Vulnerability and young women entrepreneurs: a case study of the Ethiopian informal economy Hopolang Phororo and Sher Verick ILO Regulating for Decent Work Geneva, July 8 10, 2009
Motivation Youth in developing countries face many barriers to finding decent jobs One response has been to promote entrepreneurship to create sustainable livelihoods Youth lack the skills and access to finance to become an entrepreneur Interventions have focused on these elements and are typically gender blind We argue you need to go beyond these issues
Motivation Young women face greater constraints Cultural/societal attitudes about women in business At the same time, they are also Vulnerable to harassment, violence, HIV/AIDS Balancing family and work responsibilities Mostly operating in the informal economy and hence lack social protection
Aim of this paper Provide insights into the challenges facing young women to become entrepreneurs in a broader context Draw on the findings from a small survey done of young women entrepreneurs in the Ethiopian informal economy What is novel about this paper?
Outline 1. Background on youth entrepreneurship 2. A survey of young women entrepreneurs in Ethiopia 3. Main messages and policy implications
A definition of entrepreneurship A broader behavioural concept that includes the process of creating value, innovating, and taking risk that has both economic and potentially social benefit, which goes beyond just self employment Context is important informal economy
Constraints to youth entrepreneurship Youth entrepreneurship constrained by: 1. Lack of access to finance 2. Poor access to entrepreneurship education and training (TVET) 3. Burdensome administrative and regulatory frameworks 4. Barriers to access markets and technology 5. Inadequate business assistance and support 6. Other social and cultural factors Gender intersects with age resulting in greater impediments to entrepreneurship
Constraints to youth entrepreneurship: a gender perspective 1. Lack of access to finance Lack collateral and are discriminated against by lenders 2. Poor access to entrepreneurship education Lower access to education & training and are discouraged from studying technical, business oriented subjects 3. Burdensome administrative & regulatory frameworks Lack property rights and access to information on administrative and regulatory issues Vulnerable to harassment & sexual exploitation
Constraints to youth entrepreneurship: a gender perspective 4. Barriers to access markets and technology Saturated markets Inadequate marketing skills Family constraints on travelling 5. Inadequate business assistance and support services Services are often gender blind Lack role models 6. Other social and cultural factors Business career path is not seen as an appropriate option Family duties Low self esteem and risk aversion
A survey of young women entrepreneurs in Ethiopia Addis Ababa, Ethiopia Sample consisted of 40 young women and 10 young men (aged 15 29) A structured interview was based on a questionnaire Not statistically representative!
General characteristics Most YW are street traders (60%) and small shop owners (40%) selling food, textiles and handicrafts, telephone and secretarial services 3/4 are unlicensed and nearly all had no employees Low levels of education The majority were forced to drop out of school to search for a job to support their family, get married or for cultural reasons
Establishing the business Most had started in the last 3 years, motivated by necessity (lack of other employment opportunities), though some YW mentioned profit/income opportunities Key constraints to setting up Lack of credit, scarcity of property, poor infrastructure (water, sanitation, transport)
Establishing the business 2/3 of respondents got start up capital from families/friends in a form of a gift or loan Men could rely more on personal savings but less on microfinance Even those who tried accessing microfinance had difficulties because of lack of guarantor and high interest rates The vast majority had no awareness of training and other support services when starting their businesses
Constraints to running the business Respondents cited both business and nonbusiness constraints that hampered their activities Business constraints: Lack of access to sufficient premises (including sanitation facilities), poor infrastructure, lack of access to markets the place is so small, and if I go beyond the container, the Kebele authorities will charge me.
Constraints to running the business Non business constraints Juggling work and family responsibilities Discrimination Difficulties identifying discrimination After probing gender is stronger than age
Constraints to running the business People sometimes don t take my work seriously because I am a young women. Sometimes I quarrel with customers because they don t want to pay me or mistreat me.
Vulnerabilities Harassment 2/3 of respondents reported being subjected to some form of physical and verbal assault from the police, Kebele authorities, other business people, and customers Very few had training on HIV/AIDS All lack social protection and would mostly rely on family/friends in a time of crisis
Perceived impact of self employment Young women feel that they contribute more to the family, while young men focus more on the impact on their own welfare Majority receive support from family/friends More than ¾are the main source of income for the family
How do they differ to the young men? Many similarities Young women are less likely to Be educated Have savings to set up a business Be registered Save and maintain a bank account Be taken seriously in business They are more likely to Be harassed by police, govt authorities and others
Main findings and implications Young women need to be addressed in an holistic way, using a comprehensive strategy that does not only address their needs in terms of entrepreneurship but also relating to life cycle, work family balance, vulnerability issues This not being done in normal interventions
Main findings and implications This will involve Improving access to training, credit look at nontraditional areas Creating safe places and considering life cycle issues such as access to childcare facilities Organizing young women entrepreneurs Reducing regulatory barriers and costs Raising awareness on harassment, discrimination and HIV/AIDS issues Promoting formalization
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