Men in Sub-Saharan Africa Still Dominate Businesses as compared to Women

The performance of female-owned businesses in Sub-Saharan Africa consistently lags behind that of male-owned businesses as they have fewer employees, lower average sales, and less value-added.

According to a new World Bank Report dubbed ‘Profiting from Parity: Unlocking the Potential of Women’s Businesses in Africa’ proposed a menu of evidence-based solutions to address wide gender gaps in the performance and profitability of firms in sub-Saharan Africa.

Sub-Saharan Africa has the highest rate of entrepreneurship in the world, with approximately 42 percent of the non-agricultural labor force classified as self-employed or employers. Yet most entrepreneurs are unable to grow their businesses beyond small-scale subsistence operations, impeding their contribution to poverty reduction and shared prosperity. This is particularly so for women.

Monthly profits and sales from female-owned firms are on average 34 percent and 38 percent lower, respectively than those from male-owned firms. Bridging these business performance gaps is especially critical for African economies, where women are more likely to be self-employed -often out of economic necessity- than to engage in wage work and are more likely to be entrepreneurs than men.

As many countries seek to address the twin challenges of economic growth and job creation, empowering female entrepreneurs to serve as agents of economic opportunity could help the region fulfill its need for high-quality employment, particularly in the context of widespread unemployment and growing youth populations.

“Profiting from Parity” explores the strategic decisions of female entrepreneurs, and through deep-dive analysis, uncovers new evidence on the underlying constraints to growth and profitability.

What’s driving the gender gap in business performance?

Wage job opportunities are limited in Africa. This drives men and women who might not otherwise be inclined to start a business to become entrepreneurs. According to the Global Entrepreneurship Monitor, Africa features the world’s lowest share of entrepreneurs who started a business in order to pursue an opportunity.

Many women who become entrepreneurs out of economic necessity do not intend or have the skills to build large and successful companies. Their decision to start a business instead of seeking wage work is influenced by important constraints such as differences in skills, capital, networks, time and family formation, occupational opportunities, and safety.

“By focusing on alleviating the specific constraints confronted by female entrepreneurs, governments can not only improve the business enabling environment but also broaden the benefits of private sector development,” said Hafez Ghanem, Vice President for the World Bank’s Africa Region.

Yet, to unleash the full productive potential of female entrepreneurs, policymakers and other stakeholders must understand the central question of why women’s businesses underperform.