Female entrepreneurship: laws are not enough

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By Nour Honein

While there is much concern over the lack of female entrepreneurs in first world countries, the gender gap in developing countries is even greater. Poverty, lack of proper identifying information, and little to no access to banking services leave more than 1.3 billion women out of the formal financial system (World Bank). These women then lack the basic financial tools necessary for asset ownership and economic empowerment. But is this the only obstacle?

Oftentimes women are the sole breadwinners or are responsible for the day-to-day chores necessary to keep their family fed and clothed. This becomes a major challenge when starting a business – not only is access to capital necessary to fund the early investment of their venture, but it is also needed to hire help for daily tasks so the women can put the time and effort into building a thriving business. To walk away from their current responsibilities and obligations is not an option without a safety net.

Gender indexes vary by nation in a general pattern that shows more equality associated with greater national wealth and greater inequality associated with poverty, but also hostility and instability. Within that overall pattern, specific national practices and policies will affect the freedom of women and thus their ownership.

For instance, Tanzania is exhorted to enforce equal property rights for women and men through the courts. Countries in Sub-Saharan Africa often have formal statutes giving equal property rights but local councils and tribal laws often ignore the statutory rights of women, adhering to older codes that give property rights exclusively to men. Consider: it is common for published research on women’s entrepreneurship to observe that women have fewer collateralized loans than men (one factor deemed to cause their “underperformance” as entrepreneurs), but it is rare for the same authors to recognize that the difference in credit use may be attributable to differential property rights.

In Saudi Arabia, women can’t expand into international markets as easily as men can because of restrictions on their travel. Many of us are aware that women from conservative Muslim countries cannot go abroad on their own, but the business implications of such restrictions are seldom recognized in entrepreneurship programs or research design.

In UAE, financial access differs greatly by gender: according to a report by the International Finance Corporation, 66% of the female entrepreneurs do not have active bank credit. These differences in financial access would necessarily have an impact on the outcomes for women as business owners.

From these examples, not only can we see the importance of variations in national practice for women’s performance as entrepreneurs, but we can also note how the broad backdrop of gender norms may be a powerful impediment to successful business-building by women, regardless of what action may be taken in their favor. Insisting on viewing business as a “neutral” endeavor, as many do, only makes important influences on outcomes invisible.


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