African women still earn lower profits than men

According to research by Statistics South Africa, nearly half (47%) of South African women are unemployed. This comes as would-be female employees have a tougher time finding work than men, thanks to the inequalities they face, including unequal pay and fewer leadership positions among others, while at the same time struggling to maintain a matriarchal role in society and family.

It is for reasons like these that African women often turn to self-employment by starting their own businesses. According to the World Economic Forum, women make up 58% of Africa's self-employed population and contribute around 13% of the continent's Gross domestic product GDP, with Sub-Saharan Africa in particular having the world’s highest rate of women involved in entrepreneurial activity at 26%.

Despite this, women continue to earn lower profits than men as a result of the imbalances between opportunities to scale, access to funding, and training between men and women-led businesses on the continent. The irony is that, if women-led Small Growing Businesses (SGBs) provide great investment opportunities, why do we not see more investors including female investors actively working towards closing the gender-lens investment gap? Investors are becoming increasingly interested in gender-lens investing, closing the gender gap and women’s empowerment.

The World Economic Forum revealed that 68.1% of the Global Gender Gap was closed in 2022, compared to 67.7% in 2021. Other improvements made to close the gender gap, can be seen more in the Western countries. The top three world's most gender-equal countries are Iceland, Finland and New Zealand.

To accelerate these gains and ensure that gender-lens investing becomes more than just a ‘nice-to-have’, it is critical that the ecosystem collaborates with policymakers who hold the regulatory power to unlock further gains for women entrepreneurs, as well as their communities who benefit tremendously from gender-lens investing. One way to alleviate poverty is to empower women economically, especially through entrepreneurial projects and financing that encourage women to engage themselves in entrepreneurial income-generating activities.

Sub-Saharan Africa has the highest rate of entrepreneurship in the world, with approximately 42 percent of the non-agricultural labour force classifieds as self-employed or employers. Yet most SGBs are unable to grow their businesses beyond small-scale subsistence operations, impeding their contribution to poverty reduction and shared prosperity. This is particularly so for women. This depends on us supporting the success of women entrepreneurs, through global network organizations such as the Aspen Network of Development Entrepreneurs South Africa (ANDE SA) .

This global effort is aimed at bringing experts together to move the needle on gender equality in entrepreneurship, providing funding to pilot projects in Asia and Africa to address the gender finance gap, helping build know-how among investors to incorporate gender into their business models, and looking at the intersection of gender and climate.

ANDE SA’s Chapter Head Sekai Chiwandamira says: “We must be cognisant of the fact that the battle of closing the gender gap is not as simple as it is made out to be. It is quite complex and governed by the ecosystem. If the ecosystem is conducive, and provides an enabling environment, then it becomes possible to address the gender gap.

However, if the ecosystem is highly fragmented, acting in silos and not embodying the principle of gender-lens investing, it becomes even more challenging to close the gap.” While there has been somewhat level of progress in bridging the financial gap, it requires a collective effort from the SGBs themselves, the ecosystem, government, investors and even corporates. Chiwandamira adds:

“If we truly want to change the status quo, we have to change the way we do things, and our attempt at encouraging financial inclusion for women is by rewarding investors and helping them prioritise pipeline opportunities and make gender-smart business decisions.” For Africa to achieve financial inclusion for women in the SGB sector, it requires a collective effort.

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