A new World Bank report published today proposes a menu of evidence-based solutions to address wide gender gaps in the performance and profitability of firms in sub-Saharan Africa.
Drawing on rich survey data from several Sub-Saharan African countries including Ghana, “Profiting from Parity: Unlocking the Potential of Women’s Businesses in Africa” finds that female entrepreneurs consistently lag men on several key indicators of business performance.
Monthly profits and sales from female-owned firms are on average 34 percent and 38 percent lower, respectively, than those from male-owned firms. Bridging these business performance gaps is especially critical for African economies, where women are more likely to be self-employed -often out of economic necessity- than to engage in wage work and are more likely to be entrepreneurs than men.
As many countries seek to address the twin challenges of economic growth and job creation, empowering female entrepreneurs to serve as agents of economic opportunity could help the region fulfill its need for high quality employment—particularly in the context of widespread unemployment and growing youth populations.
“By focusing on alleviating the specific constraints confronted by female entrepreneurs, governments can not only improve the business enabling environment, but also broaden the benefits of private sector development,” said Hafez Ghanem, Vice President for the World Bank’s Africa Region. Yet, to unleash the full productive potential of female entrepreneurs, policymakers and other stakeholders must understand the central question of why women’s businesses underperform.
“Profiting from Parity”explores the strategic decisions of female entrepreneurs, and through deep-dive analysis, uncovers new evidence on the underlying constraints to growth and profitability. It highlights the main factors that influence the success of female entrepreneurs as they run and grow their businesses; and calls for African governments to target key policy areas which will help empower female entrepreneurs, including capital, skills, and contextual factors like social norms. The report puts forward several promising policy areas to empower female entrepreneurs, including supporting women with secure savings mechanisms, implementing training programs that apply lessons from psychology to encourage women to act with an entrepreneurial mindset, and sharing relevant information as well as providing apprenticeships and role models to encourage women to “crossover” into male-dominated industries where they tend to earn more money than in traditionally female sectors.
“As evidence shows, when women can work and run businesses, the benefits encompass children, communities and economies. Sub-Saharan Africa is the only region where women make up the majority of entrepreneurs, yet there is much to do. This report provides a roadmap of policy actions that I hope governments will take to empower women and lead African societies and economies to greater prosperity,” said Ceyla Pazarbasioglu, Vice President for Equitable Growth, Finance and Institutions at the World Bank Group.