What will It take to level the playing field for women entrepreneurs?

Women own about one-third of businesses worldwide, yet, in several economies and sectors, women-led firms are virtually absent (Figure 1). The result is trillions in economic potential left untapped. A new paper, Closing the Gender Gap in Entrepreneurship, reveals that the barriers women entrepreneurs face are deeply interconnected and cannot be solved with isolated fixes, demanding coordinated, system-wide solutions.
 

Figure 1: Percent of firms with female participation in ownership, manufacturing sector  

Legal Reforms are the Foundation

Evidence shows that closing legal gaps that disadvantage women has real gains. A typical reforming country across the areas measured in Women, Business and the Law (WBL) correlates with a 10.6 percentage point increase in the likelihood of women holding ownership stakes in firms. This kind of change could close regional gaps, for example, bringing women's business ownership in Sub-Saharan Africa closer to the global average. But legal change alone is not enough. Real gains happen when better laws are matched with practical support across financing, skill development, and shifting social norms.
 

Four Barriers Stand in the Way

Legal restrictions persist. 40 percent of economies still limit women’s economic choices, restricting which jobs they can hold or when they can work. These limits keep women out of higher-paying sectors and can push them into necessity-driven, informal businesses.

Finance remains out of reach for many. An estimated 700 million women worldwide still do not have a financial account, and women-owned small and medium enterprises are facing a US$1.9 trillion finance gap. Even when women seek credit, they are more likely to be rejected or offered smaller loans, face stricter collateral requirements, and higher interest, despite strong repayment records. Women-founded startups accounted for only 2 percent or less of venture capital funding.

Human capital gaps remain. Although more than US$1 billion is spent each year on business training, results are mixed. Rapid technological change is widening gaps, with women less than half as likely as men to be digitally active in entrepreneurship. Training alone rarely generates sustained results if women return to environments where legal restrictions, limited finance, and discouraging norms persist.

Social and cultural expectations constrain aspirations. Unequal household responsibilities, skepticism about women’s business competence, weak networks, few role models, and limited investor trust all dampen women’s entrepreneurial aspirations and business outcomes.
 

What Works: A Systemic Response

Because these barriers reinforce each other, the response must be systemic.

• Reforming laws: Removing restrictions on women’s economic activity, such as ensuring equal property and inheritance rights, and banning discrimination in credit and employment is essential. In fact, a ten-point increase in an economy's WBL score is associated with approximately one percentage point rise in female labor force participation, and closing all remaining legal gaps the weakest-performing economies could raise female labor force participation by about 7 percentage points on average.
  
  
• Changes in financial practice: While around 50 percent of economies now prohibit gender discrimination in credit, bias - conscious or not - still limits women’s access to finance. Financial institutions need better models that recognize women’s business performance, products suited to collateral constraints, and enforce transparent, objective evaluation criteria.
  
  
• Targeted, sustained support: Governments in 77 economies now pair finance with training and business development services for women entrepreneurs (Figure 2). Programs that emphasize personal initiative, mentorship, and accelerator programs work best when they provide ongoing support, especially when women can also access credit, sign contracts independently, and operate in markets free from discrimination.
   

Figure 2: The Availability of Comprehensive Government Support to Female Entrepreneurs

• Changing mindsets: Celebrating successful women entrepreneurs, involving women in policy design, and challenging stereotypes in investment, education, and everyday business interactions help shift norms and expand what is seen as possible.
   

The Path Forward

Overcoming the barriers is possible. Better laws open doors, but women entrepreneurs will only thrive if countries also expand access to finance, invest in relevant skills, and reshape social expectations. That means governments, lenders, investors, educators, and business leaders need to align behind a common goal: making it easier for women to start, grow, and lead businesses. When countries move on all these fronts: fair rules, fair finance, practical support, and open mindsets, women-led firms don’t just survive, they scale.