Boosting female entrepreneurship North Africa hinges on enhanced use of digital technologies and access to finance
In March, the ECA Office in North Africa and the Association of Women Entrepreneurs of Morocco (AFEM) held a webinar on “Female entrepreneurship in North Africa: the role of finance and digital skills.” This was the first in the series of policy dialogues towards fostering productive female entrepreneurship in North Africa that the Office will organize in 2023, with the next webinar set for June 7th.
Participants underscored the need to seize new opportunities for encouraging female entrepreneurship to ensure inclusive and resilient crisis recovery in North Africa. One such area is the accelerated digitalization that the Covid-19 pandemic brought about. It underscored the importance of digital skills for women’s effective production, marketing and management as well as for use of digital finance and e-commerce.
The webinar emphasized that given the wide spectrum of constraints that women entrepreneurs face, policymakers, financial sector institutions and development partners need to adopt a multiple-pronged approach to address them. A conducive business environment is important, including stable macroeconomic conditions with monetary policy allowing for adequate supply of credit to the private sector.
In addition, all stakeholders should join forces to accelerate the shift in mindsets about the so far underutilized contributions of North African women to the formal economy. Women’s paid work (often informal and less paid than men’s), and female-led firms (mostly micro and small enterprises in services) have been hit particularly hard by the multiple crises that have affected North Africa since 2019. This has led to a rise in female unemployment, exceeding 20% in Algeria, Egypt, Libya and Tunisia, and averaging 23.4% for the North Africa region in 2022, up from 20.8% in 2019.
North Africa’s middle-income countries have a low female entrepreneurship rate
According to the Global Entrepreneurship Monitor, despite a high prevalence of entrepreneurial intentions, only about 6% of adult female population (ages 18 -64) in Egypt and Morocco were either starting or operating new firms in 2021. This is less than in most other middle-income countries (MICs), but it also reflects that North African MICs have some of the lowest female participation rates in the labour force globally.
One possibility of encouraging female entrepreneurship is promoting family firms. “Our analysis shows that in North African MICs, family enterprises are a particularly promising avenue for bringing more women into the labour market” said Zuzana Brixiova Schwidrowski, Director of the ECA’ North Africa Office. “These enterprises warrant policymakers’ support, which should be supplemented by childcare infrastructure in support of women balancing household and work responsibilities”.
Bringing more women in North African MICs into the labour force is also a key tool for mitigating emerging demographic trends. “We are underestimating how fast North Africa is aging. By 2050, the majority of the population in North Africa will be aged 64 and more. Against the rising old-age dependency ratio, women’s contribution to the economy is going to be critical,” said Senior World Bank Economist Helena Bardasi.
Access to finance is a longstanding key obstacle for female entrepreneurs in North Africa. The subregion’s 18 percentage point gender gap (the largest in the world) limits the growth of women-led businesses and confines them to the informal sector. Moreover, most female entrepreneurs rely on their or family savings rather than borrowing as their main source of capital. While the lack of financial and digital education as well as soft skills contributes, legal constraints also limit women’s borrowing options especially when collateral is required. Other constraints are the traditional gender roles, family duties and limited mobility due to safety concerns.
Changing laws and mindsets will require a set of complementary interventions
“There is no silver bullet”, said H. Bardasi, who explained that governments need to create an enabling environment for female entrepreneurship to reach their potential. Actions would include, for example, introducing regulations that facilitate women’s access to property or amending the requirements imposed in terms of guarantees to secure loans. To ease social constraints such as women’s traditional roles, there will be a need for both top-down and bottom-up approaches to change and opinion leaders and men will have to be included in the conversation to change mentalities.
In her first presentation of the preliminary results of the upcoming, joint ECA-Oxford Economics Africa report on gender-lens investment, Calle Davis, an economist at Oxford Economics Africa, focused on improving access to financing by women-led SMEs and establishing a more gendered entrepreneurship ecosystems.
The AFEM President Leila Doukkali underscored that while availability of funding is a frequently mentioned issue, how female entrepreneurs apply for it is also a part of the challenge. Insufficient financial education is also an obstacle to female entrepreneurship. The reality on the ground is that the changes we are seeking require financial and digital training, she explained.
AFEM vice-president for digital transformation Souad Tarmidi elaborated that digital technologies give women an opportunity to utilize online trade networks. She insisted that ICT training for women needs to be tailored to their needs, and away from stereotypes that surround women in relation to these technologies.
This help should also translate into additional support and mentorship for female owned businesses, whose exit rates in the region are higher than of those run by men, said Ihssane Iraqui a Women in Business Manager at the EBRD offices in Morocco who currently also prepares with the North Africa office a series of EBRD-ECA training workshops for women entrepreneurs.
The webinar on “Female entrepreneurship in North Africa: the role of finance and digital skills” took place on International Women’s Day and as part of the preparations for the 55th Conference of African Ministers of Finance, Planning and Economic Development of the Economic Commission for Africa (COM2023) scheduled in Addis Ababa (Ethiopia) on 15-21 March 2023 under the theme: “Fostering recovery and transformation in Africa to reduce inequalities and vulnerabilities.”
The next webinar on productive female entrepreneurship will take place on June 7, 2023.
Connect to the Economic Commission for Africa YouTube channel to watch the whole webinar on Female entrepreneurship in North Africa: the role of finance and digital skills