the future of the African continent

by MMC
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Africa is the only region in the world where more women than men choose to become entrepreneurs, a phenomenon that is not adequately debated. Expanding opportunities for women entrepreneurs through policies promoting gender equality would have a significant impact on Africa’s growth. Simple, inexpensive solutions have proven effective and should be adopted on a larger scale.

While both male and female entrepreneurs face constraints such as lack of capital, women are particularly affected by a number of obstacles, such as discrimination and lack of guarantees. As a result, women-owned businesses report monthly profits on average 38 percent lower than those of men-owned businesses. Three factors partly explain this underperformance: lack of capital, choice of business industry and business practices.

Conditions of access to capital

Data collected from ten African countries indicates that, on average, men-owned businesses have six times more capital than women-owned businesses. The fact that women have less access to assets affects their ability to obtain medium-sized loans and, in turn, impacts the growth of their businesses. This problem can be solved in two ways: by giving women more control over their assets, for example by granting them joint ownership rights (as is the case in Rwanda) or by eliminating the need for collateral. In Ethiopia, psychometric tests measuring honesty and willingness to repay loans offer a promising solution, as demonstrated by a World Bank initiative involving a partnership with one of the country’s financial institutions. Take for example the case of an Ethiopian woman entrepreneur who owns a bakery and who, for more than 10 years, was only able to obtain collective loans capped at 900 euros. Thanks to psychometric tests, she was able to obtain an individual loan, develop her business and diversify her income.

The choice of sector

In Africa, women entrepreneurs tend to confine themselves to traditionally female sectors not due to a lack of skills or access to capital, but rather a lack of information (women are often unaware that they earn less than men) and social factors. A study in Uganda indicates that women who, growing up, had male mentors who encouraged them to consider male-dominated sectors are more likely to foray into those sectors. In Guinea and the Republic of Congo, programs encouraging women to transition into traditionally male-dominated sectors by providing them with appropriate information and mentoring programs, among others, are being tested.

More relevant training

In Togo, training aimed at fostering proactive behaviors among entrepreneurs rather than teaching them basic business skills has had a significant impact. The idea is to teach small entrepreneurs to show initiative, to be proactive and to demonstrate perseverance. This training yields impressive results as female trainees have seen their profits increase by an average of 40 percent. One example is a female entrepreneur in Togo who, before the training, simply rented wedding dresses. After following the personal initiative training, she decided to expand her clientele by selling dresses and offering accessories such as veils and gloves. It now has stores in three African countries. Such entrepreneurial training was so successful in Togo that eight other countries also decided to offer it.

This is proof, if any were needed, that inexpensive solutions exist to support women entrepreneurs in Africa and that minor changes, such as modifying the type of training offered to women, can change their destiny… and that of the African continent.

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