Measuring Gender Equality in Entrepreneurship

The year is 2020 and Kamala Harris has become the first female Vice-President elect of The United States of America. According to US think-tank the Council on Foreign Relations (CFR) only twenty-one women sit as Head of State or Government in 193 countries around the world. This under representation of women in the political landscape is reflected in the business world too.

Women suffer a number of barriers that impede their full participation in economic life, including discrimination, obstacles accessing finance, fewer opportunities for accessing skills and training and under representation in specific areas, including science and technology.

Gender equality and women’s empowerment runs right through the 2030 Agenda for Sustainable Development. It is an objective in its own right and also an essential condition for meeting many of the other Sustainable Development Goals. As well as improving the life chances of girls and women from birth to old age, there is a critical need to address women’s participation in economic life.

Women make up 40 per cent of the world’s workforce. Still, their involvement in productive economic activity extends far beyond this statistic, to areas that are often unpaid or in the informal economy. In terms of ownership of small and medium-sized enterprises (SMEs), women represent 30 to 37 per cent of all SME owners in developing countries. The private sector is one of the driving forces behind sustainable economic growth. Yet, many women face unique constraints concerning establishing, formalizing and growing their businesses and fully contributing to their national economies.

GDSI research and the experience of implementing more than 100 development projects around the world have shown that, due to various cultural, social, legal and regulatory barriers, female entrepreneurs face challenges in participating in national and global value chains.

Regretfully, many obstacles prevent women’s equal participation in business activity and economic development. Allow me to outline four barriers which impede the full participation of women in economic life:

  1. Outdated and restrictive regulatory environments. Women are not alone in suffering from unnecessary regulatory hurdles, but in many countries, specific regulatory and legal barriers have a higher negative impact on women. For example, recent research conducted by GDSI for the Asian Development Bank has shown that higher business costs contribute to higher business discontinuation rates among women entrepreneurs when compared with their male counterparts. Lack of transparency and corruption in some countries, compounded by institutional discrimination against women make the business environment incredibly difficult for women, contributing to greater informality and income inequality. Introducing laws to tackle corruption and discrimination is the starting point for changing the business culture and putting women on an equal footing with men. Assisting the Ministry of Justice in Pakistan, GDSI addressed issues of land ownership, choice of marriage partner, and right to work or leave the house. Our powerful communication campaigns gave women more confidence in claiming their legal rights.

  2. Obstacles to accessing finance. The Global Findex, a comprehensive database measuring how people save, borrow, and manage risk in 148 countries, reveals that women are less likely than men to have formal bank accounts. Even if they can gain access to a loan, women often lack access to other financial services, such as savings, digital payment methods, and insurance. Restrictions on opening a bank account, such as requirements for a male family member’s permission, restrict women’s access to funds. Lack of financial education can also limit women from gaining access to and benefitting from financial services.

  3. Fewer opportunities for enhancing skills and training. While this issue negatively affects poor communities in general, women are more likely to suffer restricted access to technical resources, including skills training. This gap hinders their capacity to engage in economic activities. However, it is not just a question of hard skills: evidence suggests women in business sometimes face other ‘invisible’ barriers, such as a lack of confidence in their entrepreneurship skills, especially when confronted with discrimination.

  4. Under-representation of women in specific sectors. Women are underrepresented in high growth, high value-added fields such as science and technology. As a consequence women have less earning potential, and societies lose out on their innovation potential. To address gender disparities among women and men in these fields, young women should have better access to science and technology education, training and resources.

So, hard laws against discrimination, proactive policies to support girls and women’s education and training, and targeted financial services are essential for empowering women’s participation in the economy. However, there is a need to change working cultures and the business environment so that women engage in all economic sectors.

More support networks for professional women and women in business are essential, including women entrepreneurs, women in the finance industry and industry associations. These networks aim to facilitate the exchange of experiences and provide training and mentorship. They also have a lobbying function to bring in and retain women in under-represented industries, where C-suites are still strictly male-dominated, and women lack powerful role models.

This article was written by Fiorina Mugione, GDSI Director for Africa, The Caribbean and Pacific. Fiorina will moderate a discussion on entrepreneurship and the Sustainable Development Goals on 19 November 2020 during the Global Entrepreneurship Week at 15:00 pm.

To register for the online event please click here.