The prosperous future of Africa will be the fruit of both men and women. In fact, at present women have the potential to make Africa great. According to the World Bank, it is the African women entrepreneurs who are leading in the world in terms of business ownership.
This means African women stand to transform the region’s economy and compete on the world stage.
Women in Africa are more likely than their male counterparts to engage in entrepreneurship activities. Besides, women in Africa compose nearly 58 per cent of the region’s self-employed population (Ideas4development 2020).
A 2020 World Bank report, Profiting from Parity, indicated that women entrepreneurs across Sub-Saharan Africa continue to garner lower profits than men (34 per cent less on average).
Nonetheless, there is more work to be done in enabling women access equal representation within political and economic opportunities which are crucial for sustainable development.
Despite Rwanda ranking top ten and Ethiopia top five in World Economic Forum’s (WEF’s) Global Gender Gap Report 2020, the region can do better in supporting women entrepreneurs to promote gender parity and spur economic growth.
There are various issues raised by Ideas4development in its April 2020 publication, Female Entrepreneurship, Key Ingredient for Africa’s Growth, that are of key interest to the region, particularly in understanding the core root of entrepreneurship choices, supporting entrepreneurship, skills provision and development.
Why women choose entrepreneurship
It is a known fact across the continent that women put as much energy and resilience in work as their far more energetic counterparts. Hence, the publication argued that the only reason women in Africa are more likely than men to embark on entrepreneurship is that they have no better opportunities and not for any other reasons such as burning passion or the right skills.
“Wage job opportunities are relatively scarce in Africa and this is even more the case for women who often have lower levels of formal education and may face discrimination in hiring practices,” the publication noted.
As traditional labour divisions put women at home-level work (attending to children), only small-scale kind of businesses suit their deep needs to generate income and sustain their livelihoods.
Evidently, in East Africa, particularly Tanzania, most women in rural areas, engage in selling g
rilled maize, vegetables, vending fruits and foodstuff, selling firewood or charcoal, which ultimately support minor affairs including paying for school fees and medical bills.
In the context of the literacy gender gap, in Sub-Saharan Africa, the adult female literacy rate is at 57 per cent (far behind that of other regions), hence—proving there are missed opportunities in Africa to enhance women’s endeavours with adequate and relevant knowledge.
Africa needs to unlock any underlying potential especially in levelling the playing field, as women have continued to showcase their abilities to transform local economies.
According to the United Nations, Sub-Saharan Africa loses nearly $95 billion yearly because of the gender gap in the labour market.
To break barriers and make women’s efforts sustainable there should be a deliberate barrier lifting for women.
“Partnering with the private sector to leverage synergies should be a key element of efforts to create greater opportunities for Africa’s hardworking women entrepreneurs, with three important approaches that should be adopted,” the publication argued.
According to the publication, there is a need to dissect the underlying constraints related to social norms that are holding women back, such as the uneven burden of childcare and social norms that tend to push women into less profitable sectors. Findings from Ethiopia and Uganda pointed to sectoral segregation as an important determinant of the gender earnings gap in entrepreneurship.
In the context of findings from World Bank, data show that in Uganda the average monthly profit in the female-dominated saloons sector is around $86, while for men in the electrical sector stands at around $371. Despite being quite disparate, this scenario cements the fact that women are driven to do what they do in entrepreneurship not because of education or access to capital but because of limitations put on them through social norms.
Instead through crossing-over male-dominated sectors men can support women by breaking barriers in accessing mentors, training and adequate information on different earnings across different business sectors to even the playing field.
Also, the Profiting from Parity report mentioned the United Republic of Congo, as a place where women operate in less profitable sectors compared to men such as food: retail and services such as aesthetics.
Ultimately opening up room for women to execute their business with ample support from their counterparts and entrepreneurship stakeholders is key to acquiring sustainable economies. Male support to female-owned businesses is one of the policy interventions recommended by the report, which will spur more women to crossover to traditionally male dominated sectors, expand the business horizon and develop sustainable economies in their communities.
To make an impact, women need to possess crucial skills that can drive social entrepreneurship to the next level. The adult female literacy gap in Sub-Saharan Africa shows how much work there is to be done. According to available information from the World Bank, the literacy rate for females stands at 57 per cent.
“Self-employed women have overall completed fewer years of education than self-employed men, and male entrepreneurs often have higher technical skills,” the publication noted.
Hence, findings from the Profiting from Parity report show that skills provision ought not to be as basic as we know it; there are several grey areas to consider when providing skills to women.
According to the report, training programs such as traditional business skills to women entrepreneurs have proven to be disappointing on firm profits.
The report points out that in light of the latest evidence, we may simply be teaching the wrong skills. Rather than teaching traditional business skills like accounting, there is promising evidence that socio-emotional skills, such as personal initiative and perseverance, are useful above other formal skills acquisition.
“In Togo, a training stint that taught small entrepreneurs to show initiative, be proactive and demonstrate perseverance yielded impressive results: women who took this training saw a 40 per cent average increase in their profits, compared to no significant increase for those taking a traditional business training,” the report argued.
However, on the other side of skills sets, women with the right knack on how to acquire capital can do marvelous things in their businesses. As World Bank 2018 publication noted male–owned businesses have six times more capital than female–owned.
With the right knowledge on capital access and utilization, women–owned enterprises can scale up, compete and drive local economies.
In addition, in Tanzania, several women–driven businesses are mentored, taught and guided by local NGOs and mentor-oriented enterprises (such as Unleashed Africa, a social enterprise based in Dar es Salaam, Tanzania) to develop their business sustainably.
Scaling entrepreneurship for women
Scaling up businesses is of paramount importance to women. In this context, the World Bank has shown that to make interventions scalable several checkboxes need to be ticked.
“Low-cost, simple tweaks in project design can have a large impact on women’s empowerment. For instance, in Malawi, we found that encouraging women to register their firms did not have an impact on their profits. Yet, by combining help on registration with a simple information session at a bank and a business bank account, women significantly increased their use of a range of formal financial services, resulting in increases in profits of 20 per cent,” the publication said.
Further, scaling can also work when sound partnerships are made between women and the private sector.
According to the publication, through a partnership with the private sector, the World Bank introduced innovative psychometric tests in Ethiopia as an alternative to collateral. These tests predict the likelihood that an entrepreneur will repay a loan with accuracy, yielding a 99 per cent repayment rate.
On the ground, these innovative technologies benefit entrepreneurs like Abeba from the Amhara region of Ethiopia who owns a bakery and who, for more than 10 years, was able to obtain only group loans capped at 900 euros. The psychometric testing enables her to acquire an individual loan that expanded her business and diversified her income.
Social impact entrepreneurship is the new currency in the diverse African economy. With the right scaling mechanisms, skills provision and lifting barriers that limit women entrepreneurial endeavours, nothing can stop African women from transforming Africa’s economy.