Women of Yemen: Make it easier to secure capital for Yemeni women entrepreneurs

Now more than ever there is a greater need for women to be present Yemeni women in the labor force. Their economic participation plays a critical role in sustainable development, social cohesion and peacebuilding.

Despite the declining opportunities in the economy Degraded and restrictive social and cultural norms, Amal Abdullah says many women were able to start their own businesses and become employers rather than employees.

However, they still face gender-specific obstacles, Especially in terms of securing capital for their companies, cultural and institutional change may rather support these women’s entrepreneurship so that they can thrive.

The conflict in Yemen has contributed to the deterioration of the economy, leading to severe stress and suffering within families and communities.

About half of the population lost their jobs

Nearly half of the population has lost their jobs, while jobs are scarce in the public and private sectors, while the majority of families have no income, contributing to the catastrophic humanitarian situation in the country.

Traditionally, men are responsible for providing for the basic needs of the family, but many men are currently fighting on the front lines, losing their jobs, not receiving salaries, or suffering from war-related disabilities.

Women were under tremendous pressure due to the need to accept the role of breadwinner in the family. However, conservative patriarchal norms and traditions make it difficult for them to join the workforce, while normalized forms of gender-based economic violence, such as limiting women’s ability to save money, contribute to tensions within societies. To meet these demands, many women have found solutions and turned negative situations into opportunities – by becoming entrepreneurs.

Despite socially ingrained norms, women-run businesses have recently increased in Yemen, including businesses run from home or selling products through online platforms. Women with cooking or sewing skills started selling their products from home, while other businesses started selling imported products, such as clothing, electronics and cosmetics, which are often not available in the market due to the navy. , air and land blockade imposed by the Saudi-led coalition.

Some of these women have opened small shops to provide necessary services like: cell phone maintenance. Unfortunately, many women, including IDPs and other minorities, have limited ways to generate income, so some of them resort to selling clothes, handkerchiefs or miscellaneous products on the street that expose them to frequent violence and abuse.

Barriers to starting a business

For many, the barriers to starting a business are too great. Women entrepreneurs point out that even though women overcome social barriers, many of them do not have access to the necessary financial resources.

With many families left without any source of income, savings, property, employment or any other way to obtain financing, raising capital remains a challenge. Islamic microfinance services and community funds called “associations” offer potential solutions. But social and cultural norms, religious beliefs, and the overall economic situation prevent many women from seeking financial opportunities outside their families.

According to an assessment conducted in the city of Sanaa, “the main source of capital to start a business was personal and family savings,” indicating a large gap in the financial sector, especially with a lot of economic potential ready to to become. launched. There is an urgent need for financial institutions, such as microfinance institutions, to increase support for women entrepreneurs, especially those who do not have loan alternatives to secure capital.

Banks view them with suspicion

There is ignorance in Yemen about the banking system and its services, which contributes to the lack of bank accounts for many people, especially women. In 2014, less than 2% of Yemeni women had accounts with a financial institution – a very low percentage compared to other Arab countries.

Although Yemeni women have the right by law to own real estate and businesses and to engage in financial transactions, including obtaining loans, significant barriers still prevent women from approaching financial institutions such as banks and microfinance institutions and obtaining loans to to secure capital. create the project.

The broader culture, with its traditions and customs defining women’s gender roles and their interaction with men, creates barriers for women who want to do business with banks. For example, many women are required to obtain permission from their male guardians. In addition, the culture of society encourages people to borrow money from a family member instead of the bank. Many Yemenis prefer to invest most of their savings in assets such as gold trinkets, houses and land rather than a bank account.

Even when it comes to security, most people think that it is easier and safer to save money in cash at home. This conviction was reinforced by banking practices at the beginning of the conflict, as banks refused withdrawal requests or requested to withdraw smaller amounts due to a lack of liquidity and depreciation of the local currency, and this led many to lose their confidence in the banks have lost.

In addition, stories of military takeover have led to Full or frozen commercial bank accounts increase the fears of depositing savings in banks.

However, with the ongoing conflict and widespread uncertainty and impunity, it has become even more dangerous to keep savings at home.

An additional obstacle is the Islamic ban on interest (usury), which is a major reason for suspicion and mistrust of financial institutions on the part of the people. Islamic teachings prohibit interest rates on loans and deposits, which prevent many Yemenis from depositing their money or borrowing from banks.

In some particularly conservative societies, there is more skepticism about financial institutions, including Islamic banks. When the Social Fund for Development instituted microfinance in 1997, it was rejected by large segments of Yemeni society and religious figures such as imams in mosques denounced it and banned people from accessing microcredit.

But after they continued to provide these services, this negative perception changed over time, and microfinance gained a certain level of acceptance.

Barriers to women’s access to formal financial opportunities

Even if women exceed society’s suspicions about banks, they face other obstacles. Borrowing requirements prevent many from seeking financing opportunities from financial institutions. Conventional and Islamic banks have included massive bank guarantee requirements, which prevents many women from applying for loans, while high interest rates are an obstacle because female entrepreneurs cannot afford them in addition to religious reasons.

While Islamic banks can fill this gap as they offer alternatives to interest rates in line with Islamic teachings, women are still unlikely to get involved because lending insurance requirements remain similar to conventional banks. Therefore, banks are one of the least preferred options to get loans to start a business.

Most of the MFIs offer different types of loans at low interest rates while complying with Islamic principles. But MFIs still have special collateral requirements for individual loans, which many women cannot meet.

These requirements differ between MFIs, for example there are guarantees in the form of deposits, jewelery, salaries and bank letters. Networking is one possible way to overcome this obstacle, while providing support for bank guarantee requirements, such as facilitating the guarantees required by most MFIs and banks. However, social restrictions affecting women lead to limited access to business networks, as restrictions include preventing men from attending social gatherings where a lot of work is done.

Necessity is the mother of invention: alternative ways of financing

Due to the barriers to access to formal financial institutions, informal lending and saving mechanisms are common among women. Most women entrepreneurs rely on their own savings and resources or family savings. Examples include borrowing money from a family member or getting cash for gold trinkets. Women often get most of their gold through a dowry before marriage. In Yemeni culture, a woman’s gold is her financial guarantee and security.

However, some women entrepreneurs pledge or sell any gold they have as a last resort to secure some or all of the capital for their businesses. In other cases, women save small amounts of money over a long period of time from their personal income if they have a job or from money their husbands give for household or personal expenses.

The association is an informal funding scheme known in Yemen and many Arab countries. The association is a membership-based fund, to which each member regularly pays a fixed amount of money, often on a monthly basis. The accumulated balance of the fund is paid to one member at the end of each agreed period (eg end of the month) until all members receive a monthly quota. Fund members can be family members, co-workers, neighbors or friends with some of the participants from different social circles if they are recommended by trusted members.

Leave a Comment