The key factors holding back women’s business performance
Updated: Nov 11
The key factors holding back women’s business performance in Africa Female entrepreneurs
Female entrepreneurs do not make business decisions in a vacuum. Rather, their business decisions differ systematically from those of male entrepreneurs because they are constrained by factors in a way that men are not. World Bank’s Profiting from Parity- Unlocking the Potential of Women’s Businesses in Africa report presents the underlying constraints and explores the evidence on why the factor matters and the extent to which it contributes to the gap in business performance.
Education and skills gaps: While most African countries have achieved gender parity in access to primary education, a persistent gap in educational and skill attainment between male and female entrepreneurs – particularly at the secondary level and beyond – may help explain gender differences in strategic business decisions. Evidence points to gaps between male and female entrepreneurs in three areas: formal education, management skills, and socio-emotional skills. This report finds that self-employed women have overall completed fewer years of education than self-employed men. Male entrepreneurs often have higher technical skills; sometimes have higher financial literacy; and are sometimes more likely to participate in training or offer training. Data from Togo shows that while male and female entrepreneurs are comparable on some important socio-emotional measures, male entrepreneurs score higher than their female counterparts on measures of ambition, creativity, innovation, and imagination.
Education and skill gaps in Africa are wide and persistent, and likely have a strong influence on women’s business decisions.
Confidence and risk preferences: Women business owners in Africa frequently show less confidence than their male counterparts. Among entrepreneurs in Ghana, women are 14% less likely than men to think they would make a good leader. Female entrepreneurs demonstrate less confidence in their abilities, which may make them less willing to compete (and win) – especially in stereotypically male domains. World Bank (2012).
Women’s lack of confidence relative to men could be related to risk aversion, but analysis for this report do not show a clear pattern on this issue.
Women’s lack of confidence relative to men may keep them from taking big risks that lead to high returns. More experimental work on mechanisms designed to enhance confidence can prove important for policy.
Finance and assets: Female entrepreneurs continue to control fewer assets than men, affecting their capacity to invest in their business and access large enough loans. While the gender gap in obtaining loans from financial institutions is smaller in Africa than in any other region of the world, this report’s analysis shows consistent and large gender gaps in the size of the loans outstanding for various target groups of entrepreneurs in Africa. Beyer (1990); Pulford and Colman (1997); Soll and Klayman (2004). The gender divide in access to credit is not as strong as it once was, but with smaller asset ownership, women still struggle to get loans of the same size as men – a factor that likely fuels the capital investment gap.
Access to networks and information: Women often do not have the same access as men to large and diverse social networks that can support the growth and competitiveness of their business. This report’s analysis suggests that men’s and women’s networks vary in important ways. Both men’s and women’s networks are largely segregated by gender. Niederle and Vesterlund (2007) Women’s networks command fewer resources than men’s and include more “strong” family and kin relationships that are less valuable than new connections in creating business opportunities. . Grosse and Riener (2010); Kamas and Preston (2010); Lundeberg, Fox, and Punćcohać (1994).
With growing evidence on the importance of networks, understanding how the networks of female entrepreneurs vary from those of men – and how those differences may impact their success – is vital.
In-depth qualitative research in Ghana shows that women micro- entrepreneurs strategically manage their income to meet both business and household needs. While striving for business success, women also pursue strategies to ensure continued support from their husband, to shore up their ability to meet daily household needs, and to plan for long- term security, all of which can lead to the de-prioritization of business investment.289 Some women fear that additional visible business income will mean reduced support from their spouse for meeting household needs.
Pic by @jazminantoinette
World Bank (2012).
Beyer (1990); Pulford and Colman (1997); Soll and Klayman (2004).
-Niederle and Vesterlund (2007).
Grosse and Riener (2010); Kamas and Preston (2010); Lundeberg, Fox, and Punćcohać (1994).
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