54% of women in MENA region lack understanding of investments, survey reveals

What lies for women in the MENA region? 

As we anticipate the coming decade, it is essential to acknowledge the emerging trends for women in the MENA region. Identifying advancements in financial inclusion, entrepreneurial aspirations, and business education can empower women and play a role in fostering the economic growth of the region.

According to a study conducted by the Swiss banking group UBS, over half (54%) of women in the Middle East and North Africa perceive their understanding of investments as low, despite the exponential growth of their wealth in the region. UBS surveyed in partnership with Women in Business Arabia.

UBS survey insights

The Women and Investing in Mena report revealed that approximately 38 per cent of women in the region considered their investment knowledge to be at a medium level, while only 7.5 per cent regarded it as high.

The report, based on a survey of over 600 women in the Mena region, indicates an opportunity to promote investment literacy among women in the Middle East. It reveals that 62 per cent of those surveyed express a desire to become more actively involved in investing.

According to the Boston Consulting Group, women’s wealth in the Middle East, which amounted to $786 billion in 2020, is projected to experience a compound annual growth rate (CAGR) of 9 per cent. The report anticipates that it will reach $1 trillion by the year 2023. The expansion of women’s wealth in the Middle East raises further considerations and inquiries.

Economic empowerment: The surge in growth signifies that women in the region are acquiring economic influence and achieving greater financial autonomy. This can yield positive effects on their overall well-being and enhance their capacity to contribute to the economy.

Changing social norms: The trend implies a possible transformation in societal attitudes regarding women’s access to and control over financial resources. This may pave the way for additional progress in gender equality within the region.

Investment opportunities: The swift expansion provides a notable chance for the financial services sector to address the distinct needs and priorities of its female clientele.

While the overall figures reflect positivity, it is crucial to examine the distribution of this wealth among various countries and income brackets within the Middle East. Are the advancements concentrated within a select group of affluent women, or are they more widely distributed?

Crucially, it prompts essential inquiries such as: What obstacles still hinder women from accessing and overseeing their wealth? This might encompass disparities in inheritance laws, restricted availability of financial education, and cultural norms that discourage women’s involvement in financial decision-making.

Emma Wheeler, Head of women’s wealth, UBS Global Wealth Management said, “There is a need for conversation, education, and systemic support for women in the Mena region to better engage in discussions around finance, investment, and entrepreneurship. The industry needs to make strides with clear intentions, mentorship, encouragement, and continuity to help improve the accessibility of information and unlock the economic opportunities that diversity and inclusion bring to all.”

Evidence of women’s influence in finance

According to BCG’s research, women presently command a substantial 32% share of the world’s wealth, highlighting its significance. This statistic underscores the increasing economic strength and impact of women on a global scale. The consultancy estimates that this will experience a Compound Annual Growth Rate (CAGR) of 5.7 per cent, reaching $97 trillion by the year 2024.

Although 32% represents the global average, notable variations exist among different regions. Developed countries typically exhibit a higher proportion of wealth controlled by women compared to their counterparts in developing countries. Several elements contribute to this expansion, such as the growing participation of women in the labour force, increasing educational achievements among women, and a shift towards more gender-equitable inheritance laws.

Despite advancements, women continue to encounter various challenges in attaining financial equality. These obstacles encompass gender pay disparities, restricted financial access, and societal norms that curtail their economic opportunities.

Economic imbalances between the genders evident

The increasing financial discrepancies between genders are a significant cause for concern. The World Economic Forum projected that achieving pay parity between women and men would take 257 years, marking a 55-year extension from the 2018 prediction of 202 years. This revelation of the expanding pay gap is alarming, emphasizing the pressing need to tackle this issue. 

The previous UBS research indicates that a 10 per cent gender pay gap can result in a 40 per cent gender wealth gap, which increases to 85 per cent for a 20 per cent gender pay gap. In the Mena region, 55 per cent of women assessed their understanding of personal finance, including day-to-day budgeting, as moderate, while 28 per cent rated it as “high,” as indicated by the UBS report.

The survey revealed that merely 29 per cent of participants considered their proficiency in handling financial information to be high, with 53 per cent rating it as medium. The findings also showed that women’s proficiency in dealing with financial information is most pronounced in the UAE and least pronounced in Syria.

As per the UBS report, approximately 47.8 per cent of women in Mena assessed their familiarity with investment information as low, with 42 per cent rating it as medium, and 10 per cent considering it high. Moreover, seven out of ten women in the region rated their familiarity with investment instruments, such as stocks and bonds, as low, while a quarter rated it as medium, and only 4.5 per cent regarded it as high.

Early-age financial literacy is crucial

UBS emphasized the importance of early education and financial literacy, recognizing their pivotal role in ensuring the sustained success of women in business over the long term.

Providing girls with early education imparts the knowledge, skills, and confidence necessary for success in academics and future careers. This encompasses the cultivation of critical thinking, problem-solving, and communication skills, all of which are essential for navigating the business world.

Financial literacy empowers women by enabling them to comprehend personal finance, make well-informed financial decisions, and effectively manage their money. This understanding is vital for initiating and operating a business, handling investments, and attaining financial security. Stereotypes and societal norms may dissuade girls from pursuing careers in business. Early exposure to financial concepts and exposure to successful female role models can help dismantle these barriers and inspire girls to contemplate leadership roles in business.

The report adds, “Achieving sustainable impact requires changes in attitudes and approach as women work across industries and cultures. Unleashing this impact involves understanding the cultural needs, barriers, and prospects of both women with wealth that requires management and those seeking to create it.”

Financial capability and education essential for economic empowerment

The report identified economic resources (financial ability and wealth) and economic education (financial knowledge and confidence) as principal catalysts for fostering economic empowerment among women. This is a multifaceted issue with an intricate interplay between these factors. Let’s delve deeper:

For instance, having access to capital, income, and other resources opens up avenues for women to initiate businesses, invest in education and assets, and engage in the formal economy. Conversely, a scarcity of financial resources can markedly constrain their choices, curbing their capacity to take risks or make independent decisions.

Additionally, grasping financial concepts such as budgeting, saving, investing, and debt management equips women to make well-informed decisions regarding their finances. This empowers them to navigate the financial system adeptly, steer clear of predatory practices, and establish financial security.

Financial literacy nurtures confidence in handling money, negotiating salaries, and advocating for financial rights. It enables women to overcome feelings of fear or intimidation, encouraging active participation in financial decision-making.

UBS also emphasized the importance of incorporating gender considerations in investments, turning finance into a tool for advancing gender equality. “A gender lens can be applied by considering women-owned businesses, companies employing women across all tiers as well as companies offering products and services that benefit women,” the report added.

Eliminating the gender gap in economic participation has the potential to contribute trillions of dollars to the global economy. Investments tailored with a gender-smart approach can address specific needs, unlocking the full potential of women as consumers, entrepreneurs, and investors. By embracing a gender-lens approach to investment, countries and regions can play a role in fostering a more inclusive and sustainable financial system that brings benefits to everyone.

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Published: 19 Feb 2024, 04:55 PM IST