By Charlotte Service
Some may be surprised to discover that Africa is in fact a world leader when it comes to female entrepreneurship, with women making up ‘58% of the continent’s self-employed population’. Yet, when one considers the lack of business opportunity accessible to women, such a figure should not be so disconcerting. The inadequate supply of stable employment in Africa means that it is not uncommon for people to pursue entrepreneurship, but the scarceness of wage-related job openings is just one of many reasons why such a substantial amount of the female population engages in entrepreneurial activity. In many cases, women build up their own businesses not so much out of choice, but rather because there are few other feasible ways in which they can generate sufficient income to support themselves and their families.
The prominent influence of the patriarchy throughout social structures in Africa means that women face many obstacles to achieving formal employment. Women are much more likely to participate in unpaid work as there is an underlying supposition that a woman’s fundamental duty is to her family. Hence, women can find themselves “employed” by their spouse or family members, where this unwritten contract often translates to free labour. In cases where individuals do earn their own income, Africa’s rather traditional attitude towards the female gender means that women will typically find themselves ushered towards employment in the less profitable economic sectors. ‘Nine out of ten employed women in sub-Saharan Africa are in the informal sector’ as social norms will tend to impel women in the direction of more domiciliary jobs. This exclusion from the more male-dominated industries is what largely prohibits women from fulfilling their professional potential and capacity for wealth creation.
As it stands, women who own their own businesses in Africa earn an income that is ‘34% less on average’ than that of their male counterparts. One could argue that because men are more likely to have actively chosen an entrepreneurial venture over other career paths, they are more passionate about their business, which in turn translates to more successful business-making. However, a much more plausible explanation for the discrepancy in income between the genders, in addition to fewer participants in the more formal business sectors, is that women have been less equipped with the skills required to generate a successful business.
Most African countries have reached a certain degree of equality when it comes to access to primary education for both boys and girls, but there is still a discrepancy between the genders when we look at the number of children with access to secondary education and beyond. Women’s lack of participation at the tertiary and university levels of education is particularly pronounced, with gender gaps especially distinct in STEM subjects. Overall, young women are ‘1.5 times less likely’ than young men to be enrolled in education and with less years of formal training, it is particularly difficult for women to secure stable employment. Typically, women who run their own businesses have spent less years in education than men, something of which stands to explain the contrast in business strategy between the genders. Equipped with more formal training, resulting in a more extensive and better-quality skillset, men find themselves in a position to make more sophisticated economic choices. Contrastingly, owing to a general lack of opportunity, all a woman’s entrepreneurial knowledge must be acquired either through networking, the provision of information by friends and family, or by means of trial and error. Though perhaps eventually effective, such a learning process is not efficient. Thus, it seems that giving women the tools they require to both understand and flourish in the business world is the most obvious way to increase productivity and boost the economy.
Studies have shown that increased exposure to the more male-dominated sectors, through the provision of information, experience, or mentoring, is conducive to encouraging women to navigate towards more profitable business ventures, accentuating further reason to focus on social inclusivity and the cultivation of young women. Despite this, certain programmes designed to educate women about business matters have proven to be counterproductive. Specifically, the Profiting from Parity report illustrated that these programs had an adverse effect on company profits. This suggests that traditional methods of teaching may not necessarily be the most effective way to support women entrepreneurs. In fact, it seems that a focus on the enhancement of emotional intelligence and social skills, known as ‘Personal Initiative’ training, is more pertinent to actualising lucrative entrepreneurship.
Despite the part that a lack of training plays in precluding women’s success when it comes to entrepreneurship, how women are received by financial establishments is equally prohibitive to female success in the workplace. Tabitha Karanja, chief executive, and co-founder of Kenyan company ‘Keroche Breweries’, is just one example of an African woman who found herself discriminated against when applying for professional financial support. In 1997, having spotted a gap in the drinks market, Karanja came up with the idea to produce ‘a fortified wine using local raw materials’. She strived to offset the monopoly power held by Diageo and supply the liquor market with a new, more sustainable product that would be both hygienically produced and more affordable than other alternative alcoholic refreshments. Though now one of the wealthiest women in Kenya, Karanja notes that even after proving herself with the initial success of her enterprise, an application for a loan in 2006 that would allow her to crossover from fortified wines into beer was not well-received by her bank. Though her application was ultimately approved, in the beginning Karanja’s application was almost entirely dismissed and it took persistent begging to suppress the doubt expressed by the establishment.
Karanja is not an unusual case. By and large, male owned companies will receive ‘more than six times the capital investment of female-owned enterprises’, demonstrating that there is still an significant amount of work to be done with regards to how financial establishments in Africa accommodate women. With regards to women’s access to formal financial services, there is also the added complication of capital constraints. With fewer assets behind them, women are usually entitled to much less benevolent credit lines. This being so, the discriminatory behaviour of certain financial institutions is not the only reason women find themselves less involved with formal financial services.
Women’s own perception of themselves also has a part to play in all of this, as evidence from credit markets indicates that females are much more likely to self-select out of the money market because of their ‘low perceived creditworthiness’. They presuppose the denial of any financial applications that they may make and consequently, often fail to even attempt entry into the market. However, though this may be an active choice, it is not groundless; simply knowing about or hearing examples of women who have experienced the consequences of ingrained gender bias means that other women, understandably, expect the same treatment.
With low levels of education and a poor means of procuring adequate business knowledge, in addition to the influence of patriarchal structures, it is clearly a difficult environment for female entrepreneurs in Africa. The social and economic constraints against women lead to ‘lower profits, fewer employees and lower sales’, meaning that female entrepreneurs are rarely able to create businesses that are comparable to the size of enterprises owned by men. There is much progress to be made, but recent times have shown a promising indication of women’s progress in matters of both education and business. Last year, ‘the female literacy rate rose to 58.88 per cent’ and nearly half of the applicants to business schools in Africa were women.
Though not an intentional consequence of the lack of working opportunity available to women in Africa, the resulting exuberance of women entrepreneurs does present an opportunity for substantial economic growth. Entrepreneurial education provides individuals with the tools they require to carry out effective corporate planning, which promotes innovation and initiates economic and social progress. With the support and provision of quality training to young women, Africa will undeniably experience increasing levels of business confidence and success.
The expansion of enterprise has and always will remain key to unlocking a country’s potential for growth. Studies have shown that in emerging market economies, ‘women reinvest 90% of their earnings in their families and communities’, which demonstrates that investing in women is not only beneficial for right now, but truly has the capacity to impact the future for the collective. Women are an opportunity for wealth and employment creation and the use of policy and training programmes to mitigate, if not remove entirely, the economic constraints faced by women will allow them the freedom to emancipate their power as economic agents.
“The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.”
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