Profiting from Parity Executive Summary Unlocking the Potential of Women’s This report was produced jointly by the World Bank’s Africa Region Businesses Gender Innovation Lab (GIL) and the Finance Competitiveness & in Africa Innovation (FCI) Global Practice. The World Bank’s Africa Region Gender Innovation Lab (GIL) con- ducts rigorous research to support the design of innovative, scalable interventions to address gender inequality across Africa. The Finance, Competitiveness & Innovation Global Practice (FCI) combines expertise in the finan- cial sector with expertise in pri- vate sector development to foster private-sector led growth and help create markets in client countries. Profiting from Parity Executive Summary Unlocking the Potential of Women’s Businesses in Africa Female Increasingly, national government leaders and other stakeholders across Africa are recognizing that women are a force for growth – but could be even more so. Policymakers need to act to expand opportunities for female entrepreneurs to be agents of growth and job creation - particularly in the entrepreneurs context of a large youth population with high expectations for quality employment. In Africa, the performance of female-owned businesses consistently lags behind that of male-owned in Africa: businesses. They have fewer employees, lower average sales, and less value-added.4 Drawing on survey data from 14 countries,5 this report finds wide gaps in average profits between male- and female-owned firms (Figure 1). A force for growth Figure 1 Gender gap in profits wide on average, but varies across countries Gender gaps in monthly profits (%) WOMEN MEN Average 34% Benin micro 12% DRC census 49%*** Enterprise development is a crucial engine of Ethiopia manufacturing 45% economic growth and jobs creation. Without entrepreneurship, there would be little innovation, Ghana (1) micro 36%* Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa little productivity growth, and few new jobs.1 Over three-quarters of the African population believe Ghana (2) tailoring 20% that entrepreneurs are admired in their societies. Entrepreneurship is also seen by 76% of Africans Ghana (3) manufacturing 82%*** as a good career choice. This is the highest rate in the world.2 Malawi micro 31%*** Advancing gender equality is smart economics, Mozambique SMEs 16% sound business practice, and essential development policy. When women and men have Nigeria (4) SMEs 52%** equal opportunities to shape their own lives and contribute to their families, communities, Nigeria (5) SMEs 8% and countries, it leads to enhanced productivity, improved development outcomes, and better South Africa SMEs 65% performance by businesses and institutions.3 Togo micro -7% The countries in sub-Saharan Africa (referred to as Africa in this report) have already made significant Uganda (6) micro 30% Executive Summary progress in fostering the economic empowerment of women and girls. Women in Africa are more Uganda (7) micro 31% likely to be working than women in other regions, and almost 50% of women in the non-agricultural Source: Authors using IE database. Ghana (1): Grants for micro-enterprises survey; Ghana (2): Tailoring survey; Ghana (3): Enterprise Census; labor force are entrepreneurs. It is the only Nigeria (4): Growth and employment survey; Nigeria (5): Business plan competition survey; Uganda (6): Kassida survey; Uganda (7): Loans, grants, region in which women are more likely to be and training survey. entrepreneurs than men. 2 3 For countries seeking to harness the full potential of female entrepreneurs, the central question is why female-owned businesses underperform. The Profiting from Parity full report draws on a wealth What’s driving the gender gap of new, high-quality household and firm-level data in Africa to paint a more detailed picture of female entrepreneurs and the constraints to growth and profitability they face. It first explores the strategic in business performance? decisions of female entrepreneurs, and then explores the underlying constraints. It presents new deep-dive analysis in three areas: social norms, networks, and household-level constraints. Finally, Wage job opportunities are limited in Africa. This drives men and women who based on the findings and prior research, it makes recommendations for policymakers and other might not otherwise be inclined to start a business to become entrepreneurs. stakeholders on how to close the gap. According to the Global Entrepreneurship Monitor, Africa features the world’s lowest share of entrepreneurs who started a business in order to pursue an opportunity.7 Many women who become entrepreneurs out of economic necessity do not intend or have the skills to build large and successful companies. 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 Box 1 family formation, occupational opportunities, and safety.8 What’s new about this report? It is important to note that if women face greater constraints than men in pursuing alternative job opportunities, this can lead to a relatively higher share 1 2 3 of women taking up self-employment, which can affect their opportunities. Recent evidence from Ghana suggests that self-employed women operate in more crowded markets than do self-employed men.9 The gaps in economic opportunities are a primary, and significant, driver of the gender gap in business performance. Updated analysis: Uses Deeper understanding: Evidence-informed solutions: Furthermore, this report examines the status of already existing businesses new high-quality data to Presents a novel way Offers policymakers and which, in the absence of alternative labor-market opportunities, are likely update earlier analyses of of understanding other stakeholders research- to persist in Africa. The report also examines the conditions influencing the gender gap in business how gender-specific based guidance on designing female entrepreneurs’ decision-making, in particular those that perpetuate performance. constraints affect female programs and policies to their lower performance rates. Women overwhelmingly choose to enter entrepreneurs’ decisions improve the performance of sectors with reduced opportunities for growth; they also have lower levels and outcomes. female entrepreneurs. of available assets and capital to invest into their businesses; and they show less willingness to compete. They are more likely to operate in the informal economy and less likely to adopt advanced business practices. Drawing on extensive data analysis and earlier research, this report argues that women make or are obliged to make different decisions than men because Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa 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 (Figure 2). © Stephan Gladieu / World Bank Executive Summary 4 5 Figure 2 Strategic decisions Constraints, decisions, and outcomes: As illustrated in Figure 2, female entrepreneurs’ strategic decisions in key areas diverge from those of A blueprint for closing the gender gap in business performance male entrepreneurs in important ways. These areas include: 1. the sector they choose; in Africa 2. differences in capital and labor; 3. differences in firm capabilities; and, 4. differences in their willingness to compete. OUTCOMES 1 Gender Sector of operations differences in firm performance • Female entrepreneurs build larger and more profitable companies when they operate in male-dominated sectors. While female (sales, profits) entrepreneurs tend to cluster in sectors dominated by other women, such as retail and hospitality, evidence suggests a potential dividend to “crossing over” into male-dominated sectors. Female-owned enterprises operating in male-dominated industries are as large and just as STRATEGIC DECISIONS profitable as their male-owned counterparts. They are also larger than those in female-dominated sectors.10 Studies in specific settings suggest that a female entrepreneur’s decision to work in higher-return sectors 1 2 3 is not driven by differential access to education or finance but by social 4 factors, particularly the influence of male role models and exposure to the sector by family and friends.11 Sector Differences Differences in Differences segregation in capital firm capabilities in and labor (business willingness 2 practices / to compete Capital and labor innovation), and formalization • Female entrepreneurs in Africa have systematically lower levels of business capital – including equipment, inventory and property – relative to their male peers. Drawing on data from 14 impact-evaluation datasets from 10 countries in Africa, the typical male-owned firm has Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa over six times the capital investment of female-owned enterprises. UNDERLYING CONSTRAINTS • Female entrepreneurs’ lower levels of labor contribute to gender productivity gaps in six of the 10 countries analyzed. Relative to male entrepreneurs, female entrepreneurs employ fewer workers and use fewer labor hours in operating their businesses – but in most countries, CONTEXTUAL FACTORS women obtain returns on their business labor that are on par with those obtained by men. I Legal discrimination ENDOWMENTS HOUSEHOLD-LEVEL • The gender differences in capital and labor are associated with men CONSTRAINTS having higher profits than women. Although it may also be the case that II Social norms male entrepreneurs use more capital and labor due to gender differences Allocation of factors IV Education/Skills VIII in returns to the initial units of investment, the analyses in this report of Production III Risk of GBV suggest that providing women with the same amounts of investment Confidence/Risk resources as men is promising. V IX Time constraints/Care preferences Executive Summary VI Finance and assets Networks and VII information 6 7 Firm capabilities: Business practices, innovation, Nine factors holding back women’s 3 and formalization • Differences in the adoption of good business practices help explain the business performance in Africa gender gap in productivity for some countries. Consistent with earlier research,12 this report finds that male entrepreneurs are more likely to Female entrepreneurs do not make business decisions in a vacuum. Rather, their business decisions adopt advanced business practices in most countries analyzed. However, differ systematically from those of male entrepreneurs because they are constrained by factors in a the magnitude of the gender gaps on an index of business practices is on way that men are not. This report presents nine underlying constraints and explores the evidence on average less than half of the capital investment gaps. why the factor matters and the extent to which it contributes to the gap in business performance. In some cases, the report recommends further analytical work to allow for a deeper understanding of • This report shows some differences in innovation between male and a constraint’s relevance. The report leverages new data to dive deep on three factors – adding new female-owned enterprises. Women in Togo are half as likely as men insights for policymakers and other stakeholders looking to close the gap. to have introduced a new product in their operation. In Mozambique, women are less likely to have introduced a new process – 31% of women and 39% of men have taken innovative steps in the past 12 months. In Contextual factors Nigeria, female-owned firms are 20% less likely than male-owned firms to have improved existing products or to have introduced a new product I design. Legal discrimination: Female entrepreneurs cannot have equal economic opportunity if a country’s laws restrict a woman’s ability to own and run • This report’s analysis does not find a clear pattern between a business. Women often face barriers from customary law.17 In addition, individual business formalization and the gender gap in enterprise formal laws still do not ensure a level playing field. Although many African performance. Many female-owned firms are in the informal economy. countries have made progress in removing legal barriers – including laws While this report’s analysis finds that female-owned businesses enjoy that deny women the same rights as men to register a business, sign a higher productivity returns when formal in three countries, recent contract, open a bank account, or own and inherit property – only three studies13,14indicate a lack of impact on business performance and access African countries have formal laws that prohibit gender discrimination.18 to finance from helping entrepreneurs obtain formal status. Bottom line: Recent progress in regulatory reforms means legal discrimination may not be constraining female entrepreneurs as much 4 as in the past. However, even when laws are gender neutral, they are not Decision to compete applied equally. Work is needed to ensure gender-equal laws are both introduced and appropriately implemented. • A lab experiment in Kenya15 finds that women were less than half II as likely as men to compete with others. Numerous laboratory Social Norms: Social norms exert strong influence over the strategic experiments from outside of Africa confirm this finding. However, limited choices that female entrepreneurs make and can constrain their ability data on willingness to compete makes it difficult to weigh the importance to grow their businesses. They can shape how women view themselves,19 of gender differences in entering competition relative to other drivers of perceive their abilities,20 impact their aspirations, and can lead to the gender gap in business performance.16 discriminatory treatment by others.21 Because social norms in many African Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa countries do not align with a woman striving for business growth, women’s choices are limited. Women who contradict social norms may also face retaliation.22,23 Bottom line: The influence of gender norms on women’s business decisions is likely to be pervasive and significant, affecting major choices such as the sector of operations. For more on this, see “deep dive” 1. III Risk of gender-based violence: Widespread gender-based violence (GBV) likely takes a toll on women’s health and well-being, which hinders their ability to run their businesses effectively. Working outside of the home may put women at risk,24 while some women may view self-employment as a way to avoid sexual harassment at the workplace.25 In Malawi, 14% of female entrepreneurs have been subject to physical or emotional violence by their domestic partner; 32% say their husband insists on knowing where they are at all times; and 7% say their husbands force them to have sexual intercourse. Executive Summary Bottom line: GBV can hinder women’s managerial capacity. Testing and evaluating more solutions to overcome GBV is critical to understanding its relevance in addressing the business-performance gender gap. Research is also needed to determine whether the risks of being exposed to GBV influences a woman’s tendency to shy away from growing her business. 8 9 Endowments Household-level constraints Education and skills gaps: While most African countries have achieved Household allocation of productive resources: Women often lack authority IV VIII gender parity in access to primary education,26 a persistent gap in over the allocation of household assets and may face more pressure educational and skill attainment between male and female entrepreneurs to share resources, which restricts both their willingness and ability to – particularly at the secondary level and beyond – may help explain gender invest in their businesses. Women’s lack of control over the allocation of differences in strategic business decisions. Evidence points to gaps household resources may be a source of inefficiency if it means that assets between male and female entrepreneurs in three areas: formal education, are invested in male-supported enterprises irrespective of managerial management skills, and socio-emotional skills. This report finds that ability or the value of the business opportunity.32 Research shows that self-employed women have overall completed fewer years of education female entrepreneurs struggle to direct capital to their business, which than self-employed men. Male entrepreneurs often have higher technical can be a function of either their own or others’ needs. Inefficiency in skills; sometimes have higher financial literacy; and are sometimes more intra-household allocation is compounded when female entrepreneurs are likely to participate in training or offer training. Data from Togo shows that compelled to share resources derived from social connections outside of while male and female entrepreneurs are comparable on some important the home. socio-emotional measures, male entrepreneurs score higher than their female counterparts on measures of ambition, creativity, innovation, and Bottom line: Household resource allocation is likely a major factor imagination. influencing women’s decisions regarding their businesses. The next stage of research should include identifying scalable mechanisms to encourage Bottom line: Education and skill gaps in Africa are wide and persistent, and couples to think differently about the role of women’s contribution to likely have a strong influence on women’s business decisions. household decision-making, or advocating that female entrepreneurs simultaneously achieve both their business and non-business goals. For Confidence and risk preferences: Women business owners in Africa more on this, see “deep dive” 3. V IX frequently show less confidence than their male counterparts. Among entrepreneurs in Ghana, women are 14% less likely than men to think Time constraints and care: Women in Africa spend more time than men they would make a good leader. Female entrepreneurs demonstrate less on domestic chores.33 This limits the amount of time they can dedicate confidence in their abilities,27 which may make them less willing to compete to their business and requires them to stay home at times of the day that (and win)28 – especially in stereotypically male domains.29 Women’s lack of are best for conducting business. This report finds that women in Uganda, confidence relative to men could be related to risk aversion, but analysis for Togo, and Malawi are much more likely than men to be taking care of this report do not show a clear pattern on this issue. others while running their business – a task that can take up to twice as much of their time as men’s.34 This report finds that men spend on average Bottom line: Women’s lack of confidence relative to men may keep them 10% more time per week working in their business than women. Being from taking big risks that lead to high returns. More experimental work married increases the gender gap in time spent on the business in three on mechanisms designed to enhance confidence can prove important for countries, while the gap is lower in male-dominated sectors where women policy. may have to work the same hours as men to participate. Emerging evidence suggests that childcare programs may have a positive impact on women’s Finance and assets: Female entrepreneurs continue to control fewer assets employment outcomes,35 but these studies do not analyze the impact of VI Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa than men, affecting their capacity to invest in their business and access childcare on women’s business outcomes. 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,30 this Bottom line: Women’s time constraints associated with domestic chores report’s analysis shows consistent and large gender gaps in the size of the and care are likely a strong constraint on their business activities, but loans outstanding for various target groups of entrepreneurs in Africa. further rigorous evidence and analysis is needed on whether increasing childcare services and other types of interventions produce lasting effects Bottom line: The gender divide in access to credit is not as strong as it once on business performance. 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 VII 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. 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.31 Executive Summary Bottom line: 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. For more on this, see “deep dive” 2. 10 11 Diving deep on three constraints  Deep dive 1: Do gender-biased social norms dampen business performance? Drawing on data from Togo, Ghana, and Malawi, this report presents a deep-dive analysis assessing the prevalence of gender-biased beliefs and their potential contributions to the gender gap in business performance in Africa.36 Key findings 1. Gender-biased beliefs are prevalent among surveyed entrepreneurs in Africa. 2. Both men and women have largely internalized gender-biased norms,37 though there are some important gender differences. Women are less likely than men to be biased toward the pursuit of business opportunities, but they are more likely to prioritize household needs. 3. Entrepreneurs with comparatively high levels of education are less likely to espouse gender-biased beliefs. 4. Holding gender biases is associated with lower investment levels and lower business performance, but this relationship is not robust in all settings. There is suggestive evidence in some settings that businesswomen that hold more progressive views and operate in male- dominated sectors face discrimination in their operations. Way forward for combined research and policy • A research agenda is needed to test the mechanisms and importance of social norms as a constraint to business development. Solutions to tackle embedded social norms in enterprise development can be drawn from a number of promising areas of research on norms, including: large-scale institutional changes,38 changes in regulations,39 addressing mobility issues,40 overcoming sector sex-segregation issues,41 and community and couple dialogues.42 Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa  Deep dive 2: Do gender differences in entrepreneurial networks fuel the gender performance gap? This deep-dive analysis draws on data from Ghana, Malawi, Togo, and Uganda to assess gender differences in African entrepreneurs’ business networks and their potential contributions to the gender gap in business performance. Key findings 1. Female entrepreneurs’ business networks are mostly comprised of other women. 2. Men have larger business networks than women. 3. Business networks with “strong ties,” and family members in particular, are more likely to be part of the process of business creation © Stephan Gladieu / World Bank and development for women than for men. Executive Summary 4. Women rely on their networks when starting a business and for financial support, but men more intensively use their business networks to share information, equipment, and supplies. 5. The relationship between networks and business performance is likely not straightforward and depends on aspects such as the depth of the relationships and their influence on various areas of business development. 12 13 Way forward for combined research and policy Path forward: How policy and decision makers can act to • Additional experiments creating networking opportunities for different categories of entrepreneurs would be helpful in identifying the type of businesses who stand to benefit the most from diversifying their connections. Is networking more important in early or later stages of business development? To what extent do other gendered constraints eliminate the gender gap dampen the benefits of expanding one’s networks? Why do business networks remain so strongly segregated by gender? Are there opportunities to loosen the networks’ “ties”? What is the effect of network diversification on entrepreneurs’ choice of activity?  Deep dive 3: Do intra-household relationships affect the strategic choices made by female entrepreneurs? This deep dive draws on an analysis of micro-entrepreneurs in urban Ghana, in-depth qualitative research with the same population to explore how women’s businesses contribute to the household, and of how household demands and power dynamics impact their business decisions. Though specific to urban Ghana, the findings suggest ways that intra-household dynamics might be influential in women’s business decisions elsewhere. Gender-neutral policies that seek to create a designed to support firms, innovation, and more conducive business environment while investment in Africa. Whenever applicable, the supporting entrepreneurs will not be sufficient solutions recommended in this report are also Key findings to address the constraints identified in this sound for male-owned firms. Implementing them 1. Women’s businesses are important for meeting household needs. report. Indeed, they may instead widen existing at scale with thorough mechanisms of delivery 2. Spouses have incomplete information about each other’s earnings. gaps. But the good news is that with targeted can support female entrepreneurship while also 3. Women generally maintain control of their business income, but that strategies, the international community, national expanding all types of businesses in the economy. does not always mean they have flexibility in determining how to spend governments, NGOs, and other stakeholders it. can help address the challenges that female  Promising strategies 4. Women and men have incentives to hide their income due to pressure entrepreneurs face and thereby unleash their to share it and to increase contributions to household needs. productive potential. The best evidence today suggests that these 5. Women’s independence in business management is associated three strategies are likely to be effective for with higher profits, but it is still unknown whether this is a causal This report reviews the existing evidence, female entrepreneurs: relationship. classifies strategies based on the strength of the 6. Households manage their finances in a range of different ways and evidence, and makes recommendations based 1. Training programs that apply lessons from future research and programs should explore links between intra- on the evidence. The results are summarized in psychology to encourage women to act with an household relationships and the success of women’s businesses. Table 1. As much as possible, the report identifies entrepreneurial mindset. Emerging evidence success factors, potential risks, and mitigating from impact evaluations demonstrates the Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa measures. This evidence is typically based on importance of strengthening socio-emotional Way forward for combined research and policy a set of countries and generalizing to others skills for female entrepreneurs in Africa. In is not necessarily straightforward. Therefore, Togo, personal initiative training has positive and • Future research should examine the extent to which different financial local adaptation will be important as a means significant effects on sales and profits of male management practices within households can be encouraged and lead of ensuring sound implementation of the most and female-led micro-enterprises and generated to business investments by female entrepreneurs. Additional research promising ideas. a 91% return on investment.43 Similarly, a is also needed to identify possible policy responses either to think training program emphasizing self-esteem differently about the role of women’s businesses in the household, or The evidence presented regarding the most and entrepreneurship in Ethiopia increased the to support female entrepreneurs to simultaneously achieve both their promising interventions is typically based on business performance of female-owned firms.44 business and non-business goals. the results for the average female-owned A video to increase aspirations of market vendors businesses. However, there are often female in Mozambique (45% of them women) led to entrepreneurs who can benefit more than others very large impacts on business performance.45 from each viable or emerging solution. Finally, a training program for female micro- entrepreneurs in Kenya led to sustained While the set of constraints and solutions are increases in firm profits, survival, and growth.46 listed individually, female entrepreneurs in Africa are affected by the interplay of several Summing It up: Training programs addressing Executive Summary gender-specific constraints. Increasingly, socio-emotional skills and gender-specific programs for female entrepreneurs recognize content – as opposed to standard managerial this and combine interventions targeting multiple training programs – have proven effective constraints. in numerous contexts in Africa, and pay for themselves in increased profits over the long- The strategies proposed are to a large extent term. a subset of the most promising interventions 14 15 2. Supporting women with secure savings In addition, the following set of policies and mechanisms. Unequal bargaining power within interventions that draw on emerging evidence the household and domestic expenditure needs offer strong potential and would benefit from can affect women’s ability to finance their further assessment of impact: business activities. Therefore, providing women with mechanisms to set aside money for their 1. Removing legal constraints to gender business can help insulate these funds from equality and regulatory implementation household demands. Providing female market gaps; vendors in Kenya with access to savings accounts led to a 45% increase in business investment, 2. Strengthening land tenure rights for while no impact was found in providing such women; accounts to male motorbike drivers.47 Targeting seems important, as providing these accounts 3. Expanding women’s linkages to new in rural settings in Uganda and Malawi led to business networks; limited bank account usage.48 On the other hand, adding access to business bank accounts to 4. Offering women-friendly training support formalization led to significant increases designs, including peer support; in women’s usage of business bank accounts and insurance, and it also resulted in more 5. Providing in-kind grants; women separating household and business funds.49 This drove large impacts on sales and 6. Introducing financial innovations profits for female entrepreneurs.50 Mobile money that reduce collateral requirements, and other digital payments make it easier to including psychometric scoring; target women specifically and provides them with greater privacy and control over household 7. Facilitating access to childcare services; expenditures.51 In turn, this leads to potential increases in women’s consumption and 8. Engaging men to provide a more savings,52 and supports new economic activities supportive environment for female and empowerment.53 entrepreneurs; Summing It up: Rigorous evidence from more 9. Incentivizing women to cross over to than one study in Africa shows the positive male-dominated sectors by sharing effects of savings mechanisms on business information on expected returns in those investment and performance of female-owned sectors, and through early exposure in firms. The interventions need to be well-targeted the form of apprenticeships and male to ensure appropriate uptake from the relevant role models. target group. Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa 3. Providing large cash grants as part of business plan competitions. Providing large cash grants as part of a business plan competition can help address the capital constraints of growth-oriented firms, including those owned by women. A business plan competition in Nigeria providing cash grants averaging $50,000 increased the likelihood that women would operate a firm by reducing capital constraints. It also helped trigger hiring and led to large increases on sales and profits.54 This is backed up by another study of business plan competitions in Ethiopia, Tanzania, and Zambia.55 Additional impact evaluations of business plan competitions are under way in Africa, and will address how results are influenced by the size of different grants and the selection process. © Stephan Gladieu / World Bank Executive Summary Summing It up: Studies show positive impacts of large grants under business plan competitions on employment, sales, and profits among female-owned firms. 16 17 Table 1 LEGEND CREDIBLE EVIDENCE OF POSITIVE IMPACT ON BUSINESS OUTCOMES What works to support female-owned firms in Africa? EMERGING EVIDENCE OF IMPACT ON BUSINESS OUTCOMES EVIDENCE OF NO/LOW IMPACT ON BUSINESS OUTCOMES (NOT PROMISING) Key findings from rigorous impact evaluations POLICY AREA CONSTRAINT ADDRESSED TYPOLOGY OF FIRMS MAIN CONCLUSIONS All firms Removing legal gender biases and gaps in the implementation of laws increase women’s agency Legal discrimination and intra-household bargaining power 1. Removing regulatory and institutional Legal discrimination All firms Strengthening land rights for women increases their time and effort in entrepreneurship constraints for female entrepreneurs Easing constraints to formalization by itself is not sufficient to help female-led micro-enterprises Informality Micro-enterprises grow Providing traditional managerial training alone does not typically improve the business Skills Micro-enterprises performance of small female-owned firms Skills; confidence/risk preferences; Micro-enterprises and Training addressing socio-emotional skills and gender-specific content leads to high levels of social norms small-business owners impact on business performance 2. Improving skills and Micro-enterprises and Expanding firms’ access to new networks may, in the right settings, have positive impacts on Networks and information networks small-business owners business performance Providing mentoring on top of traditional business training has limited additional value to micro- Skills; networks and information Micro-enterprises entrepreneurs Skills; confidence/risk preferences; Micro-enterprises Complementing delivery of training programs with direct peer support may be promising social norms Finance and assets Micro-enterprises Microcredit has only limited effects on business outcomes for women Finance and assets; allocation of factors Providing in-kind grants can lead to higher profits for more successful women micro- Micro-enterprises of production entrepreneurs Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa 3. Improving access to Finance and assets; confidence/risk Start-up or existing Large cash grants for growth-oriented firms selected through a business plan competition can capital and assets preferences; skills businesses help overcome capital constraints for women Finance and assets; allocation of factors Providing women with access to secure mechanisms for savings – including mobile savings – can Micro-enterprises of production increase business investment Alternative credit scoring technologies using psychometric tests offer the promise of easing Finance and assets Micro-enterprises women’s access to larger business loans Time constraints/care All Providing childcare can increase female participation in the workforce 4. Easing household constraints GBV; time constraints/care; allocation Micro-enterprises Engaging men can potentially foster a more supportive environment for female entrepreneurs of factors of production 5. Addressing social Providing information on earnings in traditionally male-dominated sectors and early exposure norms regarding Skills; networks and information; Executive Summary Young entrepreneurs through apprenticeships and male role models can encourage female entrepreneurs to enter women’s occupational confidence/risk preference these sectors decisions 6. Facilitating access to Training does not eliminate harassment by guards at border crossings, but can make female Social norms; GBV Micro-enterprises markets traders aware of ways to minimize harassment 18 19  Challenges in designing effective programs for female entrepreneurs  Steps for development partners, corporations, and civil society Acknowledgments When designing programs for female 1. Provide funding to test innovative approaches The Profiting from Parity: Unlocking the Potential The team thanks Joanna Mikulski for guidance entrepreneurs, policymakers and other and to research that contributes to closing of Women’s Businesses in Africa Flagship on narrative, and Aline Menden, Fabio Venturini, stakeholders need to consider the following the gender entrepreneurship gap while Report is a joint production of the World Bank’s and Barbara Serfozo for project management factors: expanding global knowledge of what works. Africa Region Gender Innovation Lab and the and editing. The report’s design was guided 2. Use findings from this report to inform the Finance, Competitiveness and Innovation (FCI) by Vito Raimondi. The team is also grateful to 1. Getting targeting right: Growth-oriented design of programs. Global Practice. It was prepared by a team led Endeva, Assemblyfor and Without Violence for female entrepreneurs often benefit the 3. Continue advocacy efforts by highlighting by Francisco Campos, and included Rachel their organizational support to this project. most from skills-development programs, the business and economic case for Coleman, Adriana Conconi, Aletheia Donald, but will only participate if they understand removing the obstacles constraining female Marine Gassier, Markus Goldstein, Zenaida The World Bank team would like to acknowledge the value-added. Some interventions can entrepreneurs’ growth. Hernandez, Joanna Mikulski, Annamaria Milazzo, the generous support of the Umbrella Facility only be successful for groups of female 4. For larger firms, consider the gender Maliheh Paryavi, Rachael Pierotti, Michael for Gender Equality (UFGE), a World Bank Group entrepreneurs with access to satisfactory dimensions in their supply strategies and O’Sullivan, and Julia Vaillant. multi-donor trust fund expanding evidence, infrastructure such as roads, energy, and opportunities to integrate female-owned knowledge and data needed to identify and communications. firms. The team gratefully acknowledges the guidance address key gaps between men and women to 2. Building gender-sensitive aspects of and leadership of Markus Goldstein, Head of deliver better development solutions that boost program design: Programs need to address the Africa Gender Innovation Lab. The team prosperity and increase opportunity for all. The the constraints discussed in the report, such thanks the leadership and support from FCI UFGE has received generous contributions from as women’s lower willingness to compete management, including David Bridgman, Dahlia Australia, Canada, Denmark, Finland, Germany, and greater constraints on time. Khalifa, Douglas Pearce, Klaus Tilmes, and Iceland, Netherlands, Norway, Spain, Sweden, Sebastian-A Molineus. The peer reviewers were Switzerland, United Kingdom, and the United  Steps for African policymakers Benedicte De La Briere, Steven Dimitriyev, States. David McKenzie and Noa Gimelli. Administrative 1. Support concrete policy actions that support was provided by Nenette Santero. demonstrate strong commitment to female entrepreneurs, such as eliminating existing Endnotes legal barriers and fostering women’s participation in public life, including the promotion of female role models. 2. Ensure private sector development strategies 1. The Global Entrepreneurship and Development Institute - GEDI (2018). 33. World Bank (2012). and policies include a gender focus that 2. Global Entrepreneurship Research Association - GERA (2018). 34. The importance of household responsibilities is in line with the findings in 3. United Nations (2017). other regions. For instance, in Guatemala (Kevane and Wydick, 2001) and India addresses the specific challenges faced by 4. This is based on the authors calculations using the World Bank Group’s (Kantor, 2005), women’s sector concentration responds to the time available for female entrepreneurs. Enterprise Surveys. 5. The following datasets are of micro-enterprises: Benin, Ghana (1), Malawi, home production, and constraints on location of business. 35. Clark et al. (2017); Tabbert (2009); Barros et al. (2011); Berlinski and Galiani 3. Scale up policies that have shown credible Togo, Uganda (1) and Uganda (2). The following datasets are of SMEs: (2007). Mozambique, Nigeria (1), Nigeria (2), and South Africa. DRC is based on a 36. The analysis draws on two surveys conducted specifically for this report: Togo results. census of firms. Ghana (2) is a survey of firms in tailoring. Ethiopia and Ghana (December 2016) and Malawi (February 2017). The questionnaires used in these 4. Support the testing and evaluation of (3) are firms in manufacturing. surveys are very similar, so results are comparable. It also uses other impact- Profiting from Parity | Unlocking the Potential of Women’s Businesses in Africa 6. See for example, Hallward-Driemeier (2013). evaluation surveys from Malawi and Ghana. Most of the questions that relate to promising approaches – and share the 7. The Global Entrepreneurship and Development Institute - GEDI (2018). social norms in the impact-evaluation surveys are different from those asked in 8. Chakravarty, Das, and Vaillant (2017). the Togo and Malawi surveys for this report. findings widely. 9. Hardy and Kagy (2018b). 37. Gender-biased norms are used in this context as those against women. 5. Invest in promoting the systematic collection 10. Bardasi, Sabarwal, and Terrell (2011); Campos et al. (2015); Alibhai, Buehren, and Papineni (2015). 38. See Ashraf et al. (forthcoming) on the importance of large scale institutional interventions to overcome biases on women’s education participation. of gender-differentiated data that captures 11. Evidence from other regions demonstrates that business sector sex 39. See Deininger, Goyal, and Nagarajan (2013), and Roy (2015) on the importance segregation is not limited to Africa. In Sri Lanka, investment rates and returns of changes in property rights on investment in girls’ education. the performance, endowments, and to investment are lower in sectors characterized by a higher share of female 40. See Munshi and Rosenzweig (2006), Field, Jayachandran and Pande (2010), preferences of female-owned firms. entrepreneurs (De Mel, McKenzie and Woodruff, 2009). In the US, women’s concentration in the personal services sector explains as much as 14% of the Luke and Munshi (2011) on the importance of solutions to women’s mobility constraints in South Asia. The evidence on these issues in Africa is more 6. Involve men in policy advocacy and in the gender-based self-employment earnings differential (Hundley, 2001). limited. 12. McKenzie and Woodruff (2017). 41. See Croke, Goldstein and Holla (2017) about sector shifting. Women with implementation of solutions. Because men 13. Benhassine et al. (2018). traditional views regarding occupational segregation see larger improvements. are husbands, but are also more likely 14. Campos, Goldstein, and McKenzie (2018). 15. Paryavi, Campos and Santos (2018). 42. See Doyle et al. (2018) about a 15-week gender-transformative group education program that engages new and expectant fathers and their partners. Analysis to be bankers, inspectors, trainers, and 16. Some surveys from the report’s impact evaluation database stand as of data 21 months post-baseline shows significant differences between the exceptions. For example, in Malawi, female entrepreneurs are 38% more likely intervention and control groups across a range of health and development policymakers, it is important to engage them than male business owners to agree with the following statement: “If paid outcomes, including women’s reports of physical and sexual intimate partner at multiple levels in efforts to provide better employment was offered to me at roughly the same level that I take home in this business, I would take such employment and close the business”. violence, women’s and men’s reports of harsh discipline against children, contraceptive use and antenatal care attendance, men’s dominance in opportunities for female entrepreneurs. 17. World Bank Group (2018). decision-making, and men’s participation in and time spent on domestic and 18. This is as measured by the World Bank Group’s Women, Business and the Law. caregiving tasks. These countries are South Africa, Zimbabwe, and Rwanda. 43. Campos et al. (2017). 19. Cech et al. (2011). 44. Alibhai, Buehren, and Papineni (2016). 20. Correll (2001; 2004). 45. Batista and Seither (2018). 21. Blair-Loy (2003); Ridgeway and Correll (2004). 46. McKenzie and Puerto (2017). An impact evaluation of the same program in 22. Rudman (1998); Rudman and Glick (1999). Vietnam also found positive impacts on firm growth (Bulte, Lensink, and Vu, 23. Amanatullah and Morris (2010); Bowles (2012). 2017). Executive Summary 24. Fawole, Ajuwon, and Osungbade (2005); Morrison and Orlando (2004). 47. Dupas and Robinson (2013). However, it is not possible in this experiment to 25. Ruiz Abril (2008). distinguish between the effects of gender and the effects of sector of operation 26. World Bank (2012). on the impact of the intervention. 27. Beyer (1990); Pulford and Colman (1997); Soll and Klayman (2004). 48. Dupas et al. (2018). 28. Niederle and Vesterlund (2007). 49. Campos, Goldstein and McKenzie (2015). 29. Grosse and Riener (2010); Kamas and Preston (2010); Lundeberg, Fox, and 50. Campos, Goldstein and McKenzie (2018). Punćcohaŕ (1994). 51. Aker et al. (2016); Field et al. (2016b). 30. https://globalfindex.worldbank.org/ 52. Jack and Suri (2016). 31. Loscocco et al. (2009); Kim and Sherraden (2014); Renzulli, Aldrich, and Moody 53. Bastian et al. (2018a). (2000); Klyver and Terjesen (2007); Rankin (2001); Fafchamps and Minten (1999); 54. McKenzie (2017). Granovetter (1973, 1983). 55. Fafchamps and Quinn (2016). 32. Udry (1996). 20 21