Entrepreneurs, regardless of their inherent location or gender, share similar problems in relation to properly accessing sufficient capital to start their business, being able to attract customers, developing a sufficient cash flow to sustain their venture and a variety of other nuances that are connected to the process of developing a business.
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Within the study of Tlaiss (2013), it was explained that in most market economies small to medium scale enterprises (SMEs) make up the bulk of a country’s enterprises constituting 80 to 90 % of local businesses . Such an orientation can also be seen in the case of the UAE wherein SMEs make up 82% of local businesses within the country and employ up to 80 % of the workforce.
Despite this, it must be noted that despite the fact that SMEs constitute 82% of local businesses they are still overshadowed by the region’s oil and natural gas industry which accounts for a large percentage of the UAE government’s budget revenues . This is in stark contrast to the situation found in countries such as the U.S., UK, China and other industrialized countries where local SMEs makeup more than 70 % of GDP, 60 to 70 % of local government revenue and 75 % of export earnings.
While the UAE’s status as an oil exporter does entail a decidedly different economic structure, it must be noted that given the nonrenewable state of its oil reserves it is absolutely necessary to implement some measure of encouraging the development of SMEs in order to have a strong local economy in place that is not dependent on resource that will inevitably dry up .
With the development of new internal policies within the UAE comes an era where women have become more empowered, both in the workforce and in entrepreneurship. This is evidenced by the fact that nearly 54% of all university graduates within the UAE are women and that a growing percentage of them focus on furthering their own careers and the development of their family business rather than enter into a prospective marriage .
As a result, with declining marriage rates comes a distinct decline in access to sufficient capital by bachelors since it is the intermarriage between families that is the source of capital for an entrepreneur in the UAE to establish his own business .
This is not to imply that women themselves cannot be entrepreneurs within the country, far from it, women are actually actively encouraged to take part in business and several have become successful entrepreneurs. However, due to various types of cultural restrictions which are a part of social traditions in the UAE, this creates a low rate of female entrepreneurship with only 3 out of 10 entrepreneurial businesses being started by a woman . These restrictions come in the form of:
- Women needing permission from a male to start a business
- Separate bank accounts are necessary (i.e. male for male, female for female)
- Insufficient support from the government
- Lack of collaboration with other women
In this paper what will be analyzed are the inherent difficulties experienced by female entrepreneurs within the U.AE. It is expected that through the various facts and arguments presented in this paper, a clearer picture can be developed regarding what difficulties female entrepreneurs experience within the UAE and what processes have been put in place by the government in order to address such issues.
It is expected that through proper investigation and analysis, this paper will create effective suggestions as to how female entrepreneurs within the region can best respond to the financial opportunities and challenges they are currently experiencing.
The primary objective of this paper is to compare the situation of female entrepreneurs within the UAE 10 years ago with their current situation in 2013. Through this analysis, this paper will be able to show whether sufficiently positive developments have been enacted that would be conducive towards developing a better environment to encourage female entrepreneurship within the UAE.
In this paper what will be examined is the current state of SME’s within the UAE and the situation of female entrepreneurs in 2013 as compared to how they were ten years ago. By comparing their situation in 2004 with their current situation in 2013, this paper will be able to determine whether sufficiently positive changes have been implemented resulting in a better overall situation for the growth of female entrepreneurship within the UAE.
Through this section, a greater understanding will be developed regarding the various factors that restricted the growth of female entrepreneurship within the region and if such factors continue to take a dominating role in gender based entrepreneurial growth. So far, what this section has shown is that the problems female entrepreneurs currently face within the country come in the form of traditional cultural practices, insufficient government support and lack of proper access to financial institutions.
Such processes are distinctly different from those in western countries since there is little in the way of a similar discriminatory process. When comparing the data from the article “Small Enterprises: Women Entrepreneurs in the UAE” by Hans Christian Haan with current academic articles examining the state of female entrepreneurship within the country, it was shown that the issues have remained roughly unchanged from the time that the Haan article was written. It is based on this that the primary objective of this paper is to expound on such issues and determine how they can be resolved.
Ten years ago, female entrepreneurs within the UAE suffered from a string of limiting factors that prevented their expansive growth. This came in the form of traditional cultural practices, insufficient government support and lack of proper access to financial institutions. Since these factors were in place ten years ago, this study will thus seek to determine whether these problems continue to exist at the present, how female entrepreneurs view such problems and what solutions may be needed in order to effectively address them.
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It is based on this discovery that in the following section an investigation will be conducted regarding the current perception of female entrepreneurs involving the problems they face and what possible means of addressing them could be developed. The fact remains that the current policy system within the region suffers from significant gender specific biases.
This creates barriers towards the creation of a better business environment for female entrepreneurs. What is necessary is the development of better policy initiatives in not only removing gender barriers in entrepreneurial activity but also in developing the necessary networks for female entrepreneurs to thrive.
Another necessary examination is to elaborate on the current status of female entrepreneurial funding within the country and how this has affected the success/ failure rates of entrepreneurs.
Another question that must be delved into is whether all the recent programs aimed at creating better conditions for female entrepreneurs have been effective or have things remained the same despite their implementation? The end result of such an analysis is to understand what methods of female entrepreneurial funding would the entrepreneurs like to see implemented so as to create a better business environment that is more conducive towards entrepreneurial activity.
Current Attitudes Regarding Business Financing
Based on the article “Small Enterprises: Women Entrepreneurs in the UAE” by Hans Christian Haan, it was noted that women within the UAE rely on their own personal savings as their primary method of creating startup capital . This is an incredibly laborious and time consuming process which would of course slow down the process of entrepreneurial activity within any country that utilizes such a system .
Such a situation is in stark contrast to the way in which the entrepreneurial sector in other countries such as China, the U.S., the UK and even in certain sectors in the Middle East work since it is often seen that investing in entrepreneurs creates numerous beneficial actions, such as:
- A better local economy
- Greater amount of bank deposits
- Helping out what could potentially develop into a larger enterprise
Banks generally think of entrepreneurs as “safe bets” when it comes to loans due to the attitude of entrepreneurs in paying back what they owe even if a particular business did not turn out as successful as expected . Thus, startup capital in such situations often comes about through bank loans resulting in a far quicker level of business creation.
After conducting an analysis of the Erogul (2011) article which examined the current situation of women entrepreneurs within the UAE, it was revealed that female entrepreneurs still continue to rely on their own slowly accumulated capital as compared to merely taking out a bank loan . This shows that from 2004 till the present, there has been little change in the cultural attitude regarding entrepreneurial financing among women .
One of the potential reasons behind such a state of affairs has been connected to the currently arduous process of taking out a loan within a bank wherein a male sponsor is needed in order to sign and guarantee all aspects of the loan . Since female entrepreneurs have to rely on a sponsor who may not always be there, this further impedes the process of business development which actually discourages women from relying on banks as a source of capital .
It was seen that in the article “Small Enterprises: Women Entrepreneurs in the UAE” by Hans Christian Haan that in the case of the UAE, family played a crucial role in the funding and development of small to medium scale business ventures for women wherein more than 25% of local businesses started by female entrepreneurs were a result of family members contributing towards the initial starting capital of the entrepreneur and actively gave advice regarding the proper management of the business .
In fact, it was noted by researchers such as Mostafa (2005) that it is the strong interfamily ties within the country’s culture that limits the export market of the UAE. This is due to the development of a business culture where it has become preferable to deal with family members or friends of the family when it comes to joint business ventures and business opportunities.
This in effect severely curtails the ability of a business to expand beyond its current market due to the inherent hesitance in dealing with the unfamiliar . While there is nothing inherently wrong with family based methods of capital financing, studies such as those by Mostafa (2005) stated that it often came with certain conditions related to the types of business that can be gone into by female entrepreneurs .
This often entailed clothing, textiles, and manufacturing that were often detailed as the “traditional domain” of female entrepreneurs within the UAE. This conditional funding through family based methods of capital development can actually be considered a limiting factor in the capacity for female entrepreneurs to establish themselves in new types of business and, as such, can be considered a detrimental feature of the current “entrepreneurial funding” system within the UAE
Analysis of Government Policy Initiatives
An analysis of government policy initiatives that were mentioned in the Haan article showed the presence of gender specific barriers in entrepreneurship wherein male sponsorship, male networking and overall male assistance was required when it came to women entering into any form of entrepreneurial activity.
The problem with the implementation of male sponsorships is that it is not needed in the case of women entrepreneurs since males basically just sign their signatures on a piece of paper . They are not partners in the business nor do they take an active role in it; basically the Haan article shows that men are just there to show that there is a level of biased gender supervision occurring.
Through the work of Madsen (2010), it was revealed that at the present, there have been no government policy initiatives to address such issues with the same policies continuing to exist . Contributing to this problem is the lack of sufficient government funding in the development of female support networks which are there to help women in connecting with each other and developing the necessary relationships to grow and expand their business.
While it may be true that the UAE government states that it actively promotes female entrepreneurship and even gives awards to prominent female entrepreneurs, the fact remains that the current policy system within the region suffers from significant gender specific biases.
This creates barriers towards the creation of a better business environment for female entrepreneurs . What is necessary is the development of better policy initiatives in not only removing gender barriers in entrepreneurial activity but also in developing the necessary networks for female entrepreneurs to thrive.
The methodology that will be utilized within this particular study will be comprised of an evaluation of questionnaire results sent to a variety of female entrepreneurs within the UAE in order to determine the various difficulties they experience on a daily basis when it comes to entrepreneurial activities.
Approaching the Candidates
In order to gather the necessary data for this study, 20 female entrepreneurs will be approached by first contacting them via email. They will be asked if they would be willing to be part of an online survey utilizing the web service www.surveymonkey.com where all their responses will be recorded.
If they agree, all they would need to do is click the link on the email and they will immediately be sent to the survey page where they will fill out their personal information and fill out the questionnaire that has been developed.
The first set of questions that will be sent to entrepreneurs will be comprised of the following:
- How were you able to initially fund your business? Was it through family funds? Bank loans or through government sponsored programs?
- Aside from the method of funding that you utilized for the initial financing of your business, what method of funding would you want to utilize for any future expansion? Are you going to utilize the same initial source of funding or are you going to go for alternatives?
- Would you say that financing a business is relatively easy or simple within the UAE?
- Have you ever utilized a bank loan as means of financing some method of your business operation? If so what were the complications that you experienced, if any.
- What are some of the complications you have experienced as an entrepreneur within the UAE? Please elaborate on some of your experiences when it came to finding funds for your business.
- Would you say that local government programs have been an effective resource for local funding?
- In terms of developing an entrepreneur, would you say that the local government programs aimed at educating young female entrepreneurs have been effective?
- When it comes to the sale and development of your current product line/service, are you looking towards expanding only within local markets or do you have any plans in expanding internationally? Please explain your reasons for doing so on whatever choice suits you the most.
- What would you say is the most difficult aspect of being a female entrepreneur within the UAE?
- Do you know of any female entrepreneurs that have been successful in developing their business to encompass foreign markets? If so what was the source of their finances?
- As a female entrepreneur within the UAE, please elaborate on the current status of female entrepreneurial funding within the country and how this has affected the success/ failure rates of entrepreneurs.
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