December 2019 COMPETING PRIORITIES HOW HOUSEHOLD INCOME MANAGEMENT GENDER AFFECTS WOMEN’S MICROENTERPRISES INNOVATION LAB IN URBAN GHANA The Gender Innovation Lab (GIL) conducts impact evaluations of Authors: Rachael Pierotti and Sophia Friedson-Ridenour development interventions in Sub-Saharan Africa, seeking KEY MESSAGES to generate evidence on how to close the gender gap in • Cash grants often lead to increases in business profits for male earnings, productivity, assets entrepreneurs, but not for female entrepreneurs. This study identifies key and agency. The GIL team is currently working on over household-level factors that constrain women’s ability to grow their business. 50 impact evaluations in 21 Through in-depth qualitative research, it provides evidence that intrahousehold countries with the aim of relationships influence the business decisions of female microentrepreneurs in building an evidence base urban Ghana. with lessons for the region. • Intrahousehold relationships constrain the decisions women make The impact objective of GIL is about their businesses in three primary ways: 1) women hide income and increasing take-up of effective policies by governments, sometimes limit investment in an effort to reinforce their husband’s responsibilities development organizations as a primary provider and secure sufficient support, 2) women prioritize savings and the private sector in order to meet daily household needs, cover shortfalls in their husband’s financial to address the underlying support, and take care of emergencies, and 3) marital insecurity encourages causes of gender inequality in Africa, particularly in terms women to dedicate business income to long-term investments independent of of women’s economic and their husbands, such as property or children’s’ education. social empowerment. The lab aims to do this by producing • Efforts to support women microentrepreneurs will need to address and delivering a new body of barriers to women’s ability to meet daily household needs and to plan evidence and developing a for long-term security, in addition to relieving capital constraints. Policy compelling narrative, geared responses could include increasing security by improving marital property rights towards policymakers, on for women or improving social safety nets to change the calculus that leads what works and what does not work in promoting gender women to prioritize savings over investment. In addition, supporting women equality. http://www.worldbank.org/en/programs/africa-gender-innovation-lab to control and accumulate savings may be a way The study took place in Accra, Ghana between January to increase investment. A final option is to change 2016 and June 2017. In total, we conducted 78 individual household dynamics through programs to encourage interviews with 49 different participants. Forty-one of the more collaborative resource management behavior 49 participants were female. The participants were all among couples or to change norms about women running microenterprises, such as a hair salon, a public and men’s roles in households. bath, a tailor, a retail kiosk, or a food vendor. The sample was purposively selected so that most participants were Women’s entrepreneurship is an important source of married, some had young children, most had average livelihoods for individuals and households in much of profits of about $44/month, but some had outlier profit sub-Saharan Africa, including Ghana. Rates of women’s values of close to zero or nearly 5 times the average. entrepreneurship in Africa are among the highest in the Many of the participants were interviewed multiple times world, in part due to a lack of other opportunities for to gather in-depth information. income generation (Kelley et al., 2017). Yet, women’s businesses in sub-Saharan Africa are smaller than men’s HERE’S WHAT WE FOUND and are concentrated in low productivity sectors (World Women’s business management choices are influenced Bank, 2011). by the way that resources are managed within their Studies in development economics have concluded that in household. The structure of household resource management leads some women to simultaneously strive comparison to male entrepreneurs, female entrepreneurs to succeed in business and to achieve the following three tend to invest a lower share of available capital in their non-business goals. businesses, which contributes to gender differences in business size and profits. Recent research on the effects of distributing small grants to female microentrepreneurs 1. shows limited positive impact of cash grants on microenterprise profits (De Mel et al., 2008; Fafchamps et al., 2014; Berge et al., 2015). At the same time, studies of female microentrepreneurs commonly suggest that women’s businesses are affected by relationships with REINFORCE  HIDE INCOME AND HUSBAND’S SAVINGS, OR LIMIT others in their households1. RESPONSIBILITIES BUSINESS GROWTH HERE’S WHAT WE DID All of the households in the study can be described as following “independent management systems,” meaning A better understanding of women’s motivations is crucial that the husband and the wife manage their income for designing policies and programs that support their streams independently. Women do not know their business success. For this reason, the World Bank’s spouse’s income and do not expect to know. Likewise, Africa Gender Innovation Lab conducted an in-depth women indicate that it would be inappropriate for their qualitative research study of household and business husband to inquire about their income. Furthermore, financial management practices. The research was women’s and men’s incomes are designated for particular conducted in the context of an impact evaluation that kinds of expenses. Men are generally expected to pay for tested various strategies for encouraging business large bills, such as school fees and rent, although women growth among women microentrepreneurs. help meet those needs when necessary. Women’s For example, on average, cash grants to women’s businesses only lead to profit increases when they are the only entrepreneur in their household (Bernhardt et al. 1  2017). A study in Sri Lanka showed that women’s decision-making power and level of cooperation with their spouse affect their business investment behaviour (De Mel et al. 2008). Similarly, in Madagascar, marriage is associated with benefits for men’s businesses but not for women’s (Nordman and Vaillant, 2014). income is intended to meet daily needs, to maintain social 81% OF FOR 91% OF relationships and participate in social events, and to plan WOMEN THOSE WOMEN for their own long-term security. When managing their economic resources, therefore,  one of the primary imperatives for married women microentrepreneurs in our sample is ensuring continued pressure on their partner to fulfil his responsibilities to the in the quantitative survey their husband decides receive regular transfers the amount unilaterally household. Given the independent management of income from their husbands streams, negotiations over who should be responsible for meeting certain types of expenses can have important To be able to meet these expectations, when there are ramifications for who ends up paying for expenses in the shortfalls in the financial support from their husband, future. Women are determined, for example, to maintain women use their own income or savings to fill the gap. support from their husbands for children’s school fees. Shortfalls in a husband’s support can be unpredictable. In Many explained that if their husband knew that they extreme cases, women use business assets to meet daily had savings or knew that their income was increasing, needs. Because they are positioned as the household’s he would demand that they pay more for school fees. source of petty cash and emergency savings, women feel Women fear that apparent increases in their income will strong incentives to build cash reserves. They prioritize mean reductions in support from their husband. To guard saving and are cautious about risking their capital in against this possibility, women hide income and savings, business investment. Women understand the value of and sometimes explicitly limit business growth. business investment, but often declare that they will save first and invest later. The time for investment may never 2. arrive, however, given the frequency of shocks and the small scale of these businesses. 3. FULFILL EXPECTATIONS  PRIORITIZE TO MEET HOUSEHOLD SAVINGS NEEDS In many households, women receive a housekeeping PLAN FOR  INVEST IN CHILDREN allowance, called “chop money,” to meet daily household LONG-TERM AND PROPERTY RATHER SECURITY THAN BUSINESS needs. Daily needs include food for home consumption, small allowances to the children, small household items, Finally, many of the women in the sample view their and medication for household members with minor marriages as insecure over the long-term. Coupled with illnesses, among other things. The chop money that women’s disadvantages regarding asset ownership women receive from their partner to help meet those needs in marriage, marital insecurity encourages women to is not always sufficient and shortfalls are unpredictable. dedicate business income to long-term investments Women are expected to “manage” to meet daily needs independent of their husbands as a way to ensure security with whatever amount they receive from their husband. in the future. Long-term investments most often take the Women value being able to meet household needs as form of contributions toward children’s education, with part of their social obligation. the hope that children will provide old-age support, and purchases of land or housing. In this context, business growth is viewed as an uncertain form of long-term security due, in part, to frequent negative shocks. In order to ensure their future independence, women opt to be cautious about business investment, instead maintaining pressure on their partner to meet current needs and investing in children and property for the future. POLICY IMPLICATIONS Relieving capital constraints alone is insufficient to spur business growth for many women microentrepreneurs. The level of business investment by women microentrepreneurs is sometimes constrained by a need to manage their resources in a way that achieves non-business goals, which can impact their business success. Support for women microentrepreneurs should be designed with these constraints in mind. There are two types of policy responses: 1) change household dynamics; and 2) incorporate additional kinds of support for women entrepreneurs. Change household dynamics: Encouraging more collaborative resource management behaviour among couples, or changing norms about women and men’s roles in households could improve women’s business outcomes. Given that some women are strategically choosing non-cooperative relationships with their husbands, however, this type of intervention should be carefully designed. Women will benefit from increased cooperation only if greater transparency is not accompanied by a disproportionate increase in household expenditure responsibilities. Likewise, women may resist cooperative management arrangements that prevent them from investing in their own independent long- term security. Accompanying support: Women’s business investment decisions are affected by the risks they face in other parts of their lives. Increasing security by improving marital property rights for women or improving social safety nets could change the calculus that currently leads women to prioritize savings over investment. In addition, supporting women’s savings accumulation may be an important way to increase investment. If women feel that they have adequate savings to respond to household needs and emergencies, they may feel better prepared to invest in their businesses. FOR MORE INFORMATION, PLEASE CONTACT Markus Goldstein mgoldstein@worldbank.org Fannie Delavelle fdelavelle@worldbank.org Photo credit: Arne Hoel, The World Bank (front page; left middle), Dominic Chavez, The World Bank (left top), Jonathan Ernst, The World Bank (left bottom) 1818 H St NW Washington, DC 20433 USA This work has been funded in part by the Umbrella Facility for Gender Equality (UFGE), which is a multi-donor trust fund administered by the World Bank to advance gender equality and women’s empowerment through experimentation and www.worldbank.org/africa/gil knowledge creation to help governments and the private sector focus policy and programs on scalable solutions with sustainable outcomes. The UFGE is supported with generous contributions from Australia, Canada, Denmark, Germany, Iceland, Latvia, the Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, United States, and the Bill and Melinda Gates Foundation. The first draft of this policy brief was released in January 2019.