In a bid to improve the performance of female-owned businesses across Africa, policymakers need to act to expand opportunities for female entrepreneurs to be agents of growth and job creation.
This is according to a report, “Profiting from Parity: Unlocking the Potential of Women’s Businesses in Africa”, produced jointly by the World Bank’s Africa Region Gender Innovation Lab (GIL) and the Finance Competitiveness & Innovation (FCI) Global Practice.
The call is particularly in the context of a developing young population with high expectations in terms of finding quality employment.
In Africa, the performance of female-owned businesses consistently lags behind that of male-owned businesses, as they have fewer employees, lower average sales, and less value-added.
Drawing on survey data from 14 countries, the report finds wide gaps in average profits between male- and female-owned firms.
Advancing gender equality is smart economics, sound business practice, and essential development policy, as there is evidence that, when women and men have equal opportunities to shape their own lives and contribute to their families, communities, and countries, it leads to enhanced productivity, improved development outcomes, and better performance by businesses and institutions.
What’s driving the gender gap in business performance?
According to the Global Entrepreneurship Monitor, Africa has the world’s lowest share of entrepreneurs who started a business in order to pursue an opportunity.
Many women who become entrepreneurs out of economic necessity do not intend or have the skills to build large and successful companies, therefore, their decision to start a business instead of seeking wage work is influenced by important constraints such as differences in skills, capital, networks, time and family formation, occupational opportunities, and safety.
Recent evidence from Ghana suggests that self-employed women operate in more crowded markets than do self-employed men. The gaps in economic opportunities are a primary, and significant, driver of the gender gap in business performance.
Drawing on extensive data analysis and earlier research, this report argues that women make or are obliged to make different decisions than men because they are constrained by gender-specific factors that hinder the growth of their businesses. These constraints, related to the contexts in which women operate, their endowments, and household-related factors, influence the strategic decisions that female entrepreneurs make – which, in turn, lead to less productive outcomes.
This report presents a new, clear and illuminating guide to help further explain the factors that give rise to the gender gaps in productivity.
By Joshua W. Amlanu
