Abstract
Limited access to finance remains one of the major barriers for womenentrepreneurs in Africa. This paper presents a model of start-ups in which firms’ salesand profits depend on their productivity and access to credit. However, due to the lackof collateral assets such as land, female entrepreneurs have more constrained access tocredit than do men. Testing the model on data from the World Bank Enterprise Surveys inEswatini, Lesotho, and Zimbabwe, we find land ownership to be important for femaleentrepreneurial performance in terms of sales levels. These results suggest that thesmall Southern African economies would benefit from removing obstacles to female landtenure and enabling financial institutions to lend against movable collateral. Althoughland ownership is linked with higher sales levels, it is less critical for sales growthand innovation where access to short term loans for working capital seems to bekey.
Highlights
Productive entrepreneurship and small, medium, and micro enterprises (SMMEs) can provide an essential possible source of growth and jobs for women outside of subsistence agriculture and the public sector in Sub-Saharan African economies (Amin 2010; Hallward-Driemeier 2013; Brixiová and Kangoye 2016)
International Monetary Fund research shows that the average annual GDP per capita growth in Sub-Saharan Africa (SSA) could be up to 0.9 percentage points higher if income and gender inequality were reduced to the levels observed in the fast-growing Southeast Asian economies (Hakura et al 2016)
We examined the role of gender and asset ownership by including in the econometric model the gender of the owner, as well as an indication of whether or not s/he owned the land occupied by the business, which we assumed could serve as collateral for the loans
Summary
Productive entrepreneurship and small, medium, and micro enterprises (SMMEs) can provide an essential possible source of growth and jobs for women outside of subsistence agriculture and the public sector in Sub-Saharan African economies (Amin 2010; Hallward-Driemeier 2013; Brixiová and Kangoye 2016). We defined entrepreneurs as owners of micro or small firms (with 10 people or less), since in such firms the owners are either the managers or work closely with them Against this background, the paper contributed to the literature on links between gender gaps in land ownership, access to finance and entrepreneurial performance in three Southern African economies: Eswatini, Lesotho, and Zimbabwe.. While women-owned firms were less likely than firms owned by men to fund their activities with credit from formal sources, including through an overdraft facility, those that were part of a larger firm recorded better sales performance With this analysis of the firm’s business linkages, our research contributes to the literature on the role of social and professional networks in the performance of women-run firms (Brixiová and Kangoye 2019; Renzulli et al 2000).
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