By Amanda Elam, Aileen Ionescu-Somers and Wendy Teleki
You may believe that the worst impacts of the COVID-19 pandemic are behind us. This is true for many countries, mostly developed economies. For the less fortunate, though, the impacts are enduring.
Women entrepreneurs in emerging economies represent some of the most vulnerable entrepreneurs globally. Many faced exceedingly difficult business impacts during the COVID-19 pandemic which could have been – and could still be – addressed through policy action.
We know that business disruption will inevitably take place again, whether related to another pandemic, the impacts of climate change, political or other global unforeseen circumstances. Entrepreneurship is increasingly seen as an important contribution to resilient and healthy societies, and women entrepreneurs are especially important for growth in emerging economies. Findings from the Global Entrepreneurship Monitor (GEM), a consortium of national teams that carries out survey-based research on business startup activity around the world, show that women business owners in emerging economies faced significant challenges during the pandemic, triggering fears of insurmountable setbacks in progress towards gender equality. At the same time, women remain some of the most optimistic and resilient entrepreneurs on the planet and are particularly motivated by a desire to contribute to a better world.
So much is at stake. Estimates suggest that a sustained and concerted effort to help women start and grow businesses at the same rates as men could boost the global economy by over $2 trillion dollars, according to projections from the Boston Consulting Group and Citibank. A new policy report from GEM and the Women Entrepreneurs Finance Initiative (We-Fi) notes a model that could add $5 to 6 trillion of new GVA (gross value added) to the world economy. These studies all underscore that more support for women entrepreneurs is fundamental to driving economic growth.
This new policy brief, Women Entrepreneurs in Emerging Economies: Lessons on Segmentation and Care Needs from the 2019-2021 Pandemic, explores how the pandemic impacts have persisted for women entrepreneurs in emerging countries with a particular focus on four economies in the low income countries studied between 2019-21: Egypt, India, Iran and Morocco (participated in the GEM survey in each of the three years). The goal of this focused study is to inspire new and innovative approaches to supporting women entrepreneurs in emerging economies.
Key Findings
Startup rates for women in lower income countries dropped by over half from 2019 to 2020, only partially recovering in 2021. Business closure rates rose by about 25% for women in lower income countries and remained high from 2019 to 2021. However, in 2021, women in lower income countries were close to parity with men with about one in five reporting business closures due to the pandemic. Importantly, while men in lower income countries experienced a doubling in business closure rates, women in lower income countries showed the highest business exit to entry ratios across all groups in 2020.
Entrepreneurial intentions were high for women in lower income countries in 2021. Women business owners, both early-stage and established (in business for more than 42 months), reported the highest rates of seeing new business opportunities as a result of the pandemic and the highest rates of adopting new digital tools during the pandemic. Women in lower income countries also reported the pandemic’s devastating impacts on their businesses and family demands. Notably, these impacts varied in important ways across industry sectors, business stages and cultural contexts.
Recommendations
Policymakers, program leaders and researchers can take pragmatic actions to support the recovery and growth of women-owned businesses in their communities and prepare them for future disruptions.
1. Address family care needs for new/small business owners.
It remains a fact that – almost everywhere on the planet – women carry a disproportionate amount of responsibility to address family care needs during times of crisis. This presents an extra layer of stress and business disruption for women entrepreneurs – particularly in developing economies that lack safety nets – during national crises. To maintain economies that are as healthy as possible post-crisis, and also not lose ground on gender equity, public policy should always consider the impact of family demands on new/small business owners, especially in times of crisis. Currently, family context measures are almost completely absent from most major datasets collected for the study of business start up and growth. Both researchers and policymakers can ensure the availability of higher quality sex-disaggregated entrepreneurship and business data by including measures related to family demands.
2. Understand the specific needs of women business owners.
GEM research reveals that women tend to start and grow different types of businesses from men. Indeed, these businesses are primarily in service sectors such as health, education and retail, which were all significantly affected by the pandemic across the globe. However, these negative impacts are still lingering in emerging economies that offered less opportunity and financing to switch to digitized technical solutions (online retailing potential, for example). Tailoring programming for different segments of women entrepreneurs, such as by industry sector, market focus, business stage and sociodemographic group, may better address the specific challenges that women face in starting and growing their businesses.
For example, improvements in the access to and quality of growth funding is sorely needed in sectors where women are highly active, while women opting to create businesses in male-dominated sectors need extra support to overcome negative stereotypes too often triggered in highly masculinized cultural contexts. Sex-disaggregated data is needed to identify gaps in financing and inform the type of entrepreneurship training, policy and programming needed for women entrepreneurs. This is particularly critical for emerging economies where these types of data sets are extremely limited.
3. Provide more cultural support and access to business networks for women entrepreneurs.
Negative stereotyping means that women business owners often face barriers to access business networks, financial service providers and investors that support businesses beyond the microfinance or seed stage of development. Programs that pair women entrepreneurs with peer networks, coaches and mentors are powerful ways of supporting women entrepreneurs to access resources, advance their businesses and achieve their greatest aspirations. Involving influential men as allies and supporters of women’s business networks is also key to preparing women to succeed in the marketplace.
4. Support equal access and affordability of digitization for women entrepreneurs.
Whether driven by men or women, digitization can be especially challenging for small businesses with limited budgets and bandwidths, but this is particularly true of emerging economies. However, women in developing contexts face additional challenges in access to the internet via mobile phones and other infrastructure necessary to support the use of digital tools. Policymakers and program leaders can build on the imperative that pushed so many women business owners to adopt digital tools. One such way would be offering training programs to enable women to use digital skills more successfully, thus growing their markets, accessing growth financing and reaping operational efficiencies.
Amanda Elam is a Global Entrepreneurship Monitor researcher and co-author of the report “Women Entrepreneurs in Emerging Economies: Lessons on Segmentation and Care Needs from the Pandemic 2019-2021”, developed in partnership with the Women Entrepreneurs Finance Initiative (We-Fi), a global partnership housed in the World Bank. Aileen Ionescu-Somers is the Executive Director of Global Entrepreneurship Monitor. Wendy Teleki is Head of the We-Fi Secretariat.
Watch the webinar recording in which we explore the key takeaways from this policy brief.