A new report by the United Nations Economic Commission for Africa (ECA) on women entrepreneurship, has found that educational attainment gaps limit the success of women-owned businesses in Africa.

The report also offers potential solutions to tackle the imbalance.

The report, titled 'Women’s Entrepreneurship Report: Education and Finance for Successful Entrepreneurship in Africa' was released on January 21, and is the first such commissioned for the region.

It studies data from tens of thousands of African entrepreneurs and firms to establish links between education, access to finance and improved productivity.

First, the report reveals that education is a critical factor for productive female entrepreneurship in Africa. For instance, women with primary education or less are 27 times more likely to have started a business by necessity than those with higher attainment driven by opportunity.

“Necessity-driven entrepreneurs lack productive and innovative activities which could transform their businesses. In comparison, opportunity-motivated entrepreneurs are more likely to operate in profitable sectors and are expected to add about 17 more jobs in the next five years,” the report states.

Second, increasing women’s educational attainment can improve their ability to own a bank account and save for business. According to the report, women with secondary education are 51 times more likely to have a bank account and 22 times more likely to save than those with lower attainment.

Findings from the report also show a positive link between access to finance and women’s business practices and performance. Firms with credit innovate more, buy more assets and borrow more from banks than those that are financially constrained.

Commenting on the topic, ECA gender, poverty and social policy division director Thokozile Ruzvidzo notes that “women’s entrepreneurship is recognised as the biggest yet underutilised opportunity for sustained economic growth and social development”.

“While Africa leads the world in terms of the number of female entrepreneurs, they largely start a business by necessity, tend to be smaller and face more barriers in securing support and investment,” she adds.

The report examines the factors behind this and identifies evidence-based recommendations, which will guide governments in crafting conducive policies so that all women have adequate education, skills and resources to run, grow and sustain lucrative businesses.

“Successful female entrepreneurship is not only a catalyst for women’s economic empowerment and regional self-sufficiency but is also essential to recover from the economic impacts of Covid-19,” Ruzvidzo comments.

The report recommends that African countries focus on increasing women’s education beyond primary schooling and enforcing laws to remove barriers to education such as early marriage and pregnancy.

It also proposes market-specific vocational education, soft and hard skills training and mentorship opportunities which prepare young women for opportunity-driven and high-value entrepreneurship.

Regarding access to credit, the report urges governments to regulate gender-sensitive financial products, including digital solutions, which cater to the constraints faced by women entrepreneurs, especially those at the bottom of value chains.

It further outlines special incentives and commitment plans to boost and bring savings of women entrepreneurs to a formal economy, which can instill a habit of regular contributions. For instance, shifting from rotating saving clubs towards village-level savings and loan associations can help rural women access loans and earn interest.

The report identifies a critical need to bring insurance products to protect women-owned businesses in rural areas that are more vulnerable to climate and health crises.

Finally, it encourages countries to enact legal provisions to prohibit creditors and cultural practices from discriminating against women in accessing credit, property or inheritance.