Unlocking the Potential of Women’s Businesses in Africa
Enterprise development is a crucial engine of economic growth and job creation in Africa. Without entrepreneurship, there would be little innovation, little productivity growth, and few new jobs.
On the surface, the continent boasts a higher rate of women entrepreneurs than anywhere else in the world, with countries in sub-Saharan Africa already making significant progress in fostering the economic empowerment of women and girls.
But while national government leaders and other stakeholders across Africa are recognizing that women are a force for economic growth, the World Bank notes that the performance of female-owned businesses consistently lags behind that of male-owned businesses. They have fewer employees, lower average sales, and less value-added.
Women in Africa also tend to be underestimated and marginalized within the global economy. They experience high barriers to entry when pursuing business and management education and as entrepreneurs, they are overrepresented in industries that yield lower revenues. They are also less likely to own property or other forms of collateral, creating a disadvantage when seeking capital to grow their businesses. And yet, there are opportunities to change this.
Regional Differences
While Africa as a whole is making strides in development, the story differs region by region. For example, in 2019, Africa’s economy grew by 3.4%, but the growth was primarily driven by the continent’s ‘Big 5’, Algeria, Egypt, Morocco, Nigeria, and South Africa.
Development continues to differ between different regions in Africa, with North Africa leading, followed by East and West Africa. East Africa shows the fastest growth, with South Africa being the only region that showed a decline. However, West Africa showed the highest jump from 7% to 28% increase following the emergence of Nigeria from a recession.
Country Snapshots
Understanding one’s target market is critical for any enterprise, both for-profit and nonprofit. To update our understanding of current economic conditions, existing entrepreneurial ecosystems, and sociopolitical challenges, the AWEC team recently studied specific countries to identify opportunities to accelerate women entrepreneurs. Below are glimpses into three countries in which we see possibilities to achieve greater gender parity.
Egypt
Key Demographics
Due to the expansive desert across the country, 95% of the population resides within 20 miles of the Nile Delta.
The official language is Arabic, but English and French are widely spoken in business and higher education settings.
Generally speaking, Egypt more closely identifies with the Middle East, partnering with Gulf countries on regional initiatives and serving as long time arbiters in the Israeli-Palestinian conflict.
Women are extremely underrepresented in the labor force, with 26% of the country’s women working, compared to 79% of men.
Entrepreneurial Landscape
Entrepreneurship appears to be on the rise in the country, especially among younger demographics seeking work. These so-called “necessity entrepreneurs” make up 42% of the early-stage ventures in the country and are concentrated in the retail, manufacturing, and agriculture sectors.
Cairo is becoming a regional hub for venture capital, with several firms, such as Algebra Ventures and Sawari Ventures, and accelerators, like Flat6Labs, raising multimillion dollar funds, countless co-working spaces in areas like Tahrir Square, and the Central Bank of Egypt establishing a $57 million FinTech Fund.
Ranks 114 out of 190 on the World Bank’s Ease of Doing Business (2020).
Opportunities
The entrepreneurial ecosystem in Egypt has significant promise, especially as the government and other institutions continue to strengthen direct investments in opportunities for innovative and creative solutions to regional problems.
Underrepresentation of women in the workforce creates an opportunity to train and develop them as business leaders.
Accelerators aimed at women that are delivered in Arabic may gain traction more quickly than those delivered in other languages.
Cameroon
Key Demographics
Cameroon is a central African country located on the Gulf of Guinea, with an estimated population of 28.5 million people. The majority of Cameroonians live in urban areas (58%) located in the west and north.
The UN ranks Cameroon relatively low (141/189 countries) on gender equality. The Government of Cameroon recently enacted the National Gender Policy, a strategy and action plan to address gender inequality
Entrepreneurial Landscape
Cameroon has a diversified economy, with major industries like petroleum production (oil accounts for 40% of the country’s annual revenue), aluminum production, food processing, lumber and the service sector (consumer goods and textiles).
Cameroon is ranked extremely low in the World Bank’s Ease of Doing Business report at 167 out of 190. Less than 15% of Cameroonians have access to financial services, furthering challenges for entrepreneurs.
Cameroon has more than a dozen accelerators and tech hubs and is seeking to grow its startup community. ActivSpaces is the premier accelerator, focused on young tech entrepreneurs.
Opportunities
The new Cameroonian tax code, updated in January 2021, will now provide tax relief for startups in the Information and Communication Technology (ICT) industry, hoping to spur the growth of this sector.
Additionally, as of 2021, Cameroon improved access to credit information by establishing a framework through the Central African Economic and Monetary Community for the licensing and operation of credit bureaus. This aims to help Cameroonians get access to credit and increase the amount of money available in the economy.
Businesses and NGOs seeking to enable entrepreneurship - particularly businesses led by women - in Cameroon might consider partnering with existing hubs and accelerators, such as ActivSpaces, the top tech hub in the country, to identify mutual priorities and gaps to fill.
Ghana
Key Demographics
Ghana is a west African nation with an estimated population of 32.3 million people, with 57% of the population under the age of 25.
Most of the population resides in the southern part of the country along the coastline and in urban areas.
Gender equality is established in the Ghanaian constitution and the country has implemented a number of initiatives to work toward greater gender parity in education, government representation, and employment.
Entrepreneurial Landscape
Agriculture, mining, and energy are amongst the largest industries (by GDP) as a result of Ghana’s arable land and access to natural resources.
Pre-pandemic, Ghana was experiencing significant economic growth, with the IMF forecasting 8.8% growth in 2019.
In recent years, Ghana has implemented a number of reforms that enabled the country to improve its standing in the World Bank’s Ease of Doing Business rankings to 118 out of 190, outperforming sub-Saharan Africa in a number of key indicators.
There is a burgeoning technology sector in the country given its fast internet connection and high mobile phone penetration.
Ghana also boasts the third highest concentration of women business owners in the world according to the 2020 Mastercard Index of Women Entrepreneurs
Opportunities
The relative ease of doing business in the country coupled with government initiatives that support entrepreneurship has led to an emerging entrepreneurial ecosystem that has attracted the attention of major tech companies and venture capital firms.
With the devastating effects of the COVID-19 pandemic on Micro, Small & Medium Sized Enterprises (MSMEs) across the continent, particularly those led by women, Ghana was no exception. A majority of them operate in the informal and highly impacted sectors and without crucial business support, often find it difficult to move beyond micro level i.e. small, often informal operations. There’s an opportunity to create programs, policies, and support systems to empower Ghanaian women to strengthen their businesses and rebuild their livelihoods.
Empowering a Continent
The growth of Africa’s GDP has been strengthened by both investment and net exports since 2014 according to the African Economic Outlook 2020 report by the African Development Bank. Notably, says the report, it is the first time in a decade that investment expenditure (54 percent) explains more GDP growth than consumption expenditure (31 percent) in Africa.
This increased investment represents the great opportunities that lie in creating systems and businesses that uplift the people and economies of the continent. A crucial component of growth in Africa is the intentional empowerment of women who face systemic and cultural challenges in business. To paraphrase a well-worn saying, empowering a woman empowers an entire generation.