When women entrepreneurs succeed, their success creates a ripple effect that improves not only their lives—and those of their family members—but also their communities. In 2020, research by the World Bank revealed that across the globe, economies are losing $172 trillion as a result of the lifetime earnings disparities between women and men.
Identifying the factors that contribute to women’s success, understanding the challenges they face, and understanding how to remove their gender-based obstacles is in everyone’s best interest.
A good place to start is The Mastercard Index of Women’s Entrepreneurs (MIWE) 2020 Report, which provides an 82-page global analysis of women in business. It includes data from such institutions as UNESCO, World Bank, GEM, and the World Economic Forum. Close to 80% of the world’s female labor force is represented in the 58 various economies included in this year’s index.
We delved into the comprehensive report to share some of the key points.
The MIWE ranks economies based on how successful they are, compared to their peers, in advancing entrepreneurialism among women. The methodology includes 12 indicators and 25 sub-indicators covering Advancement Outcomes, Knowledge Assets & Financial Access, and Supporting Entrepreneurial Conditions.
For the first time in the MIWE’s history, Israel takes the top spot, leapfrogging from its 4th place ranking last year. The 1st place ranking results from Israel’s aggressive goal to double the number of women entrepreneurs in the country in the span of 2 years by focusing on startup funding and networking.
The United States, which took the top space in 2019, dropped to 2nd place. Although it was edged out by Israel, the US continues to be a leader in providing supportive entrepreneurial conditions and supporting the growth of women as business leaders. In addition, the rate of female entrepreneurial activity in the US grew from 10.7% in 2018 to 13.6% in 2019 to 16.6% in 2020.
Switzerland takes 3rd place in the rankings, up from 11th place last year. The country enjoyed strong gains in several areas of the index. For example, Support for SMEs increased by 37%, Cultural Perceptions of Entrepreneurs increased by 45%, and Women Entrepreneurial Activity Rate increased by 26%.
New Zealand, Poland, the United Kingdom, Canada, Sweden, Australia, and Spain round out the top 10. In 11th through 20th place: Thailand, Chinese Taipei, Ireland, Colombia, Hong Kong SAR, Philippines, Indonesia, France, Portugal, and Denmark.
While the top 34 economies scored in the 60s and 70s, 13 economies scored in the 50s, including Japan, the UAE, Italy, and Romania. In these economies, entrepreneurship activity is less about gender gaps and more likely to be attributed to employment, academic opportunities, and financial inclusion. In the countries ranked in the bottom 3 spots, Egypt, Algeria, and Bangladesh, women continue to face sociocultural, economic, and financial obstacles.
One interesting note: the economies of Uganda, Angola, Malawi, Ghana, and Botswana have the highest rates of business ownership by women (30% to 40%) despite such barriers as a lack of educational opportunities, personal wealth, and access to capital. This stands in stark contrast to wealthy economies like Japan and Saudi Arabia, where women are more likely to have equal access to education and financial services and yet still have dismal entrepreneurship rates.
When considering the factors that contribute to the advancement of entrepreneurship among women, greater support for SMEs and more positive sociocultural mindsets are 2 primary reasons. Positive cultural perception of entrepreneurship and the perception of good entrepreneurial opportunities are crucial in motivating women to take risks and pursue new opportunities.
On the other hand, the fear of failure/a lack of confidence is a primary factor stopping women from starting a business. A lack of funding is another cause, followed by a lack of motivation.
COVID-19’s Impact on Women in the Workforce
The effects of the pandemic on women entrepreneurs cannot be underestimated, as COVID-19 impacted businesses owned by women and men. In fact, 68% of the world labor force was impacted by the pandemic and subsequent economic downturn. And such containment measures as social distancing, partial and full lockdowns, and either recommended or mandatory workplace closures impacted 70% of the workforce in high-income economies, including the US, Switzerland, Singapore, and Israel, and 70% of the workforce in upper-middle-income economies.
Informal workers, who number 1.6 billion globally, are the most vulnerable. And in many low-income or developing economies, women comprise a significant portion of informal workers. For example, in hard-hit sectors in Central America, they make up 58.9%. Women workers are 48.5% of employees in hard-hit sectors in South East Asia, 45.8% in South Europe, and 45.5% in South America.
In comparison, in the US, Canada, and Columbia, women’s employment declined by a little over 16%. However, women accounted for almost 60% of terminated positions (compared to 40% of men) in just February and March of 2020.
Women also have the added burden of childcare when schools are closed. In addition, as they’re already on the negative side of the gender wage gap, a total loss of wages—or even a decline—could lead to poverty.
Pandemic Opportunities for Women Entrepreneurs
Women such as Chancellor Angela Merkel of Germany and Prime Minister Jacinda Ardern of New Zealand are examples of leading in difficult times. They serve as role models for women who may be fearful and lack the confidence to start a business right now, as well as those who are already business owners. Seeing these women lead countries through the worst crisis of our lifetime while exuding quiet intelligence, strength, and calmness helps to solidify the view of women as leaders who can successfully navigate pandemic-related obstacles.
And some women, having cultivated adaptability, are already making the necessary adjustments to succeed in the new normal. For example, 42% have switched to a digital business model, while 37% are developing a section of business that focuses on meeting local or global needs. In addition, 34% have identified new business opportunities.
There’s no doubt that women have the ability to be creative and innovative. However, this innovativeness can only thrive in a business landscape that not only supports but also drives innovation, in addition to actual policies that support business innovation. And this will require support from institutions, organizations, and governments to close the gender gap.