The Journey to Financial Independence: Empowering Women in the Middle East

In the vibrant landscape of the Middle East, financial literacy among women is on a transformative journey. Particularly in the UAE, the evolution is notable but far from complete. As of recent reports, the gender gap in financial literacy remains a significant challenge, despite strides in educational and economic initiatives.

A Glimpse into the Current State

In the UAE, the seeds of financial literacy are sprouting, thanks to increased awareness from both governmental and private sectors. For instance, the 2023 Global Gender Gap Report indicates that while the UAE has made progress, with a 65.5% closure of the gender gap, full gender equality is still projected to take 152 years in the MENA region. Women in the UAE have begun to occupy more senior roles, yet disparities persist, particularly in financial understanding.

Recent studies underscore this disparity. According to a 2021 S&P Global survey, only 29% of women in the MENA region are financially literate, compared to the global average of 33%. In the UAE, the situation is slightly better but still below the global benchmark. Women here often excel in personal finance management but struggle with more complex financial matters and business management, highlighting a crucial area for growth.

Unpacking the Financial Literacy Gap

Several key factors contribute to this gap:

1. Cultural Norms and Gender Roles: Traditional views often position men as the primary decision-makers in financial matters, which limits women’s exposure to financial education. This cultural backdrop makes financial literacy programs less accessible to women in rural or less developed areas.
2. Educational Disparities: Urban areas offer more financial literacy programs, but women in less accessible areas may miss out. A recent UBS report reveals that 54% of women in the region rate their investment knowledge as low, while only 7.5% rate it as high.
3. Limited Financial Networks: Unlike their male counterparts, women often have less access to informal financial networks and business circles, which hinders their financial learning and business growth.

Regional Opportunities for Women Investors

However, there’s a growing trend: Women now control a third of the world’s total investable wealth, with their share growing faster than men's. In 2020, women held 33% of global personal investable wealth, up from 31% in 2016, and this is projected to rise to 35% by 2025. The growth rate of women’s investable wealth (8.2% CAGR from 2016-2020) has outpaced men’s (5.9%), and this trend is expected to continue globally and in the Middle East.

Investment Preferences in the Middle East: Women in the region primarily invest in stocks, real estate, and precious metals. Single women often prefer real estate, influenced by changes in ownership rights and regulatory frameworks, while their overall investment choices are shaped by business and personal circumstances, as well as regional geopolitical and economic factors.

Challenges and Opportunities: Women often feel that investing is not a common topic for discussion in their social circles, leading to a lack of confidence in engaging with financial matters. There is a need for accessible education, step-by-step courses, and supportive networks to empower women in their financial decisions. Creating environments that foster open discussions, mentorship, and networking among women is critical for building financial confidence and overcoming traditional barriers.

Navigating Barriers to Financial Independence

Emirati women face a variety of challenges on their path to financial independence, influenced by cultural norms, legal restrictions, and social expectations:

1. Gender Pay Gap: Women in the UAE earn approximately 80 cents for every dollar earned by men, translating to a 20% pay gap. This discrepancy makes it challenging for women to save and build wealth. Strengthening equal pay laws and ensuring transparent pay structures could help bridge this gap.
2. Networking and Mentorship: Only 30% of female entrepreneurs in the UAE have access to mentors, compared to 45% of their male peers. Establishing women-focused business networks and mentorship programs can help fill this gap.
3. Social Stigma: Despite contributing about 10% to the UAE’s GDP, women-owned businesses face social stigma. Highlighting successful female entrepreneurs and providing access to startup funding can help shift perceptions.

The Power of Small Business Ownership

Owning a small business can significantly empower women financially. In the UAE, women-owned businesses reported an average 30% rise in annual income. They also benefit from flexibility in work schedules, with 60% of women entrepreneurs noting improved work-life balance. Furthermore, 70% of female entrepreneurs gain crucial financial and management skills, enhancing their career prospects.

However, women-led businesses make up less than 10% of all businesses in the UAE, compared to the global average of 23%-26%. Despite this, studies show that women-led businesses perform as well as or better than those led by men. For example, women-led businesses earn 78 cents of revenue for every dollar invested, compared to 31 cents for men.

Support Systems for Entrepreneurial Success

To bolster women’s entrepreneurial efforts, several support systems are crucial:

1. Access to Funding: Women received about 15% of venture capital funding in 2023. Increasing this percentage and creating targeted financial products can help address the funding gap.
2. Mentorship and Networking: Initiatives like the She Can Initiative and Dubai Business Women Council offer vital networking and mentorship opportunities. Connecting women with experienced professionals can provide essential guidance.
3. Education and Training: Programs such as the Women’s Economic Empowerment Program by Abu Dhabi University provide specialized business and financial education.
4. Legal and Regulatory Support: Reforming laws to enhance women’s financial autonomy and providing clear information about legal rights can help women navigate business regulations.
5. Community Support: Building a community of women entrepreneurs through local business groups and online forums can offer emotional support and practical advice.

Women Supporting Women in Business and Community

Women are eager to invest in women-led businesses, but they often lack access. UBS research shows that 68% of women are interested in investing in female-led businesses, but 70% lack access to these opportunities. Many women feel more understood by other women investors who consider the holistic picture rather than just financial performance. Companies with gender-diverse leadership tend to outperform those without, emphasizing the need for more female partnerships and support.

Women in Family Businesses

Although women often manage short-term financial decisions, they are becoming more involved in long-term investment strategies. As women are expected to inherit significant wealth in the coming years, their role in financial decision-making is set to expand. In family businesses, cultural norms are slowly changing, with more women taking executive roles and being encouraged to lead.

Challenges and Cultural Norms

Despite these advancements, cultural norms still pose challenges. Women often need support from family or male partners to enter the business world. However, there is a growing trend of female empowerment, especially in regions like Saudi Arabia, where initiatives like Vision 2030 encourage women's participation in business and leadership roles.

Looking Ahead: The Path to Financial Independence

To advance women’s financial independence in the Middle East, several steps are essential:

1. Expand Financial Education: Offering more workshops and programs tailored to women’s needs can boost financial literacy and confidence.
2. Strengthen Networks: Developing mentorship programs and professional networks will provide valuable support and opportunities.
3. Improve Access to Funding: Encouraging investment in women-led businesses and creating specific funding opportunities can address financial barriers.
4. Advocate for Policy Changes: Supporting policies that promote gender equality and reforming legal barriers will help create a more equitable environment.
5. Highlight Role Models: Showcasing successful women in business can inspire others and challenge cultural stereotypes.

By focusing on these areas, the Middle East can foster a more inclusive and supportive environment for women’s financial empowerment, leading to a more equitable and prosperous future for all.

Inova’s Role in Empowering Women in Finance

It was a pleasure to be part of the “Women in Finance” panel organized by APM Capital Limited in celebration of Emirati Women’s Day on 26th of August 2024.

Dagmar Turkova, Co-Founder & COO of Inova, joined the panel as a speaker alongside other remarkable leaders such as Umarrah Shafiq, Natalia Ishchenko, and Alexandra Reyes, engaging in a meaningful discussion with an attentive audience.

During the panel, we explored critical topics such as:

?? The current state of financial literacy among women in the Middle East ?? Key factors contributing to the knowledge gap in financial education for women ?? Barriers Emirati women face in achieving financial independence ?? The empowering role of small business ownership for women and much more...

Women in Finance Middle East: APM Capital Panel Insights (crunchdubai.com)

APM Capital marks Emirati Women’s Day celebrations highlighting Financial Inclusion for Women and ESG | UAE News 24/7 (uaenews247.com)