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InFocus Wartime Economy Fosters Surge in Female Entrepreneurship in Aden

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Women have only ever made up a fraction of the business community in Aden, and in 2015 – when Houthi forces and their allies invaded the southern city and spurred a regional intervention to liberate it – their share declined dramatically. While precise numbers are hard to come by, anecdotal evidence points to a rapid decline: Dr. Kulthum Nasser, head businesswoman in the Aden Chamber of Commerce, told the Sana’a Center that the war reduced its female membership from roughly 20 to just six, with many forced to close their businesses or flee the country.

But before long, Nasser began to notice a reversal: the number of women entrepreneurs in Aden increased rapidly. Speaking with many of these women, she recognized that the vast majority had never run a business before.“We found that one of the most important problems that women faced was the absence of any agency to help them launch their projects, conduct feasibility studies, determine the mechanisms of work and marketing for their projects, or provide them with legal protection to guarantee their rights,” said Nasser, who recognized that these new entrepreneurs would need support if they were to grow their enterprises. This led her to found the Union of Small Project Owners (USPO), licensed by the Aden Chamber of Commerce in 2016, to help women entrepreneurs build their business acumen. Shortly after its inception, the USPO had less than 150 members. By May 2022, there were close to 1,200 businesswomen who had signed on.

A combination of necessity and opportunity has been a primary driver of this trend. “The war led to dire economic conditions that greatly affected women,” said Nasser, with the general economic collapse robbing many families of their income – usually earned by male heads of the household – and forcing them to scramble for new sources of revenue.

At the same time, the war economy created a new socioeconomic class with disposable wealth in the city, which reshaped demand for goods and services. To cater to this new market, Nasser says women entrepreneurs have often transferred traditional skills — such as cooking, making incense and perfumes, sewing and handicrafts — into small, informal commercial enterprises.

All businesses in Aden face a litany of challenges, such as poor security, exchange rate and price instability, a lack of services, and difficulty accessing financing. The hurdles women entrepreneurs confront are compounded by patriarchal social norms. Women have to deal with threats to their physical security when moving outside the home, and women’s participation in business is belittled and denigrated by wider society. This lack of recognition exposes Yemeni businesswomen to predatory behavior by their male peers and the public officials they have to interact with.

In this In Focus article, the Sana’a Center looks at women entrepreneurs in Aden, the challenges and opportunities they face, and the complex dynamics that have prompted the surge in women-owned businesses.

Market Distortions Fuel Enterprise

In 2013, Ahed Isa and her husband were expecting their first child. She had quit her job as a computer engineer in preparation for motherhood, but without work felt a void in her day. She began making gifts for friends and family to hand out in celebration of her baby’s arrival. The praise she received for her creations was so encouraging that when relatives held their own celebrations, she made gifts for them as well. It quickly dawned on Isa that this hobby had the potential to be a business venture and a way to earn income for her family: she enjoyed the work, had an obvious talent for it, and most importantly she could do it from home while tending to her new baby. With the encouragement of her husband, she began to make small capital investments – purchasing printers and other materials – to get her business off the ground.

Today Isa, now 34 years old, is a well-known wedding and event organizer in Aden. Just this summer, she purchased new uniforms for her staff of 23. She says the Houthi invasion of Aden in 2015 and the period of insecurity following the city’s liberation almost completely shuttered the wedding and event industry, but what followed was a period of rapid growth.

“The society changed after the war, and the market requirements changed,” she says. “Weddings and occasions before the war were more simple – each according to his ability and financial capabilities,” with extravagant events limited to the wealthiest in society, such as the families of prominent businessmen and politicians. She says that during the first years of the war, event services were typically limited to the small minority of individuals in society who could afford them.

As the war in Yemen raged on, however, a new class emerged in Aden, the interim capital of the internationally recognized government, associated with the armed groups and currency speculators, both of whom have ready access to hard currency. This “new money” cohort has been far more ready to ostentatiously display their wealth by hosting opulent social events, with this embrace of materialism trickling down through much of the rest of society. Today, a professionally planned wedding has become a standard that young brides-to-be aspire to attain, with many people feeling compelled to stage an event that upholds their reputation in the eyes of society. Isa says many in the middle class borrow money to stage lavish events that they can little afford.

Before the war, Isa says she mostly worked alone and was limited to designing gifts for weddings and decorating cake-cutting tables. Today, she and her full-time team can manage and arrange every element – food, music, souvenirs and decorations – of any occasion, including weddings, graduation ceremonies, holiday festivals and more. Having moved beyond her home business, Isa now rents two warehouses to accommodate the goods and supplies she needs. But despite the surge in demand and the growth of her business, Isa says the work still feels precarious in the current environment.

She sites security as a primary concern. With most of her events taking place in the evening, Isa says she is anxious about her staff moving around the city late at night, given the general lawlessness and political instability in Aden. She says wild swings in the value of the Yemeni rial have also cost her business huge, unexpected losses when the amount she agreed to charge a customer no longer covers her costs. To avoid this, Isa says that since the beginning of this year she has priced all her customer agreements in Saudi riyals (SAR), with weddings usually costing between SAR5,000-25,000 (US$1,330-6,650). Other challenges Isa lists include recurring fuel shortages and power outages.

“We [currently] do not feel the financial stability that entitles us to enter into legal procedures and pay taxes and additional fees,” she says, adding that to officially register her business would cost 1 million Yemeni rials on top of other official and unofficial costs. “Because of the situation’s instability, we occasionally cover losses with profits from other activities.”

Walaa Ahmed Mousa prepares a design for the laser printer at her home workshop in Aden on August 4, 2022. Since 2016, Mousa has launched two business ventures, first an online platform to sell clothes, and later a graphic design and printing shop. “My launch was through the Union [of Small Project Owners], through which I benefited a lot in regards to managing my project and understanding the necessary legal procedures to operate,” she said. “Before joining the union, I knew nothing about professional licensing” // Sana’a Center photo by Ammar Khalaf

Dreams Deferred

Anhar, another resident of Aden who preferred to be identified only by her first name, spoke to the Sana’a Center about her studies in communications engineering at Aden university before the war, and how she dreamed of getting a job in the public sector like her father. Today, her father’s monthly salary is not enough to cover the family’s needs for even one week – a fact that contributed to Anhar abandoning her education to focus on the immediate need to generate income.

This led her to open an online store, in which she displays fashionable, brand-name clothing that she began importing overland from Saudi Arabia, with the help of her sister who resides there. Her project caters to a new class of spenders, and she can earn the equivalent of three months’ local salary in one order.

Anhar is just one among many of her generation who, in response to the economic realities that came with the war, prioritized the immediate need to make money over the life they may have otherwise chosen for themselves. It is difficult to discern, in the recent surge of female entrepreneurship in Aden, how many of these women are opening and operating these businesses of their own volition, and how much their spouses, families and the scramble to survive are dictating their choices for them.

Hurdles to Economic Integration

Many women entrepreneurs choose not to register with the local authorities and the commercial registry, according to Nasser. The reason, she says, stems from the upfront cost, as well as a fear that notifying the local authorities will make them the target of additional fees and taxes. In the absence of a functioning state, many women business owners in Aden believe that following the official procedures is complicated and costly with little benefit. Nasser adds that women entrepreneurs in particular are targeted by dishonest public officials, who believe they are ignorant of their legal rights and ripe for extortion.

At the same time, working off-the-books puts women entrepreneurs at risk of facing informal levies from municipal workers, tax officials, security forces, and others who demand payoffs to allow businesses to operate. Operating unofficially comes with the risk that real estate owners could raise rents suddenly and dramatically, as there is no legal contract between the business and property owner.

Educating women entrepreneurs about their legal rights and how to exercise them is one area Nasser says the USPO has been effective, and a reason many women join the organization. Nasser’s position in the Chamber of Commerce and connections with the local authorities act as added layers of protection.

“In addition to solving some of the problems that women face with official authorities… especially those who are not officially registered, we communicate with the relevant authorities through our networks to exempt them from fees [the authorities attempt to impose],” says Nasser. But she adds that much more assistance is needed, including government action to mandate an official body to help women entrepreneurs assert their legal rights and fend off abuse.

Nasser says that the patriarchal business environment also presents major obstacles to women entrepreneurs. While male traders making deals with one other do so with an inherent level of respect, among the more unscrupulous wholesalers and suppliers there is an assumption that a woman working outside her home has no man to protect her. Women entrepreneurs purchasing basic materials to operate their enterprises thus regularly face price manipulation or traders changing the terms of the contract after a deal is already agreed.

Increasing the business savvy within its membership is thus a primary mission of the USPO. To this end, Nasser says the association provides free training courses related to business management in the private sector, such as how to run a feasibility study and a marketing campaign, and provides consultations for business startups and project sustainability. The association also provides extensive networking, product-testing and marketing opportunities through the large bazaars and exhibitions it stages, where members set up stands to hawk their products and services to other members and attendees. Nasser says that to date the USPO has staged some over 20 of these events.

A lack of access to financing remains one of the most fundamental obstacles for women business owners, according to Nasser – a problem that existed before the war that has only been compounded since. She describes an environment in which banks and other financiers impose onerous loan requirements that curtail women’s ability to grow their enterprises. Previously, small business owners were usually able to secure loans against real estate, however, with the general insecurity plaguing Aden, lenders know that seizing property in case of default can be next to impossible. Instead, they require gold to be handed over as collateral – a condition many are unable or unwilling to meet. Exorbitant interest rates on loans (with 30 percent being common, according to Nasser), rigid repayment requirements, and exchange rate volatility that can evaporate the value of earnings all dissuade those that might otherwise qualify for small business loans.

Yemen’s economic and social transformation through more than seven years of war has been catastrophic, birthing a war economy, a semi-functioning public sector where salaries have often gone unpaid, and a low-paying private sector devastated by a lack of security, the collapse of the rial and inflation. Many students have been forced to forego or quit university studies to help support their families. Many men, unemployed or simply unpaid, have abandoned their professions to earn a soldier’s salary on the frontlines. However, the coalescence of these ills has created an opening that women entrepreneurs in Aden have stepped in to fill.