Women Entrepreneurship and Poverty
“We are not here only to demolish discrimination but to envision the benefits to the human race of integrating this forgotten half of humanity in development.” — Sirimavo Bandaranaike, Prime Minister of Sri Lanka
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In developing countries, gender inequality plays an integral role in women’s lives and has a lasting effect on the economy and poverty levels (Health Poverty Action, 2018). As stated by the World Bank, governments and initiatives globally have put out efforts to empower women by making them entrepreneurs. This has led the number of SMEs owned by at least one female to increase to about 8–10 million. Many of them had a positive influence on both the community and the economy by increasing the number of jobs available to citizens from underprivileged backgrounds. Empowering women through entrepreneurship does not only create a perennial impact on the welfare of women, but also on the welfare of society as a whole. This edition of Economix Review begins by discussing the barriers stopping women in developing countries from contributing to the workforce and how it worsens poverty levels. It then describes the role and importance of women entrepreneurship as well as the existing challenges in empowering future women entrepreneurs. Subsequently, it explores the role of governing institutions and the general public in supporting and progressing women entrepreneurship.
The Majority of the Poor are Women
Women have higher poverty rates than men in almost all societies (Casper et al., 1994). One prevalent reason for this is because single women are more likely to live with children than single men. For instance, in Central and South Asia, women represent two-thirds of the poor. Divorced mothers aged 24–35 are more likely to live with children whilst divorced fathers of the same age group are more likely to be living with their parents with no children. With more mouths to feed and bodies to provide for, the amount of income necessary for such households to escape poverty increases. Therefore, even if single men and women had equal earnings, more women than men would be in poverty on account of supporting children.
Despite being a significant driver of social mobility, over 130 million girls worldwide do not go to school and a whopping 15 million of them have never seen the inside of a classroom. The international education sector acknowledges three underlying issues causing this. Firstly, girls coming from a poor economic background are prone to child marriage as it is thought to be the best option, second, most schools do not have the facilities to support female-specific needs, lastly, girls do not feel safe at school due to the risk of sexual violence, harassment, and exploitation. In India, 40% of 15 to 18-year-old-girls do not attend school and almost 65% of them are engaged in household work. Due to these high levels, women only take up 25% of the labor force whilst the rest spend 85% of their time doing unpaid care work when they should ideally be in school. According to a report by McKinsey, empowering these girls to study and work can add $770 billion to the country’s GDP by 2025, allowing social mobility in the long run (Paddison, 2017).
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Alongside facing the lack of education, skills, and qualifications, women also have to deal with laws and regulations that restrict them from working in certain industries due to their gender. It is observed that this further prevents around 2.7 billion women from fully empowering themselves and causing them to do more unpaid work or work that has limited opportunities for progression. The World Bank states that 104 economies establish labor laws that restrict the job types women can undertake, as well as where and when they are allowed to work. In Russia, women are prohibited from doing transportation jobs like driving trains or piloting ships. Whilst in Kazakhstan, it is deemed inappropriate for women to cut, eviscerate, or skin cattle, pigs, or other ruminants, as a result, they are not permitted to undertake such jobs. Last but not least, in Moldova, women are not allowed to drive buses with more than 14 seats (The Economist, 2018). A great number of these laws date back as early as the colonial days and may not be relevant today. Nowadays, these laws lead to the loss of productivity and the prevention of social mobility. Thus, for these women, entrepreneurship can be the answer.
The Impact and Importance of Women Entrepreneurship For The Welfare of Developing Countries
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Women in developing countries must be empowered via the growth of entrepreneurship to contribute to the development of a creative economy. There are several important components in the empowerment of women, including the support of all stakeholders (government, private sector, NGOs, and PT) in carrying out gender-responsive poverty reduction programs, the availability of achievement motivation training to raise awareness of the importance of entrepreneurship development, the composition of women actors in businesses and local entrepreneurs as a medium for learning by doing, and the form that these programs take.
One of the most important goals of entrepreneurship education is to reduce discrimination and achieve gender equality. The concept of conventional education does not allow for the development of entrepreneurial education curriculum, the relationship of educational institutions with manufacturing and other organizations, and the relationship of educational institutions with other organizations. Indonesia has increased the number of schools from the New Order significantly. However, advances in educational quality and learning results have not kept pace with this enormous increase in access to school. The limited studies of elementary and secondary school student accomplishment undertaken during the New Order revealed that achievement levels were low, increased slowly if at all, and compared badly to other nations. In international standardised exams of student accomplishment, Indonesia’s performance from 1999 to 2015 suggests that little has changed in these areas following the fall of the New Order. In the most recent PISA (Program for International Student Assessment) iteration, 42% of Indonesian 15-year-olds failed to reach basic criteria in all three areas tested: reading, maths, and science. At the same time, as shown in Figure 6, Indonesia’s PISA, TIMSS (Trends in International Mathematics and Science), and PIRLS (Progress in International Reading Literacy Study) scores have remained relatively stable throughout time. This tendency has helped to solidify Indonesia’s position at the bottom of the list of nations examined in these exams, below neighboring Malaysia, Vietnam, and Thailand.
Traditional or domestic roles for women include those of spouses, mothers, and home administrators, among other things. In contrast, the transitional position involves an appreciation of women as workers, members of society, and contributors to human growth. Women in the transitional position of workers actively participate in economic activities (making a livelihood) in a variety of activities in line with their talents and education, as well as available occupations, throughout this period of transition.
Women’s engagement in Indonesian society now not only demands equality, but it also asserts that its function has significance for the development of Indonesian society. Many qualities are required of female entrepreneurs, including being creative, innovative, risk-takers, willing to change their ways, deft in their production, effective in their management, and productive in their operations. They must also be quick to make decisions, precise in their execution, and must be developed to address the shortcomings of the present educational system. Women must benefit from a multi-dimensional interaction between the notion of courses and communities based on entrepreneurial experience. As a result, creative education must provide a new dimension for the acquisition of entrepreneurial knowledge; active learning models can provide innovative personality development that results in the creation of something unique and the subsequent conversion of that uniqueness into entrepreneurial activity. Entrepreneurship is a desirable attribute in emerging countries since it helps to overcome the challenges of economic growth and development.
Worldwide, female entrepreneurship is underrepresented, and study into female entrepreneurship is much more underrepresented, particularly in Arab countries and developing countries. In Arabia, women’s entrepreneurship has its unique set of features and requires specific attention, in part because Arabs have their perspectives about women’s participation in commercial operations. Having received entrepreneurship training, women entrepreneurs report feeling more confident in their abilities to improve skills, discover and capitalize on business possibilities, collaborate effectively, and be more flexible in their decision-making.
Existing challenges in empowering future women entrepreneurs
Data released by the World Economic Forum recently showed that the gender gap in economic participation and opportunity index number has increased by 58% in 2021, along with a 95% gender gap in education that has been closed globally compared to last year. Attainment of this issue is supposed to accelerate the growth of women’s participation globally. Unfortunately, women face challenges from time to time, especially due to the COVID-19 pandemic. One of the main challenges was caused by gender segregation that has impacted several sectors, particularly jobs that required technical skills. This problem will lead to a condition in which people will have low salaries, fewer opportunities, and a higher unemployment rate that is known as the “scarring effect”.
However, in contrast to the situation in developing countries, women are forced to emphasize their leading role in the economy. According to the US Census Bureau in 2020, out of 11 million single families in the US, the majority of 80% of it was led by single mothers. This number is mostly caused by two main problems. Children being born to unwed mothers and a high divorce rate that results in a necessity for the mother to support her own family by herself as a response to her family’s economic survival. However, US government’s contribution to overcome the financial distribution for these women is still impacting a small range of numbers. For instance, today women usually receive fewer opportunities, as in food and education and this leads them as dependent individuals because they have less control by having fewer financial opportunities.
Worldwide organization offering help for each country to reorganize and create wider opportunities for women. In 2017, World Bank established We-fi (Women Entrepreneurs Finance Initiative) forum by giving financial support to unlock women-led/owned businesses (WSMEs) access globally. As an intergovernmental institution, UNDP also provides an establishment of Women Entrepreneurship Day (WED). Some projects that have been implemented both by we-fi and WED to mobilize women entrepreneurs are approaching countries with funding, livelihood assistance, and reskilling to remove barriers among women entrepreneurs. Furthermore, Middle east and North African countries promote policies on the financial sector and create a strategy to foster developments to seize entrepreneurs’ opportunities by creating OECD and conducting a CFE-supported activity focusing on SMEs innovation growth through the creation of internationally competitive SMEs of women entrepreneurs in developing countries. Thus, as we’re connecting a puzzle piece, government initiative and individual growth are both needed to minimize gaps and create a better picture of economic growth.
The Role of Governing Institutions in Dealing with Existing Challenges
Supporting or establishing programs that improve women’s entrepreneurial capacity can be done by policymakers to induce economic growth. Capacity-building programs such as workshops and mentoring programs have been proven to facilitate the profitability, growth, and survival of women-owned businesses (Innovations for Poverty Action, 2016). One example is the Gender and Entrepreneurship Together (GET Ahead) program that aims to help women in developing countries such as Kenya, Vietnam, and Algeria to address the barriers in running a business. A study done on the program found that it produced positive results within several business areas, including financial, managerial, product, and market outcomes. For instance, businesses that received training were 15 percent more profitable and 3 percent more likely to survive. Not only that, these female entrepreneurs were more likely to use managerial practices, create innovation within their products, and reinvest their profits within the business. One point to note is that the positive outcomes enjoyed by the women entrepreneurs that received training appeared to impose no negative effects towards non-participant firms, meaning that these efforts have made the overall market sales, profits, and customer base grow.
A study done on women’s entrepreneurship in the MENA region states that improving the regulatory framework is an integral part of realizing women’s entrepreneurial potential (OECD, 2016). Existing barriers such as high taxes, troublesome regulations, as well as social and cultural obstacles have made women reluctant to formalize their business operations and thus hinder its development in the future. Indonesia has made great strides regarding this by involving community leaders and relevant stakeholders. It is observed that for the sake of culture and ease, it is more common to register a business in the husband’s name, however, this will lead to losses in legal ownership in the event of a divorce. Hence, the government developed a program with the Asia Foundation with aims to reduce the burden of registration and reform the licensing process. It was well-received by various stakeholders including the leaders as well as the community and has been successful in encouraging women to register their businesses.
According to the OECD in the Public Procurement Forum for SMEs, public procurement, or the purchase of goods, services, and works by the government or state-owned enterprises, is a strategic tool that is used with SMEs to promote environmental and social outcomes. Public procurement programs help women enterprises open up to new markets and level themselves with larger established corporations, this further fuels economic growth by providing employment opportunities. In African countries, one factor contributing to the slow pace of SMEs is faulty public procurement practices (Fourie & Malan, 2020). It is not rare that corrupt politicians use public procurement as a tool to embezzle public funds and therefore resulting in features relevant to most African countries: widespread poverty, income inequality, high living cost, infrastructure decay, etc. With a sound public procurement practice, African countries are estimated to have less corruption, reduced wastage, ensured infrastructural development, enhanced effectiveness of government spending, and enhanced social welfare which will ultimately result in higher development levels.
What can Society as a Whole do to Support?
As we live in an era of globalization and technological advancement, it is critical to empower our women by assisting them in navigating the ever-changing landscape of technology. Science, technology, engineering, and mathematics disciplines (STEM) as well as digital literacy in school and early training programs are examples of approaches that might be used to achieve this objective. In September 2005, the United Nations recognized ICT as a tool to attract sustainable development as a response to the gender divide, in which women with not enough education are rarely able to gain detailed information as 70% of the world’s websites are in English. The enthusiasm over the growth of ICT has resulted in a number of initiatives to promote the use of ICT in development, including research, projects, workshops, and other. However, data obtained in most African countries, female Internet users are estimated as a percentage of total use of 25 per cent or less (United Nations, n.d.). This gap shows that ICT should be addressed more specifically as a powerful catalyst for political and social empowerment of women, and the promotion of gender equality.
Furthermore, companies should encourage diversity in their employment practices, organizational culture, and ideas. Increasing women’s participation in the workforce can also increase the number of women entrepreneurs in the long run. Unfortunately, due to the cultural perspective of one’s country or particular groups of individuals, women are still underrepresented in managerial jobs. For Instance, in Kazakhstan women account for no more than 19 percent of the managers (Burunciuc, 2018). According to the IMF, increasing women’s representation in the workforce and closing the gender gap could lead to a GDP increase by an average of 35%. Four fifths of these gains come from adding workers to the labor force, but fully one fifth of the gains are due to the gender diversity effect on productivity (Lagarde & Ostry, 2018). Leaders may be encouraged to treat diversity as a key business strategy, and to integrate diversity with other priority business drivers and personnel management methods, to achieve this.
Conclusion
Empowering women entrepreneurship through an adequate substance of support and access from external parties could help women earn contributions to society’s welfare. In this case, governments play a significant role in creating regulations and delivering entrepreneurship education to intensify women’s roles in business and entrepreneurship as well as improve economic growth. One thing to keep in mind, positive outcomes obtained by female entrepreneurs who receive training seem to have no detrimental consequences on non-participant enterprises, implying that these efforts succeed in increasing total market sales, profitability, and client base. Whilst the governing institutions are working on strategies to close gaps in inequality, members of society can be actors in creating increased opportunities for the community and enhancing the number of women entrepreneurs in society.
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