“When women are empowered to fully participate in the economy, household income increases, businesses grow, and stronger economy emerges and endure,”

Sean Cairncross, CEO, Millennium Challenge Corporation.

Sub-Saharan Africa has the highest female entrepreneurship rate globally, with approximately twenty-six percent of female adults engaged in entrepreneurial activity. Women in Africa are more likely than men to be entrepreneurs, so supporting women in this role can promote sustainable development. The Mastercard index on women’s entrepreneurship suggests that Africa is a world leader in female business owners.

Still, this report only counts the quantity but does not represent the quality of women’s businesses. While both male and female entrepreneurs face obstacles, women deal with more barriers such as social norms, discrimination, and access to finances. Women-owned enterprises record, on average, 38 percent lower profits monthly than men-owned enterprises. Supporting women’s entrepreneurship by providing access to finance, training, mentorship, etc. will provide a base in which female entrepreneurs in Africa can grow.

Government and development agencies should support women’s entrepreneurship because it can transform Africa by promoting gender equality, economic development, and increasing political participation.

Promoting gender equality  

One effective way to empower women anywhere is to promote financial independence. When fully supported, entrepreneurship can lead to financial freedom by generating income for women and enabling them to cater to their own financial needs and families. Entrepreneurship can also increase women’s voices in society. Financial freedom can make women less dependent on their male relatives (father, brothers, uncles, etc.) by giving women leverage in the family’s decision-making process and determining how to allocate their resources. Financial freedom for women can also help promote equality.

The International Finance Corporation (IFC) notes that Micro, Small, and Medium-Sized Enterprises (MSMEs) play a large role in closing the gender gap. Women own almost forty percent of small businesses. Inequality in access to education, training, and financial services can be alleviated if there is a concerted and collaborated effort to support women in their entrepreneurship journey. The gender inequality gap could reduce further if women entrepreneurship is not only supported but encouraged throughout Africa.

Promoting economic development

Entrepreneurship is a huge part of economic development because it contributes to job and wealth creation, community development, and improved living standards. Female entrepreneurs create employment opportunities not only for themselves but for others as well. Women’s business activities influence a country’s economic performance by bringing new products, methods, and production processes to the market and boosting productivity and competition more broadly.

Unlocking the potential of African women can make a considerable contribution to the continent’s growth and prosperity. Mckinsey & Co.’s publication on the power of parity states that in 2018, women generated thirty-three percent of Africa’s collective GDP. The publication further notes that there is still room for growth if the government can level the playing field for women-owned businesses.

The female economy is the world’s largest emerging market, with the potential to add $12 trillion to global GDP by 2025. There is an immense opportunity for economic growth and development in Africa if women’s entrepreneurship is supported. As the world’s leader in terms of the number of female-owned businesses, the African economy stands a chance of raking in a large chunk of revenue for the African market if the government removes the constraints that prevent women businesses from being successful.

Women use the income they generate from their businesses to support their households and improve their family welfare. Research by the Women Global Development and Prosperity (WGDP) showed that when women are economically empowered, they invest ninety percent of their income back into their families. If female entrepreneurs in Africa get assistance with access to finance, mentorship, training, etc., it will help increase their businesses’ quality, which could promote economic development.

A high poverty rate exists among women in Africa, and Covid-19 has worsened this. In Niger, Benin, Burkina Faso, and Mali, there are between forty-eight and sixty-five percent of women living in poverty. Entrepreneurship can reduce the poverty rate among African women by providing them income. We could lower the percentage of women living in poverty in Africa if women-owned businesses are supported.

Increase political participation

There are few women in political office in Africa. Financial ability, among other things, is essential to increasing women’s political participation because it takes money to participate in politics. Satang Nabanech, a women’s rights advocate and attorney from The Gambia, notes, ‘’ politics are expensive, and many women lack the financial assets to succeed in it.’’ These poor women are more concerned with survival. By supporting female entrepreneurs, they could have the financial ability to be a part of politics in their country. The financial freedom that comes with having one’s own money could provide other opportunities like public office appointments or community organization roles for women.

Supporting female entrepreneurs can give women the needed economic muscle to participate with their male counterparts in the political arena. Increased political participation could considerably reduce the disparities between women and men, increase women’s autonomy, and allow them to play a more active role in their country’s political and economic life. Women can then influence the political decisions that affect their rights and equality in society.

Despite the enormous potential women have as entrepreneurs in promoting economic development, they face several obstacles that hinder their growth and development. These obstacles prevent women from reaching their full entrepreneurial potential. African governments should work toward mitigating these obstacles. Some of these include the following:

Access to finance

The African Development Bank estimates a $20B financing gap for African women entrepreneurs, causing these businesses to suffer. Women do not have equal opportunity to access finance from external sources such as banks and other financial institutions. Because of this limitation, women tend to prefer using personal credit/saving in financing business. Financing hinders a lot of women from scaling their businesses because they do not have sufficient funds to do so.

Social norms

Norms are shared beliefs about how people should or should not behave and act. Though social norms can promote a society’s culture and value, they can limit women and girls from fully participating in the economy. Women might not be able to go into a particular business because society considers those businesses as male-only enterprises. Some social norms that say women belong at home impede women from going into entrepreneurship.

Education

Unequal access to education and training between male and female entrepreneurs in Africa has widened the progress gap. This gap makes the probability of a man succeeding as an entrepreneur higher than a woman. Education and training are essential for helping women entrepreneurs increase and improve their business management skills.

Removing the constraints female entrepreneurs deal with is the first step in supporting women’s entrepreneurship in Africa. African governments and development partners should make concerted efforts to remove these obstacles to support female entrepreneurs because it can promote gender equality, economic growth, and increase political participation. Investing in women also have a multiplier effect on health, education, and family. Female entrepreneurs contribute significantly to the economy and society and will contribute more if they are supported.