In several developing countries, social institutions perpetuate a cycle of invisibility among women across spheres such as the workforce, education, and healthcare.
Cultural complexities hindering gender inclusion in developing countries
At the hands of archaic and regressive practices, women are married off at 12-15 years of age or are made to drop out of school. In Sudan, for instance, parents might even not send their girls to school which shows that factors such as cultural and religious beliefs come in the way of opportunities for women and adolescent girls. Especially in the South Asian region, which charts the highest in gender-based discrimination, these social institutions perpetuate absenteeism of women across middle and low-income countries from contributing to economic growth. The inability for South Asian countries to include women in their economic ambitions is impeding women from achieving their full potential, and as a result hampers further economic growth.
A case for women entrepreneurship – a key lever for economic growth of developing nations
It is no secret that women’s economic participation is a crucial prerequisite for empowerment while also facilitating a nation’s growth. Women make enormous contributions to the economy and society through businesses, farms, or unpaid care work. Encouraging women to take up entrepreneurship has a cascading result in propelling employment as women create more than 150-170 million job opportunities which catalyzes growth. Moreover, a study by Boston Consulting Group indicates that equal participation by men and women as entrepreneurs could accelerate a rise in GDP by ~3 per cent to 6 per cent, boosting the global economy by $2.5 -5 trillion.
In this context, entrepreneurship not only empowers women but also propels developing countries along the indices of human development. The correlation between women entrepreneurship and its effects on economic growth are more noticeable in developing countries such as India, Nigeria, Tanzania, Bangladesh, etc. as compared to the USA, UK, and Scandinavian countries.
Despite that, the growth trajectory of developing economies is hamstrung by the lack of an enabling ecosystem for women entrepreneurs. Gender norms, exclusionary practices, lack of capital ownership, etc. continue to deter women from setting up and scaling businesses. Throughout Sub-Saharan Africa, women are disproportionately affected in their land ownership and transfer rights and in India, there are only 14 per cent women-led enterprises.
Access to financial capital, harnessing a risk-taking ability, deterrents in women taking expert counsel, etc., challenge a developing country’s economic potential. Data from the World Bank’s ‘Doing Business’ project reveals that the average cost of the official fees and necessary legal services for women to start a business in Sub-Saharan Africa is 36.3 per cent income per capita, as compared to a much lower 3 per cent for entrepreneurs in OECD. The report also finds that India stands at the 63rd rank on the Ease of Doing Business Index, lower than that of Rwanda (38th) and Kenya (56th). Since women’s access to resources and capital is still limited and dependent on permission from male family members, their entrepreneurial abilities are left unrealized.
Bridging policy and practice to propel female economic contribution
Even though documented start-up policies exist at central and state government levels, they have had limited impact on creating more opportunities for women entrepreneurs and ensuring development of their enterprises. It will take sustained investment in capacity building, mentoring and behaviour change over a long-term horizon to bridge the gender gap. Equally important is to prioritise investments equitably across innovative start-ups and small and medium enterprises.
Since women have limited access to credit and other financial instruments, there is a dire need for multi-stakeholder participation to garner resources that create innovative financing solutions. Collaborations to bridge the existing information asymmetry will enable more women entrepreneurs to benefit from the entitled government schemes. This, in turn, will have a telling effect on breaking the cycles of poverty and immobility.
Strengthening the policy landscape to create implementation-centric regulations that help the woman entrepreneur also needs to be a key priority of developing nations. This calls for consistent involvement of last-mile practitioners and private stakeholders in the process. Budgetary spending on gender mainstreaming activities and policies has become a recognizable tool to create gender parity, especially among low-income countries.
Policy changes coupled with the inclusion of women entrepreneurs in incubation programs is crucial for their economic empowerment. Concerted efforts to make the entrepreneurship ecosystem more inclusive involve applying a gender lens to how incubators and investors are set up, right from the advisory board to the portfolio teams and investment committees. Attempts to galvanize inclusive entrepreneurship ecosystems beyond established start-up hubs should also be considered. Collaborating with international donor agencies to augment capacity building and create scalable programs is a step in the right direction. Corporate social responsibility initiatives can also help create templates that governments can scale up to implement solutions.
Way forward
Entrepreneurship is a compelling tool for women to be seen, heard, and achieve agency, especially in developing economies. With progressive policy reforms, institutional support, and the mobilization of diverse stakeholders, developing countries can leverage their growth potential and perform better in human development indices. Thus, creating a discourse around entrepreneurship is a key lever for economic growth and can aid developing countries better their ecosystems, while also boosting women’s participation in economies.
The article is co-authored by Ullas Marar, Technical Advisor, Women Economic Empowerment, GIZ
and Ananya Nanda, Consultant ESG. Views are personal.
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