Review: Women’s Entrepreneurship Development in Ethiopia

Women’s entrepreneurship development is important for the achievement of broader development objectives such as growth with equity. Studies indicate that in Africa, many women entrepreneurs are found working in difficult situations when compared to their male counterparts. Factors like political instability, poor infrastructure, high production costs, and non-conducive business environment affect more women entrepreneurs than men in the said region. Limited access to key resources like land and credit, legal and the socio-cultural environment also act as serious impediments. In the era of globalisation changing patterns of trade and evolving technologies necessitates skill enhancement that many women entrepreneurs in the continent are yet to possess. This paper discusses the role women entrepreneurs in Africa. In this piece we present a brief scenario of the women entrepreneurs in Ethiopia and the role of the state in this case.

The International Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) while making it obligatory for the governments to emphasise the role of women in development programmes and on strategies for eliminating discriminatory practices against women it also raised awareness on how this could be done. It was then the questions of equity in access to education and other resources became of part of larger debate and the recognition of women as economic agents also gathered momentum. The Beijing Platform of Action, adopted in September 1995, led to the adoption of National Gender Policies thus laying the thrust on mechanisms to ensure that women and men had the same rights, obligations and opportunities in all areas of life, including economic activity. Yet, we find that in the poor and developing economies there seems to be little change in the overall condition of women. They face gender-based barriers in society as well as in their households. They function within male-dominated, patriarchal, and tradition-oriented societies where socio-cultural dynamics determine the status of women and their differential participation in the public sphere. Dependency on male relatives, male-based policies and male-dominated markets are among the women specific barriers to enterprise development. Studies indicate that in the developing countries, a higher percentage of women are often found engaged in informal enterprises and so it becomes important to strengthen and legitimatise their activity and ensure equal opportunity as men. Even in cases where gender equality policies exist, enforcement of these policies is weak and cultural practices often prevail.

Ethiopia is such an economy which became a democracy in 1994 after several years of socialist regime. Ethiopia adopted its first micro and small enterprise development strategy in 1997. Although the lack of comprehensive and up-to-date national statistics on the micro and small enterprises (MSE) sector makes it very difficult to make precise estimates, the share of women in is reported to be approximately 65 per cent in Ethiopia (1997 estimates). However, the vast majority of women’s enterprises employ only the owner, and very few fall into the small and medium-sized categories. Most women owned enterprises start at the micro-level and do not grow beyond five employees, if they grow at all. This is true for the MSE sector in general, but is even more evident among women-owned enterprises This also indicates the lack of financial support available to enable women entrepreneurs to grow beyond the informal and micro level of enterprises, to become small and medium enterprises.

A woman entrepreneur in the African context is the image of a poor, uneducated woman, with few if any of her own assets, and limited means of accessing necessary resources from others. Women with medium and large enterprises are more likely to have grown up in an entrepreneurial family; to be university educated (often abroad) and travelled; have experience working in a large corporation or a previous venture and ahs a better networking capacity.  Further, women-owned MSEs report a low level of awareness of micro-finance and other financing options. In Ethiopia, there are a number of micro-finance points of service, but over 90 per cent of loan activity is done in rural areas (with a large emphasis on the agricultural sector); Women’s share of micro-finance is 38 per cent in Ethiopia (where women are estimated to own two-thirds of the informal and micro-enterprises). It is pointed out that women have reported that the ceiling on micro-finance loans is too low to be of much value when they want to do more than operate at a subsistence level. In fact, many women entrepreneurs indicate that low micro-finance ceilings, coupled with the lack of availability of any sources of financing to bridge the gap to conventional bank financing, is a major impediment to the growth potential of their enterprises.

Ethiopia also suffers from a lack of systematic data and research on the state of women as well as a lack of information on support initiatives targeting women’s enterprise development. However, “fact sheets” and reports outlines the contributions of women-owned MSEs to the economy and also signals the problems faced by the women engaged in this sector.

Attention to gender equality issues in the Ethiopian Government is seen in the event of a National Policy on Ethiopian Women in 1993, with the aim of eliminating gender and cultural bias that hinders women from participating equally in the economic and social development of the country, and to guarantee women their human and democratic rights. To implement the policy, the Government of Ethiopia established a Women’s Affairs Department in all government organizations at the department level. The role of these Women’s Affairs Departments, among other things, is to create favourable conditions for effective implementation of the policies relating to women’s affairs as issued by the government organizations, and to assess whether policies, programmes, and development plans have given due consideration to safeguard the benefits to women.

Although MSEs are acknowledged as being important to the economic development ofthe country, most small-scale entrepreneurs start their enterprises out of necessity and in case they get alternative employment they are ready to give up their role as an entrepreneur for job security. Thus, on one hand there is a need to promote entrepreneurship among women and on the other create an environment which makes enterprenuership a viable and attractive employment for all.  Towards this the MoTI-WAD has announced the “Month of the Woman Entrepreneur” in Ethiopia, plans to work in the required direction.

 A good practice in compiling relevant MSE information is the Ethiopian Business Development Network CD-ROM (info@bdsethiopia.net), the combined output of 27 network members, including public and private sector organizations. The CD-ROM includes a sub-portal on women in business. However, most women-owned MSEs in Ethiopia do not have ready access to a computer or the Internet. Networks and networking are very important in entrepreneurship development. Good practices do exist in the organization and development of WEAs. For example, the Amhara Women Entrepreneurs’ Association is advocating for their members in the Amhara region of Ethiopia and assisting them in obtaining plots of land for their business premises.

Lack of available business premises is reported by women entrepreneurs as one of the top barriers to the growth of their enterprises.

In order to pursue growth, women entrepreneurs need to be able to easily register and/or license their enterprises. In the past, this has been an expensive and cumbersome process for all MSEs. Women have been doubly disadvantaged because of lack of information, knowledge, confidence and financial resources. The situation is improving – governments in Ethiopia have made considerable progress in simplifying the business registration process.

Yet, the women entrepreneurs in the African countries face numerous barriers that prevent them from realizing the full potential of the economic contributions of their enterprises. As they are unable to accumulate titled assets that can be offered as collateral security for loans, the scale and growth of their enterprises will be adversely affected.

Source: Support for Growth-oriented Women Entrepreneurs in Ethiopia, Kenya and Tanzania Geneva, International Labour Office, 2005