What Policymakers miss on Women Economic Power in Africa
On the need to transition from baby-making to profit-making
Hurdles faced by Women
Women, despite facing a myriad of backward traditional beliefs, insufficient financial support, and ineffective laws, have shown their capabilities of being economic agents. Every day, they shoulder home-based care responsibilities and still find time, amid persistent struggles, to initiate and continue with their income-generating activities. As per the World Bank report on Profiting from Parity; Unlocking the Potential of the Women’s Business in Africa, women in Africa are likely to be self-employed (58%) than men due to limited opportunities in formal employment. Similarly, women employers make up 45%, a figure which is at par with that of Europe and Asia.
Though they are the major drivers of economic growth in Africa, women-owned businesses are achieving less than they could. Here's the breakdown:
Lower profits. On average, businesses run by women make 34% less profit than those run by men.
Fewer employees. Women-owned businesses are more likely to be small. In established businesses (with 10 or more employees), women run only 10% of medium-sized companies (100-500 employees) and just 7% of large companies (over 500 employees).
Lower sales. On average, established women-owned businesses bring in 38% less in sales than those run by men.
Lower value-added. Businesses owned by women seem to generate less economic value. They add about 38% less value compared to male-owned businesses. These gaps exist throughout Africa, although the severity varies by country. The overall trend however is clear: women-owned businesses underperform relative to men-owned businesses.
Different paths to business ownership. Women in Africa often face hurdles entering the job market. Compared to men, they might choose to start businesses due to limited job options, not necessarily because they have the most resources or are in the best sectors.
Women often underestimate their capabilities when compared to men. They still face low self-esteem that's attributable to male dominance.
Crowded markets and limited options. The study suggests women may be concentrated in certain small business sectors with a lot of competition, especially from other women entrepreneurs. This limits their growth potential.
Persistence in less profitable smaller businesses. Because of fewer job alternatives, some women might stay in businesses that barely make ends meet. This means the pool of women-owned businesses might include a higher proportion of those struggling compared to men-owned businesses.
Unpaid ‘domestic workers’. Women in Africa spend a lot of time in non-economic activities more than men. This time constraint translates into limited hours expended in their businesses.
Unequal connections. Women entrepreneurs often lack the same level of connections as men. Men tend to be part of networks with more resources and better access to important businesses, which can give them a leg up.
Nonetheless, despite being less profitable, women's businesses bring in income needed for food and education, which wouldn't be available otherwise. This contradicts the traditional belief that men are the sole providers for housing, school fees, and other necessities.
In the study carried our in Ghana, female entrepreneurs who have less control over decisions in their businesses and personal lives, their businesses tend to make less money. For example, women who need permission from their husbands to start a business or buy equipment end up with lower profits on average. The same goes for women with limited control over their own money, household finances, or borrowing for the household. This lack of decision-making power seems to also limit how much these women can invest in their businesses.
The World Bank study found some interesting things about the kind of support a spouse does or doesn't provide. Women entrepreneurs actually seemed to have higher profits on average if their husbands didn't help out in certain ways. For instance, women whose husbands didn't help with finances during tough months or contribute money for groceries made more money overall. And if female entrepreneurs make higher profits, their spouses are likely to cut off their support. There's a chance this is because women with more profitable businesses simply need less help from their spouses. But it could also be that having more independence and control over their own money allows these women to invest more back into their businesses.
Driving Factors behind Women Entrepreneurship in Ghana (and by extrapolation, other African countries); Mumuni et al., 2018.
Policy Gap
Policymakers have yet to bring to light the gendered nature of managing money in light of a psychological dimension. Women have a distinct way of doing things; their feminine approach to expending, saving, and investing when compared with men is plainly different and can make the difference in their lives yet researchers and policymakers haven’t prioritized gender data in decision-making. Recent systemic and scoping studies have only focused on the antecedents and consequences of money management behaviors but no gendered differences have been used as a construct in research. Previous psychological studies have revealed the interiority variations in how women and men make financial decisions. Nonetheless, the little attention directed to the attributes and meanings attached to money by both genders has led to poor financial policies among financial institutions yet the influence of their psychological makeup is overwhelming.
The fact that women consider money as a form of security mirrors their predominant concern for wider family responsibilities. Their level of financial consciousness is higher than that of men, a claim that is attributable to their natural care instincts. Given this gender distinction, women tend to be fully aware of their present financial situation and are likely to initiate prompt measures to alter their worse financial outcomes.
Women are mostly concerned with their future more than men. Naturally, in light of their relationship lens with men, they tend to look for safe havens, where they are well-protected, cared, loved, and that there are no threats from their partners about the quality of their lives in general. Similarly, in the realm of financial management, women exhibit the same behaviors. Their future-oriented perspective helps them to develop a sure-proof financial plan. They get anxious if they sense that their finances aren’t enough to meet the needs of the family. Money, being a source of worries amongst them, isn’t attributable to missing out wealth accumulation (which men traditionally prefer). But, the distress emanates from the fact that they aren’t institutionally well-insured from a financial sense, are unprepared financially, and are concerned for what lies ahead when they are financially starved.
While men have a tendency to acquire money as a way of expressing prestige, power, and control, women are less likely to develop those traits. Men yearn for external recognition to impress other people and gain social and political influence. However, this show-off supremacy is absent among women because their money attitudes are distinct. Their good financial habits are mirrored in the fact that they are unlikely to compare their pay with that of others. Similarly, women’s negativity towards money stems from the adverse ramifications of money on the moral and ethical values of the people. Interestingly, a study by Wilhelm et al posited that women often equate giving of money to power when they are serving family responsibilities, with them being the financial managers at the household level. This perspective confirms my earlier claim that women’s financial worries are tied to family duties (and not external validation).
The Way Forward
Though there are other suggested traditional interventions to amplify women's economic power, getting right from the start is clinically appropriate (and highly needed). The existing solutions such as addressing social norms and removing regulatory barriers are incremental, gender-insensitive, and myopic and may hide gender bottlenecks that baffle women mostly and blur policymakers from acting right. So, “what next?” you ask.
Any interventions should be psychologically backed; Certain skills like confidence, resilience, self-esteem, leadership, risk propensity, and perseverance are important for any business to succeed. There's new evidence that these skills are especially helpful for women entrepreneurs in Africa. For example, a program in South Africa that focused on these skills for women led to higher profits and sales for participants even after the program ended. HerVenture helped over 2,500 women entrepreneurs by giving them the resources and encouragement they needed. This award-winning app offered them the skills, knowledge, and confidence to launch and grow their businesses, all while helping them take their ventures digital.
Here is a look of the improved competences from the program (s):
Another study in Togo showed that training women to be more proactive and future-oriented had a much bigger impact on their business success than just teaching them typical business management skills. In fact, women who learned these proactive skills saw their profits increase by 40% compared to those who only got traditional training.
Going forward, the onus now is on non-governmental institutions, policymakers, financial analysts, governments, and banks to be privy of gender disparities in empowerment, and develop programs aimed at uplifting women wholistically. To join in these efforts of women economic power, I have formed my own initiative, which i will be sharing separately through your emails.
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Thank you for putting this together! Such an important topic for discussion. Women are not only the source of life but pillars in economic systems. Since becoming a mother myself and working “around the edges of motherhood” I can see how these women have to become very efficient with the scarce resources and time they have available, which in itself is a trait that (as the children grows) increases change to greater entrepreneurial success (if also recognised and supported, which is where a big problem remain as you mention… very excited about the herventure project, never heard about it?!) keep it up 👏
Great post, Edwin. Most of the studies are done by men who have neither the understanding nor the consideration you do for the female gender. Yes, we are all Homo sapiens, but like all mammals there are distinct differences between the genders of the species. Just because a woman is making sufficient in her business to take care of her family (frequently including her spouse) doesn't mean she is a failure. For her needs she is a success.