Female Entrepreneurship Resource Point - Introduction and Module 1: Why Gender Matters


Female-run enterprises are steadily growing all over the world, contributing to household incomes and growth of national economies. However, women face time, human, physical, and social constraints that limit their ability to grow their businesses.

The Female Entrepreneurship Resource Point responds to increasing demands for best practices and tools to integrate gender in private sector development and entrepreneurship promotion programs, and address the needs and constraints faced by female entrepreneurs. It is designed to have two functions—provide practical guidance and recommendations, and serve as a clearinghouse of programs, emerging research and data on the topic.

Female entrepreneurs make significant contributions to economic growth and to poverty reduction around the world. In the United States, for example, women-owned firms are growing at more than double the rate of all other firms, contribute nearly $3 trillion to the economy and are directly responsible for 23 million jobs. In developing countries, female entrepreneurship is also increasing—there are about 8 million to 10 million formal small and medium enterprises (SMEs) with at least one female owner.

While the number of women operating their own business is increasing globally, women continue to face huge obstacles that stunt the growth of their businesses, such as lack of capital, strict social constraints, and limited time and skill. The World Bank has created a clearinghouse of programs and research to support female entrepreneurship (see the full research point), and gathered the following observations on the state of women in small business:

Female entrepreneurs are more likely to operate in the informal sector or in traditional female sectors.

Worldwide, at least 30 percent of women in the non-agricultural labor force are self-employed in the informal sector; in Africa, this figure is 63 percent. Women-owned businesses tend to be informal, home-based and concentrated in the areas of small-scale entrepreneurship and traditional sectors, which primarily includes retail and service. Operating from the home allows women to satisfy competing demands for their time as they balance a disproportionate share of housework and childcare responsibilities. But social norms are at play as well. In societies where women are expected to stay in the home, or where traveling outside the home can be dangerous, women have no choice but to operate these types of businesses.

Gender gaps are still present in the critical skills needed to run a successful enterprise.

While women are making major strides in educational attainment at primary and secondary levels, they often lack the combination of education, vocational and technical skills, and work experience needed to support the development of highly productive businesses. Male entrepreneurs, for example, are more likely than female entrepreneurs to have been employed in the wage sector prior to starting a business.

Women are also less likely to afford or have access to information and communications technology (ICT) — television, computers, mobile devices and the like. ICTs are needed to function in a world where digital is becoming the norm and an important element of growing a business. Illiteracy is another barrier to ICT use among low-income women. Furthermore, public Internet points, provided through business centers, libraries and Internet cafes are not always women-friendly with inconvenient hours of operation or unsafe, socially inappropriate facilities.

Lack of finance is a major constraint to the growth of female-owned enterprises.

Access to finance is often cited as a main constraint to the growth of female-owned enterprises. The Gallup World Poll shows significant differences in access to financial services for women- and men-owned businesses in developing countries. On average, women have less access to basic banking services such as checking and saving accounts. As a result, many female entrepreneurs rely on their own savings, loans from family and friends, or micro-loans to finance their business needs. However, the small size and short-term nature of micro-loans do not allow women borrowers to make long-term investments in their businesses.

Disproportionately high legal and regulatory barriers can also have a profound effect on women’s ability to run stronger, more viable businesses. Only 38 out of 141 economies covered in the Women, Business and the Law database set out equal legal rights for women and men in key areas such as opening a bank account, getting a job without permission from their spouse, and owning and managing property.

Legal constraints in family law and inheritance can determine a woman's ability to own property and access collateral for financing.

The institutional and legal environment is critical to the growth of female-owned enterprises. Laws regulating the private sphere specifically those regarding marriage, inheritance and land can hinder women's access to assets that can be used as collateral when securing a loan. According to the Women's Legal Economic Empowerment Database – Africa (Women LEED Africa), only eight countries include provisions to give women the right to own property. While gender gaps in education tend to close with development, the same is not true of gender gaps in legal rights—middle-income countries are as likely as low-income countries to define men as the head of the household, to give the husband the right to choose the matrimonial home or to deny women the ability to own assets in their own name.