Background
With the proliferation of ESG (environment, social and governance) goals, diversity and inclusion are two of the main topics being discussed across many jurisdictions. Many countries have in place diversity quotas to ensure equal gender representation in corporate leadership. Yet, despite steady progress, globally companies are led predominantly by men ' both at the board and the senior management levels.
However, over the past few years, there has been some progress on this front in the Middle East/North Africa (MENA) region. Research shows that gender diversity is growing across the MENA region, but is increasing at a slower pace relative to other regions. Clearly, more needs to be done to advance equal participation of women in corporate leadership.
The Current State of Gender Diversity in MENA Companies
A study done by the IFC in 2019 concluded that at least 50% of 1,600 companies in Lebanon have at least one female board member, and women represent 14% of all board members within the sample space. Furthermore, 47% have one to two female board members, but only 3% have three to four female board members.
In Egypt, the quantitative analysis concluded that at least 47% of companies have at least one female board member, and women represent 14% of all board members (listed and private companies). Women occupied 10% of the boardrooms of listed companies, with three women serving as the chairs of their respective boards. Furthermore, 39% of firms have one or two female board members, and 8% have three or more. This was an improvement from the study the African Development Bank (ADB) did in 2015, which found that women occupied about 8.5% of Egyptian boardrooms compared to their sub-Saharan counterparts: Kenya (19.8%), Ghana (17.7%), South Africa (17.4%), Botswana (16.9%) and Zambia (16.9%). ADB's pioneering study also found that women formed only about 5.9% of Moroccan boardrooms.
A joint recent study conducted by the American University in Cairo and the Egyptian Stock Exchange found that as of July 31, 2020, at least 50% of Listed companies in Egypt now have at least one woman on their Boards. As of July 2020, among the 242 companies listed on the EGX, women hold only 10.8% of board seats.
In Morocco, although there are many qualified female candidates, only 5% of the country's companies have women in the top executive role. All told, women comprise 17% of board members of listed companies in Morocco.
The 2019 IFC study found that, in both Lebanon and Egypt, entities with gender-diverse boards outperformed those with all-male boards. The gender diverse boards were quite ahead of their peers with all-male board members in terms of profitability measures ' more than (double the profit growth) and better solvency.
Despite this evidence that women's inclusion on boards lead to greater financial performance, MENA board gender diversity continues to grow at a slow pace.
Barriers to Gender Diversity within the MENA Region
There are traditional and cultural barriers to the advancement of women on Boards in the region ' in particular, widespread attitudes and expectations about gender roles. Traditionally, women in the MENA region receive less encouragement and support in pursuing advanced academic degrees in business, finance and other demanding fields as compared to men. For male-dominated industries, women may be discouraged from accepting career positions that require them to stay out late or to interact with male colleagues. According to a May 2021 Bloomberg article, in the words of Fatma Hussain, the only female on the board of Dubai-based logistics group Aramex PJSC, 'I interview a lot of people, and sometimes a female candidate has to ask permission from her parents to take on an offer because there are many males [involved].'
Changes on Gender Diversity Throughout the MENA Region
Incremental progress toward greater gender diversity in MENA boards continues to be made. Some notable examples:
- In the United Arab Emirates, the government announced in March 2021 that all listed companies should have at least one woman on their boards. The rule went into effect in April 2021; since then, less than 20 companies have added women to their boards.
- In Egypt, the Minister of Planning and Economic Development announced in February 2021 that the ministry is establishing an 'Equal Opportunities Unit' to promote gender equality, counter discrimination and increase inclusiveness at the ministry. While the goal may not necessarily be focused on board diversity, it is aimed at fostering positive diversity mindsets that promote equal opportunity across all activities, in addition to encouraging innovation in achieving the United Nations' fifth goal of sustainable development (Goal 5: Gender Equality).
- In Morocco in February 2021, the IFC partnered with the Club of Women Administrators (CFA) Maroc to promote parity and diversity in companies. As part of this agreement, IFC will support the activities of the CFA-Maroc members in strengthening the role of women in corporate governance
Apart from Regulation, What Can Still Be Done to Bridge the Gender Diversity Gap?
Multiple avenues exist for broadening gender diversity in MENA boards. Among them:
- The corporate governance codes in the region are mostly silent on gender quotas. This is an opportunity to improve overall corporate governance and transparency, with a particular focus on board dynamics and functioning, as well as more extensive public disclosure of non-financial information such as gender composition of the workforce, in senior management and on boards in corporations.
- Educate girls and support efforts to reduce the dropout rate among them. Additionally, there is a need to remove gender barriers and stereotypes around gender roles and expectations.
- Create and sustain networks of female leaders, which will connect women in different industries and sectors. Through this, future female leaders can be identified and mentored through training, mentoring, sponsoring, and the company- and sector-wide implementation of gender diversity initiatives.
- The cause also relies on the support of male leaders. Male leaders themselves need to be engaged in broadening diversity, so they too promote gender balance in the workplace. This can be done through various means such as public advocacy and support.
