The Global State of Small Business during COVID-19: Gender Inequalities

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While the coronavirus can infect anyone, its impact will certainly not be the same for everyone. Experience from previous epidemics suggests that COVID-19 will impact groups who are most vulnerable and amplify any existing inequalities. The results of a recent global survey of entrepreneurs reinforces this insight, shedding light on some of the gender disparities in the impact of COVID-19. 

The survey was conducted from May 28th to 31st 2020, collecting observations from approximately 26,000 business owners and managers in over 50 countries with an active Facebook Business Page. To provide timely information for policymakers in responding to COVID-19, the Future of Business survey is being conducted on a monthly basis, aiming to assess micro, small and medium enterprises’ (MSMEs) experiences during the pandemic.

Global MSME Business Closure Rates

The heat map below shows the percentage of businesses sampled that were temporarily closed within a country at the time of the survey. Globally, 26% of businesses were non-operational during the survey period, although there was significant variation at the regional and country level. (countries that were surveyed and had at least 30 observations are represented in pink). 
 

Global MSME Business Closure Rates

Gender Gap in Business Closure Rates

In terms of the gender gap, globally, we find female-owned businesses were 5.9 percentage points more likely to have closed their businesses than male-owned businesses, taking into account regional attributes.  

Gender Gap in Business Closure Rates

The figure above presents gender disaggregated business closure rates by region. In all regions, among the countries sampled, we find a gender gap in business closure rates at the time of the survey. In the Sub-Saharan African countries sampled, for example, 34% of male-owned MSMEs were temporarily closed at the time of the survey compared to 43% of female-owned MSMEs. Women entrepreneurs may be disproportionately affected by the contraction in economic activities as a result of COVID-19 for a number of reasons. This includes gender differentials by (1) government-imposed restrictions; (2) sectors of operation; (3) time spent on domestic responsibilities; and (4) finances, which we discuss below. 

Business closures may be related to the timing of COVID-19 outbreaks and the resulting restrictions placed on businesses. Using the University of Oxford Coronavirus Government Response Tracker’s “stringency index,” averaged over the survey period, we rank lockdown policies across the countries sampled using four levels of severity (quartiles). The figure below shows that the gender gap in temporary business closures is largest in countries that have the strictest lockdown policies in place at the time of the survey i.e. Q3 and Q4.
 

Gender Gap Closures

 Q4 = strictest lockdown policies in place during the survey period

Business Sector

In the survey sample, tourism and other consumer-focused businesses appear to have been hit particularly hard. Globally, the sectors with the most business closures were: travel or tourism agencies (54% closed) hospitality and event services (47%), education and child care services (45%), performing arts and entertainment (36%), and hotels, cafes and restaurants (32%). We find the biggest gender difference in the type of services that men and women operate. For example, men are more likely to operate in the “professional services” sector which faced relatively lower business closures than “education and childcare services” and “wellness, personal grooming, sports and fitness services,” where women business owners are more likely to be concentrated.Female-owned firms are indeed concentrated in consumer-facing sectors (services, hospitality, retail trade) where the demand shock is hitting hardest. While accounting for sectoral differences  narrows some of the gender gap in closures it does not fully explain the difference. 

Time Spent on Domestic and Care Responsibilities

A large proportion of operational business owners/managers are having to manage domestic and care responsibilities, with women still doing the bulk of this work. This could be the result of the extra burden that may come from staying home during a quarantine or caring for children out of school or family members who have fallen ill. The figure below shows that in Sub-Saharan Africa, for example, 18% of married male business owners report they spend more than six hours per day on domestic and care activities while still operating their business. This compares to 26% of married female business owners. 

Time Spent on Domestic and Care Responsibilities

This extra domestic burden is evident when respondents are asked what policies are most needed at this time. Female business owners who are married with young children report that their number one priority is support for taking care of household members, whereas for male business owners married with young children this ranks 6th in their list of policy needs at this time.

 

Most needed policies

Finances

We find that 33% of businesses had an outstanding loan at the time of the survey. Of those with outstanding loans, 43% report that a “loan payment deferral” is a needed policy. While the gender differential on having a current business loan in the sample is not large, no information about the size of loans or financial obligations was collected.

We find large regional disparities in the likelihood of a business to receive financial assistance, as well as significant gender differences within some regions. The most common types of assistance are grants from the government and unemployment benefits. The figure below shows that business owners in Sub-Saharan Africa and South Asia are least likely to be receiving any financial assistance at this time compared with other regions of the world. In Sub-Saharan Africa and South Asia the few entrepreneurs that receive financial assistance most commonly cite that funding is received from friends and family rather than from government programs or formal financing sources. 

Receiving any form of financial assistance in response to COVID-19

 Taken together, these data indicate that male- and female-owned businesses are impacted differently by lockdown policies and measures of support being put in place to help businesses weather this crisis. Going forward, careful consideration of differential impacts by gender of the COVID-19 pandemic and the different constraints that men and women face will be important to build effective policy interventions.  

To find out more about the data and the global findings, read the Global State of Small Business report.   
 

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