§ Until
gender parity is improved throughout the African continent, female
entrepreneurs will remain under-earning compared with their male counterparts.
§ Governments
and policymakers can support women entrepreneurs and female-led startups in
Africa through targeted policies including gender-responsive budgeting and
utilizing the African Continental Free Trade Agreement.
An African drive for gender equality and women’s empowerment has
consequently given rise to women entrepreneurs and female-led startups on the
continent. Sub-Saharan Africa, in particular, has the world’s highest rate of
women involved in entrepreneurial activity at 26%. According
to the MasterCard Index of Women Entrepreneurs (MIWE) 2021, Botswana,
South Africa, and Ghana are among the countries with the highest percentage of
women entrepreneurs globally.
The index reveals that these countries not only have a high
percentage of female-owned businesses but also formally support women
entrepreneurs. Research shows that women make up 58% of Africa’s self-employed population and are
more likely to become entrepreneurs than men.
This reveal has profound implications. Female-led startups in
Africa and beyond are not only as profitable (if not more) than male-led
startups but more likely to drive women’s empowerment and make a positive
social impact on the continent. That said, the gender gap in Africa may not be
closing anytime soon in light of the numerous challenges women entrepreneurs
face around funding their businesses.
The World Economic Forum’s 2022 Global Gender Gap Report estimates
it will take an average of 132 years to achieve gender equality globally; in
2020, that figure was 99.5 years.
According to the World Bank, women entrepreneurs across sub-Saharan
Africa continue to earn lower profits than men (34% less on average).
Gender discrimination is one reason for this disparity; others include limited
access to capital and assets, lack of a support network and other social and
self-limiting factors.
Economic
potential of female-led startups
The African Development Bank (AfDB) has asserted that female-led
startups are key drivers of economic development and contribute to
financial integration in the continent through job creation. As such, African
governments can boost economic growth and lift millions out of poverty by
unleashing the potential of women entrepreneurs, as stated by the World Bank, transforming the continent with
the right policies and interventions.
Harvard research also shows that increasing the rate of female-owned businesses and
reducing gender gaps in Africa are growth enhancing. Meanwhile, a study from
management consultancy Roland Berger notes that women entrepreneurs contribute between $250 billion and $300 billion to
African economic growth, equivalent to about 13% of the continent’s GDP.
Even on a global scale, the female economy is considered the
world’s largest emerging market, which has the potential to contribute $12 trillion to
global GDP by 2025. Moreover, female entrepreneurs create employment
opportunities for themselves and others and drive community development and improved living conditions on
the continent. By introducing new products to the African start-up economy,
female founders boost productivity and create competition in male-dominated
markets.
“
The crucial role of female-led startups in Africa means that
African governments and policymakers must address the socio-cultural
constraints that limit female founders’ growth potential and reduce their
engagement in the African start-up space.”— Aimée Dushime, Global Shaper,
Kigali Hub
According to a McKinsey study on the power of parity in Africa, women
contributed 33% of the continent’s collective GDP in 2018. Indeed, African
governments can achieve more growth by unleashing the potential of female-led
startups and creating an equitable business environment for them to thrive. In
Sub-Saharan Africa, research shows that there is currently a $42 billion
funding gap for women entrepreneurs.
It is projected, however, that Africa could
gain $316 billion in GDP by 2025 if the gender gap is bridged.
African governments thus have a vested interest in implementing the right
policies to protect women entrepreneurs and address the challenges that prevent
their businesses from succeeding like men’s. Supporting women’s
entrepreneurship is a route to economic empowerment and quality of life for African
households if women then contribute their income to those living with them,
including their families. In a post-COVID era where many African economies are
recovering from the pandemic’s adverse economic effects, such efforts become
even more urgent.
Kick-starting
female-led startups in Africa
The crucial role of female-led startups in Africa means that
African governments and policymakers must address the socio-cultural
constraints that limit female founders’ growth potential and reduce their
engagement in the African start-up space.
African policymakers can manage the funding challenge African
female-owned startups face by adopting gender-focused policies, such as Gender
Responsive Budgeting (GRB), which helps to improve the allocation of public
funds to female-owned businesses. As well as strengthening women’s rights
through legislation, African governments can use GRB to address gender bias and
discrimination against female founders of startups.
African countries can also use the African Continental Free
Trade Agreement (AfCFTA), which aims to create a single continental market for
goods and services and boost intra-Africa trade. AfCTA could be utilised to
develop an enfranchising environment for female founders, allowing African
women entrepreneurs to expand their businesses across the continent.
Redressing gender disparities doesn’t just put those in power on the right side of history; it benefits them by enriching their entire countries, providing them with a vested interest in creating an enriching environment for female entrepreneurs.
Source: europeansting