from the era of capitalism into the era of talentism.
“Competitiveness on a national and on a business level will be decided more than ever before by the innovative capacity of a country or a company. Those will succeed best, who understand to integrate women as an important force into their talent pool,” he said.
To support this, more than 600 million new jobs are needed globally for both women – and men – in the next decade.
In 2017, a total of 32 female CEOS were represented on the Fortune 500 list, up from 21 in 2016, but there is still much room for improvement with men dominating 94% of upper leadership roles.
Women represent less than 5% of Standard & Poor’s 500, yet studies show that companies with female leaders tend to perform better financially. Companies committed to diversity and inclusion, with 30% female leadership, can add up to six percentage points to their net marginsand having at least one female director on the board could reduce a company’s chance of failure by 20%.
For start-ups, success is more likely if women are part of the executive team. A BI Norwegian Business School survey showed that women outperformed men across the board – demonstrating emotional intelligence, clear communication, problem-solving skills, and methodical management.
The female approach to leadership also fosters an environment that encourages cognitively diverse teams, with women more likely to consider the rights of others and take a co-operative approach to decision-making.
A 2011 study found that at all leadership levels, women ranked higher in 12 of 16 core leadership competencies, significantly outscoring men in the areas of initiative taking and driving results.
Women leaders in the GCC also display strong levels of organisational effectiveness, scoring higher than men in 75% of behaviours – inspiration, people development, and efficient communication. What is interesting to note is that the presence of women leaders in company meetings apparently engenders a greater sense of formality (reflective of reaction to relevant gender norms), which leaders say delivers more task-focused and efficient discussions.
THE GCC OPPORTUNITY
Across the GCC, governments are pursuing economic diversification visions and moving towards knowledge-based economies, with women’s economic empowerment a key commitment.
In the GCC, 52% of university students are women.This rises to 70% in the UAE where 46% of UAE university graduates in science, technology, engineering and mathematics (STEM) are women.
In Saudi Arabia, female graduates occupy more university seats than their male peers. Shifting attitudes to social constraints, proactive policymaking and growing familial encouragement, is supporting real-time change.
The Middle East and North Africa region closed more than 60% of its overall gender gap in 2017.A total of 11 countries in the region improved their overall score, led by the UAE.
The women’s average labour force participation rate for the region is still relatively low at 27%, versus men at 77%.Current female participation in the workforce ranges from 15% in Kuwait to 63% in the UAE, with the ratio of women to men in senior positions at an average of 9%.
The UAE already ranks second in the Middle East for wage equality for similar work, according to Dubai Government data, and the newly launched Gender Balance Council has been mandated to enhance the public sector working environment by providing women with equal opportunities.
In Saudi Arabia, the plan is to increase women’s participation in the workforce from 22% to 30% by 2030, while Bahrain puts female contribution to the economy as increasing at around 5% per annum, with a 2020 target of 45.6%. Kuwait has also committed US$4 million to the development of women’s skills and boosting economic participation.
Companies with gender, ethnic and racial diversity are at least 15% more likely to reap above average financial returns.
The importance of leveraging networks to advance the female economic agenda, and create valuable partnerships across communities and markets, is a vital cog in the empowerment process.
On average, 19% of male employees in large companies have a sponsor (or mentor) who actively supports their advancement, versus 13% of women.Innate differences also exist in the female-male approach to exploiting networks with women leaning towards smaller, tighter networks formed of people with the same shared value system and a focus on mutual support, while men see networks as a practical means to an end.
Distinction between personal and business connections also characterises network differences. In the GCC, intangible traditions and biases can constrain networking opportunitywith women, for example, not participants in majlis or diwaniya settings.
One area where women power ahead of men is their access to an extended network outside the confines of the business environment, as powerful influencers in their respective communities.
In the GCC, government entities such as Dubai Women Establishment (DWE) have launched initiatives to support Emirati women’s empowerment. DWE’s Qudwa programme is a platform for female Emirati role models to share their knowledge, skills and experience with national women across all strata of society. It is also behind the Insta Hub, female e-traders’ platform, which supports GCC women e-business owners in marketing their products and services.
Women approach business start-up funding differently from their male peers, and tend to raise smaller amounts of capital, with more reliance on personal sources of financing. They are three times less likely to approach angel investors or venture capitalists, or tap into personal networks.
They are also more reliant on owner equity and insider financing, and have a propensity to use a lower percentage of external debt versus men; and choose bootstrapping instead of venturing into overdraft territory.
More risk averse than male investors, women like a greater control over their business ventures, with the small, manageable business model favoured by many.
Women also have higher unmet credit needs, and lower loan approval rates due to the reliance on personal financing affecting credit scores.
However, women have greater success when it comes to crowdfunding, where ‘emotional appeal’ and the smaller investment-wider net approach resonates with the investor audience.
Government financial support is also key through programmes such as the Saudi Arabia and UAE-sponsored Women Entrepreneurs Finance (WE-Fi) Initiative, which aims to support greater women’s workforce integration by supporting women’s entrepreneurship. The WeMENA Initiative is another World Bank-sponsored business model competition focused on empowering and supporting women entrepreneurs in developing innovative and financially sustainable businesses.
DIVERSITY & INCLUSION
Business success building, not quota filling
Diversity and inclusion initiatives have traditionally been put in place to comply with corporate governance and self-regulation – falling under the Corporate Social Responsibility (CSR) label. Simply hiring minorities, women, people of determination to fulfill a quota or tick a CSR box is not acceptable in the 21st century corporate arena.
Building effective, cohesive and, ultimately, profitable teams, businesses and economies requires a focused diversity and inclusion policy
D&I thought for the day
- Diversity in the workplace is a variety of different voices each bringing a unique perspective, experience and skill set
- Leveraging diversity is a conduit to produce better products and services to support financial success
- D&I is the democratisation of ideas and creativity that resonate in today’s globalised world
- D&I is not just an HR policy, it’s a business success driver
- D&I policies and practices address the needs of the individual but support the goals of the organisation
Deborah Gillis, President and CEO, Catalyst
Intuit 2020 Report, 2010
Ernst & Young
McKinsey Global Institute – BSR Women’s Empowerment in Global Value Chains report
World Economic Forum Global Gender Gap Report 2017
International Labour Organization, 2012
The Peterson Institute for International Economics and Ernst & Young, 2016
Leeds University Business School, 2010
Dow Jones 2012
DeGroote School of Business, McMaster University, Ontario Canada &
Still University, US – International Journal of Business Governance and Ethics, 2013
Harvard Business review study, 2011
McKinsey & Company, Promoting Gender Diversity in the Gulf, 2015
Pearl Initiative 2015 progress report
UAE Embassy, Washington DC, US
World Economic Forum Gender Gap Report 2017
International Labour Organization
Chartered Institute of Personnel & Development (CIPD)
Gulf Business report, 2018 – Closing the Gulf’s gender gap
Harvard Business Review
LeanIn.Org and McKinsey & Company
McKinsey & Company, Promoting Gender Diversity in the Gulf, 2015
US National Women’s Business Council and Library of Congress study – Understanding the Landscape: Access to Capital for Women Entrepreneurs, 2018
World Bank – Why Supporting Women’s Economic Inclusion is Vital for the GCC, 2017
McKinsey & Company, 2015 – Why Diversity Matters