Addressing Africa's entrepreneurial gender divide

Written by: Dani Redd


Africa has taken great strides in closing its gender gap over the past few years. 
 
The World Economic Forum’s Global Gender Gap Report 2020 placed Rwanda in the top 10 of the Global Gender Gap Index Rating. Meanwhile, new initiatives have been developed to celebrate businesswomen in Africa – Reset Global People and Pulse recently announced a list of the Top 100 Women CEOs in Africa. Topping the bill is the inspiring Abimbola Alale, CEO of Nigerian Communication Satellite Limited, who boasts a PhD in Peace, Security and Strategic Studies, a degree in Space Studies and an MBA from the International Space University.
 
On the African continent, an increasing number of women are choosing to start their own businesses. In fact, Sub-Saharan Africa is the only region in the world where women entrepreneurs are in the majority. But it’s not all good news. According to a report jointly produced by World Bank’s Africa Region Gender Innovation Lab and the FCI Global Practice, women’s businesses are consistently outperformed by men’s, with fewer employees, lower average sales, and less value-added. So what explains this underperformance?
 
The problem
 
According to the report, data obtained from 14 impact datasets across 10 African countries shows that the typical male-owned firm has six times the capital investment of female-owned enterprises. 
 
This is because women commonly have less access to assets, which consequently affects their ability to secure loans. Furthermore, women are less likely to have control over household resources and are sometimes pressured to share their profits within the family, instead of reinvesting them in their businesses. 
 
Gender-biased beliefs also hamper women’s prospects in the sphere of business, with some women experiencing discrimination for attempting to pursue an entrepreneurial career. 
 
A lack of formal education and training leads to lower levels of confidence, and subsequently reduces risk-taking and ambition. It also means that many women tend to cluster in female-dominated sectors such as retail and hospitality, rather than crossing over to male-dominated sectors like construction and finance, which offer higher financial yields.
 
The solution
 
The problems faced by women entrepreneurs sound almost insurmountable. But the good news is that many governments, NGOs and businesses are taking targeted steps to solve them, enabling women to realise their potential. 
 
Training programmes that are specifically targeted towards women can address skills gaps and lead to increased confidence. Personal initiative training in Togo has had positive effects on profits of female-owned micro-enterprises and generated a 91 percent ROI. An entrepreneurship training programme in Ethiopia has improved the business performance of women-owned firms.
 
Meanwhile, improving women’s access to finance will increase their ability to build businesses. There are plenty of grassroots organisations helping to facilitate this, including the Women’s Microfinance Initiative, which is establishing women-administered village-level loan hubs across East Africa. These hubs offer capital, training and support services to enable women to engage in sustainable, income-producing activities.
 
Diariétou Gaye, World Bank Director of Strategy and Operations for the Africa Region, believes more can be done to enable women to access bank loans by eliminating the need for collateral.
 
“In Ethiopia, psychometric testing measuring honesty and willingness to repay loans offers a promising solution, as demonstrated by a World Bank initiative involving a partnership with one of the country’s financial institutions,” he explains.
 
More and more is being done to help women advance in business across Africa. To do so is integral both to women’s wellbeing and the economic advancement of society. When women and men have equal opportunities in business, it leads to a more productive society and better-performing institutions.



Nine factors holding back women’s businesses in Africa
 
According to “Profiting from Parity: Unlocking the Potential of Women’s Businesses in Africa”, a report by World Bank’s Africa Region Gender Innovation Lab and the FCI Global Practice, there are nine factors impeding women’s entrepreneurship. These are:
 
1.      Legal Discrimination: In many African countries, women simply do not have the same legal rights as men to open a bank account, register a business or own property.
 
2.      Social norms: Women are affected by societal influences, and in many African countries, social norms do not match with a woman striving to grow a business.
 
3.      Risk of gender-based violence: GBV takes its toll on women’s wellbeing, and working outside the home may put them at risk. In Malawi, 14 percent of female entrepreneurs have been subject to physical or emotional violence from a partner.
 
4.      Education and skills gaps: According to the report, self-employed women have completed fewer years of formal education than men, while men often have higher technical skills.
 
5.      Confidence and risk preferences: Women business owners in Africa demonstrate less confidence in their abilities – in Ghana, women are 14 percent less likely than men to think they would be a good leader.
 
6.      Finance and assets: Women control fewer assets, affecting their capacity for loans and investments.
 
7.      Access to networks and information: Women don’t have the same access as men to large, diverse and well-resourced networks that enable their businesses to grow.
 
8.      Household allocation of productive resources: Women often lack authority over household assets and are often pressured to share resources.
 
9.      Domestic responsibilities: Women in Africa spend more time than men on domestic chores and caring for household members, which limits the amount of time they can dedicate to their business.