The closure of Coffee Architecture at the height of the Covid-19 pandemic was “a very hard time” for Nooran Al Bannay, the founder of the company and a rare Emirati barista.
The Abu Dhabi-based coffee shop, open since 2018, could survive the crisis by cutting down on costs and allocating last year’s profits to pay salaries.
But in any event, Al Bannay could not afford to go bankrupt. The entrepreneur had already overcome major hurdles to convince her family members of her path, as it is frowned upon for Emirati women to work in the customer service field.
“Serving coffee to people makes me happy; this is my passion,” she said.
“It was a lot of arguments! But I was patient to change their minds and pursue my dream,” Al Bannay told Asia Times.
Like her, a growing number of Gulf women took the plunge and set up their businesses in recent years as female entrepreneurship gained momentum, stimulated by new legal amendments and a better acceptance at the society level.
Saudi Arabia has sought to place itself at the forefront of that change, launching an economic and social reforms project aimed at increasing women’s participation in the workforce by a third within the decade.
“This has paved the way for women to take their chance. Still, I think it will take some time before we can see something coming out of Saudi,” said Issam Altawari, a Kuwaiti financial practitioner.
A 2019 Mastercard study reported less than 2% of business owners in Saudi Arabia are women as they “encounter more constraints such as cultural bias where they are less accepted and regarded as being equal in business.”
Male-dominated networks
In Oman, the Covid-19 crisis hit when full-scale operations had just begun at the fish processing plant launched last year by female Omani entrepreneur Farha Al Kindi, following a decades-long career at the Ministry of Agriculture and Fisheries.
“We could not believe what was happening; it was a big shock. We had to close the plant for four weeks,” the founder of Sea Delight told Asia Times.
As Oman banned movement between governorates to contain the spread of the virus, Al Kindi was unable to serve customers or even to access her plant in Al Masnaah.
To preserve cash flow, the entrepreneur who already made her mark in the male-dominated seafood industry, reached an agreement with suppliers: raw products will be paid on credit. Before production can return to early 2020 levels – about one ton of ready-to-eat fish products per month – financial issues will need to be addressed.
“I would put my bets more on female entrepreneurs to survive the crisis,” Altawari told Asia Times, convinced businesswomen are often more combative and resilient than their male counterparts.
Still, risks of bankruptcies are at an all-time high and roughly half of startups surveyed in June across the region worried about running out of cash.
Although Gulf governments promote women’s economic inclusion, no Covid-19-related financial support directed explicitly towards women entrepreneurs has been announced. Furthermore, male and female-led SMEs interviewed by Asia Times said fiscal stimulus packages are insufficient to support Gulf non-oil economies.
The appetite of banks for lending to struggling businesses is also expected to dry up – even before the pandemic, bank credit to SMEs in the Gulf region was already the lowest in the world. Because of this, entrepreneurs often turn to self-financing, private investors or venture capital, a form of private equity investment for high-growth businesses.
“As venture capital investors, we have to be proactive in sourcing and backing female founders,” said Tala Al Jabri, a partner at HOF Capital, a global technology investment firm with offices in New York City, San Francisco and the Middle East. At a global level, over a third of companies supported by HOF Capital have female founders.
The Saudi venture capitalist said more female investors are needed as women entrepreneurs are often made vulnerable in fundraising processes because “the network of financiers tend to be more male-dominated”.
According to a report published by Harvard Business Review, strong gender bias in the venture capital industry tends to “influence decision-making” and eventually fail women entrepreneurs.
Think different
“More than 1,400 years ago, there was no resistance towards Arab women being entrepreneurs. The first wife of Prophet Muhammad himself was a successful businesswoman” said Altawari, who believes the Covid-19 crisis is a unique occasion to recognize the place that women deserve in Gulf economies.
Better educated than men – in Qatar, for example, about 67% of higher education graduates are women – Gulf female entrepreneurs are well positioned to disrupt industries and digitalize old-school business models.
In Saudi Arabia, the CEO and founder of the Jeddah-based workshop provider Workshop X turned constraints caused by the pandemic into a unique opportunity to pivot the business model from in-person to online training.
“It was a great idea, our revenues and the number of attendees tripled!” Noor Marzoky told Asia Times.
Moreover, as the company shifted online, many of the regulations on workshop providers were lifted – in Saudi Arabia, workshops that physically host more than 25 participants have to be approved beforehand.
Marzoky believes “it is the time” for Saudi female entrepreneurs to seize opportunities, yet, she acknowledged the market is still hesitant to trust a young woman. “You have to work triple what a man has to work,” she said.
A situation that leaves many wondering where to start.
“When I talk to young Emirati ladies who come to the coffee shop, I can see a lot of dreams in their eyes, but they always ask me, how did I discover my passion,” Al Bannay said. The Emirati barista calls on women entrepreneurs to focus on innovative business ideas rather than copy-pasting existing concepts.
Experts have long called for reforming education systems in the Gulf to develop critical thinking among the youth. According to the World Bank, “teaching methodologies remain teacher-centered,” mirroring top-down centered Gulf societies.
Innovation‐driven education systems are vital to diversifying Gulf economies beyond oil and gas revenues, but would creative individuals go one step further and question governance systems? Authoritarian Gulf rulers might wonder.