Addis Ababa, 19 January 2021 (ECA) - A new report finds educational attainment gaps limit the success of women-owned businesses in Africa while offering solutions to tackle the imbalance.
The UN Economic Commission for Africa (ECA) released its report on women’s entrepreneurship today, which studies data from tens of thousands of African entrepreneurs and firms to establish links between education, access to finance and improved productivity.
First, the report reveals that education is a critical factor for productive female entrepreneurship in Africa. For instance, women with primary education or less are 27 times more likely to have started a business by necessity than those with higher attainment driven by opportunity.
Necessity-driven entrepreneurs lack productive and innovative activities which could transform their businesses. In comparison, opportunity-motivated entrepreneurs are more likely to operate in profitable sectors and are expected to add about 17 more jobs in the next five years.
Second, increasing women’s educational attainment can improve their ability to own a bank account and save for business. Women with secondary education are 51 times more likely to have a bank account and 22 times more likely to save than those with lower attainment.
Finally, findings show a positive link between access to finance and women’s business practices and performance. Firms with credit innovate more, purchase more assets and borrow more from banks than those that are financially constrained.
The Commission’s Director for the Gender, Poverty and Social Policy Division, Ms. Thokozile Ruzvidzo, said: “Women’s entrepreneurship is recognized as the biggest yet underutilized opportunity for sustained economic growth and social development.”
While Africa leads the world in terms of numbers of female entrepreneurs, they largely start a business by necessity, tend to be smaller and face more barriers in securing support and investment.
Ms. Ruzvidzo added: “Our report examines the factors behind this context and identifies evidence-based recommendations, which will guide governments in crafting conducive policies so that all women have adequate education, skills and resources to run, grow and sustain lucrative businesses.
“Successful female entrepreneurship is not only a catalyst for women’s economic empowerment and regional self-sufficiency but is also essential to recover from the economic impacts of COVID-19.”
The report recommends African countries to focus on increasing women’s education beyond primary schooling and enforcing laws to remove barriers to education such as early marriage and pregnancy.
It also proposes market-specific vocational education, soft and hard skills training and mentorship opportunities which prepare young women for opportunity-driven and high-value entrepreneurship.
Regarding access to credit, the report urges governments to regulate gender-sensitive financial products, including digital solutions, which cater to the constraints faced by women entrepreneurs, especially those at the bottom of value chains.
It further outlines special incentives and commitment plans to boost and bring savings of women entrepreneurs to a formal economy, which can instill a habit of regular contributions. For instance, shifting from rotating saving clubs towards village-level savings and loan associations can help rural women access loans and earn interest.
The report identifies a critical need to bring insurance products to protect women-owned businesses in rural areas that are more vulnerable to climate and health crises.
Finally, it encourages countries to enact legal provisions to prohibit creditors and cultural practices from discriminating against women in accessing credit, property or inheritance.
The ‘Women’s Entrepreneurship Report: Education and Finance for Successful Entrepreneurship in Africa’ is the first such commissioned for the region.
Click here to download the report.
Economic Commission for Africa
PO Box 3001
Tel: +251 11 551 5826