Gender andPrivate Sector Development

What can be done andWhat we don’t know

Francisco Campos, Africa Region Gender PracticeDIME FPD Workshop, Rio de Janeiro, 6-10 June 2011

Outline

• Female entrepreneurship: the case of Africa• Problems and potential explanations• Importance of specific constraints• What can be done?• What should we learn?

Female entrepreneurial participation is relatively high, particularly in Africa

52%

16%14%

28%

33%36%36%

21%17%

28%

36%

30%

Africa Middle East & North Africa

E. Europe and Central Asia

Latin America & Caribe

South Asia East Asia Pacific

Female Male

Source: Data from Hallward-Driemeier et al. (2011), Expanding Opportunities for Women in Sub-Saharan Africa, World Bank; Author’s calculations

Share of entrepreneurs within the non-farm labor force

Employers, 3%

No employees

outside HH, 97%

However, most of female-headed enterprises in Africa are smaller than male-owned

Employers within female entrepreneurs in Africa

Source: Data from Hallward-Driemeier et al. (2011), Expanding Opportunities for Women in Sub-Saharan Africa, World Bank; Author’s calculations

0.4

0.6

0.8

1.0

1.2

1.4

BDI BFA CIV CMR COMGHA GMB KEN MWI NER NGA RWA SLE SWZ UGA ZMB

Female Male

Relative size of enterprises(compared with mean size in sector)

Female-owned businesses are less productive than male-owned

Source: Data from Hallward-Driemeier et al. (2011), Expanding Opportunities for Women in Sub-Saharan Africa, World Bank;

3%

-4%

-5%

-6%

-8% -6% -4% -2% 0% 2% 4%

Gender gap in productivity

Gender gap accounting for sector

Gender gap accountingfor size of enterprise

Gender gap accountingfor sector, size and investment

Gender gap (female vs male) in productivity in Africa

*

**

** significant at 5% * significant at 10%

Women are more likely to have smaller informal enterprises and in traditional low value-added sectors.

When in similar conditions,women-headed businesses can perform as well as male.

Business constraints faced in particular by women-headed firms

1. Lower access to capital (finance and risk-sharing)2. Lower access to other financial services3. Less time to work – and to their business – due to

higher housework and care responsibilities4. More limited access to distribution networks5. Less likely to build managerial and financial

literacy skills

Source: Hallward-Driemeier (2011), Finscope SME Surveys, Brown and Haddad (1995), Berniell and Sanchez (2011), Morris et al. (2006), Grief (1993), Banerjee and Duflo (2000), Rauch (2007)

What can be done?

Evidence about what should be done in Africa, although growing, is still small. More impact evaluations will help address this knowledge gap.

Interventions that work for small scale enterprises will likely disproportionally help women-headed enterprises.

1. Access to capital

What can be done?• In-kind grants (Ghana)• Loans to top scorers of previously

rejected borrowers (South Africa)**

** significant at 5%

Source: Fafchamps et al.(2010), “When is capital enough to get female entrepreneurs growing? Evidence from a randomized experiment in Ghana”; Karlan and Zinman (2008); Banerjee et. al (2009); Karlan and Zinman (2010); Giné and Mansuri (2011); Berge et al. (2011)

Monthly return on capital of a grant for female entrepreneurs

in Ghana

But:- Cash grants worked better for male entrepreneurs- No effects of in-kind (and cash) grants for women at subsistence level

Example:

What do we need to learn?• How to efficiently screen

entrepreneurs• How to make microfinance effective

(India, Philippines)• How effective can large loans be in

improving productivity of female-headed firms (Pakistan)

• How can access to risk-sharing schemes help women enter new sectors

• How effective are government matching grant schemes

In-Kind Cash

24%

3%

2. Access to financial services

Example:

Effects on female self-employed of accessing a savings account in

Kenya40% 37%

Source: Dupas and Robinson (2009), “Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya”; Ashraf et al. (2008); Brune et al. (forthcoming)

But:- 40% of women in the treatment group didn’t make any transaction in the account within the first 6 months

What can be done?• Savings account (Kenya, being

replicated in other countries)• Better still – especially in agri-

businesses – commitment accounts (Philippines, Malawi)

What do we need to learn?• Does improving the knowledge about the

benefits of a bank account lead to improvement in businesses’ performance

• Or should we focus on reducing the costs of accessing these accounts

• How to effectively separate household and business money

• Effects of mobile banking and other tools to increase banking reach

** significant at 5%

***

* significant at 10%

3. Time available to business/work

Example:

Effects of access to free childcare on women’s employment in Brazil

Source: Barros et al. (2011), “The impact of access to free childcare on women’s labor market outcomes: Evidence from a randomized trial in low-income neighborhoods of Rio de Janeiro”; Heymann (2004); Attanasio and Vera-Hernandez (2004); Ilahi and Grimard (2001)

But:- Increase in monthly HH income due to mother’s employment was well below the monthly cost of the service per child

What can be done?• Childcare? (Brazil)

What do we need to learn?• Is improving the returns of business

activities – and letting women know about it – enough

• Does improving infrastructure services such as water allow for increased commitment to business activities

• Do flexible working arrangements helpTreatment Control

46%

36%

**

** significant at 5%

4. Access to distribution networks

What can be done?• Limited evidence on what can be done by gender of the

entrepreneurs

What do we need to learn?• Do linkage programs work

• Can we overcome (gender) discrimination by improving information

• Can co-operation between suppliers (co-operatives, etc) be effective in expanding their market access

5. Access to management / financial literacy skills

Example:

Effects on profits of business training for existing female-owned

firmsin Sri Lanka

Source: Mel et al. (2011), Business Training and Female Enterprise Start-up and Growth in Sri Lanka; Bloom et al. (2009); Karlan and Valdivia (2010); Cole et al. (2009); Drexler et al. (2011); Giné and Mansuri (2011); Berge et al. (2011)

But:- Effects of additional value of cash grants do not seem to materialize for women interested in starting enterprises

What can be done?• Management training for medium level

enterprises (India)• Rule-of-thumb training (Dominican

Republic)

What do we need to learn?

• What type of skills are constraining business development given the limited effects of general interventions to upgrade business and financial knowledge of entrepreneurs (Peru, Indonesia, Dominican Republic, Pakistan)?

• What characteristics of training programs are successful in upgrading female-headed businesses?

Training only Training & cash

-4%

56%

** significant at 5%

**

Take-aways

With impact evaluations, we can learn how to address a number of these challenges that women seem to face while growing their businesses.

By comparing two or more interventions within an impact evaluation study, we are able to rank the importance of specific constraints.

But to separate the effects by gender of the business owner, we need large samples.

Gender andPrivate Sector Development

What can be done andWhat we don’t know

Francisco Campos, Africa Region Gender PracticeDIME FPD Workshop, Rio de Janeiro, 6-10 June 2011