The World Bank pronounced in 2019 that women in Sub-Saharan Africa (SSA) have the highest labour force participation rate of any developing country region in the world. Women in SSA are also more likely than women of any other region to work as entrepreneurs and are more likely than any men to be engaged in entrepreneurship.
Among the non-agricultural workforce, almost 50 percent of women in the region (compared to less than 40 percent of men) are entrepreneurs, with the vast majority of these women being self-employed, rather than employers.
The World Bank further recognizes that it is likely that many of these women go into entrepreneurship because of lack of opportunities in wage employment and not because they necessarily have the right skills or experience nor because they have identified a good opportunity.
SSA is the region with the lowest ratio of ‘opportunity’ entrepreneurs to ‘necessity’ entrepreneurs. Within the region, women may even be more likely than men to be necessary entrepreneurs, given the greater constraints they face to accessing wage jobs, which may push them into entrepreneurship as a last resort.
“Such constraints include lower education and skills levels, a greater share of child care and other domestic tasks, and possible discrimination in the wage job market. Indeed previous research in Botswana indicates that while most micro-enterprises are ‘necessity’ rather than ‘opportunity’ enterprises, this is even more the case for women-owned businesses,” the World Bank said in 2011.
According to the 2019 World Bank’s Profiting from Parity report, beyond making the decision to become entrepreneurs, rather than wage workers, women face a series of constraints that influence their strategic decision and ultimately contribute to weaker business performance outcomes.
The report finds that, across 10 countries SSA countries, women entrepreneurs’ profits are an average 34 percent lower than those of their male counterparts, while their sales and value added are 38 percent lower.
One of the most important of the strategic decisions a business must take is on which sector to operate in. Research indicates that sectoral segregation is one of the factors underpinning women’s inferior business performance outcomes with women tending to operate businesses in less profitable sectors.
A recent global paper that uses data from 97 countries, finds that while women in the male-dominated sector make higher profits than women in female-concentrated sectors, “they still make less that the men operating in male-dominated sectors”.
A 2019 research study titled “Crossovers in Botswana: Women Entrepreneurs Who Operate in Male-Dominated Sectors”, by Ludovica Cherchi and Daniel Kirkood found that “the inability to create jobs, especially in the service sector where Botswana has more competitive advantages, is undermining the country’s efforts to reduce high inequality and eradicate extreme poverty”.
The report suggests that to counter these, recent work such as the World Bank’s Systematic Country Diagnostic (SCD) for Botswana has highlighted “the need to raise returns to non-farm employment, including by improving the productivity of micro and small enterprises. This is particularly important given the high business failure rate in Botswana compared to its peers”.
While Botswana has long had government programmes supporting small, medium and micro-enterprises, it is thought that these programmes have been generally unsuccessful in reaching micro-enterprises, potentially because they are not well targeted to the needs of the smallest businesses and may not be affordable to them according to the World Bank in 2011.
“The need to raise the productivity of micro-enterprises is especially relevant to women: while high skilled women in Botswana find opportunities with wage jobs in the public sector, where they outnumber men and where 70 percent of university-educated women work, less educated women and women from poorer backgrounds tend to be unemployed or self-employed, especially in low-productivity micro enterprises and the informal sector,” stated the World Bank in 2015.
The World Bank in 2011 further observed that while have had higher enrolment rates at primary, secondary, and tertiary levels of education for many years, among micro-enterprises owners, women appear to have lower levels of education than men, indicating that small-scale entrepreneurship is selected by the most disadvantaged women.
According to the research report, evidence also suggests that there is significant sector-based sex segregation of male and female entrepreneurs in Botswana; women are over represented in sectors, such as personal services, hotels and restaurants, textile manufacturing and retail, while men are represented in more profitable sectors, such as construction and electronics, information technology (IT).
Given this context, “it would be useful for policy makers to understand how some women in Botswana are able to cross over into male-dominated sectors and the impact this has on their business performance outcomes”.
“In terms of profits, we find that women who operate in male-dominated sectors make just as much as men in those sectors and make significantly more than women who operate i9n female-concentrated sectors. However, our sensitivity analysis also finds that these results are partly driven by the profits of high-performance outliers. These outliers tend to be foreign-born owners or those who jointly own their business with another owner. Our results specifically highlight the positive impact on women’s profits of jointly owning a business with a spouse,” it is argued.
The research study states that in Botswana the positive impact of exposure is through having had prior work experience or training in male-dominated sectors.
However, “once women are operating in a male-dominated sector, we find evidence that their spouses provide significant support to help them succeed. Additionally, unlike in other crossovers studies, the level of education of crossovers and their mothers’ is a significant correlate of operating in a male-dominated sector, as is being foreign-born business owner”, it is submitted.
The research study also recognizes that the main constraints to growth include observable differences between men and women. Access to finance is a key challenge for all firms, with women and men owners equally likely to list it as the most important problem they faced when they opened their business.
However, women (both crossovers and non-crossovers) are more likely than men to identify finding a business location as the most important problem, while non-crossover women are more likely than both crossovers and men to list weather conditions.
The research study findings suggest that “exposing women to more profitable male-dominated sectors, such as through training, apprenticeship, and mentoring programmes, could be effective in getting them to cross over. While we do not find evidence that husbands help women to cross over, spouse’s do appear to provide important support that could help women to succeed in a given sector, such as providing skills (either through their own labour or by imparting the skills on the wide), access to larger amounts of finance/capital, and by helping with business registration or the acquisition of a license”.
Given the importance of the role of the spouse in helping crossovers operate their business, “policy makers should consider interventions that sensitize husbands on the valuable role they can play supporting their wives as entrepreneurs”.
The research paper further argues that while priority for business support should be given to opportunity entrepreneurs, it will clearly be important for some policies to focus on necessity entrepreneurs.
In the short-term these businesses may benefit from the same types of support that are needed by other entrepreneurs, given the similarities in the constraints faced by all businesses. Policies that promote access to capital/finance may be valuable for all sole-owned women businesses, regardless of their sector.
Such policies should take account of evidence from across the region indicating that women have unequal bargaining power in their households and often face competing claims on their business finances, resulting in business funds being diverted to a spouse’s business or to other non-business-related investments, such as children’s education.
