Progress towards women’s entrepreneurial development has increased over the past ten years. However, female entrepreneurs continue to face multiple obstacles in their journey—one of them being the barriers imposed by the legal and regulatory framework of the economies they work in. Women, Business and the Law 2019: A Decade of Reform data shows that 115 economies still legally constrain women from running a business in the same way as men.
Access to finance is one of the biggest obstacles women face when running a business. Part of this challenge can be addressed by prohibiting gender-based discrimination in access to credit by law. For instance, research shows that the Equal Credit Opportunity Act may have had a favorable impact on women’s ability to obtain mortgage funds in the United States.
Of the 187 economies examined by the Women, Business and the Law, 115 do not prohibit discrimination in access to credit based on sex or gender. For instance, in the Middle East and North Africa only Djibouti, Malta and Morocco and in South Asia only the Maldives provide such protection for women entrepreneurs. Regionally, 83% of economies in Sub-Saharan Africa, 72% of economies in East Asia and the Pacific, and 65% of economies in Latin America and the Caribbean do not protect women from gender-based discrimination in access to credit.
Women, Business and the Law data shows that more women have formal accounts at financial institutions and debit cards in their own names in economies where the law prohibits such discrimination. Additionally, women-owned businesses can significantly contribute to an economy’s growth. However, research also shows that only 7% of total private equity and venture capital funding goes to female-led businesses in emerging markets across the globe. Legally prohibiting discrimination based on gender is a crucial first step to providing women entrepreneurs a path to access credit.
In addition to gender-based discrimination in access to credit, the Running a Business indicator also examines other restrictions on women’s entrepreneurship, including a woman’s ability to open a bank account, sign a contract and register a business in the same way as a man. For instance, in Cameroon, Chad, Gabon, Guinea- Bissau and Niger, married women can only open their own bank account when they have a separate profession. In Pakistan married women cannot legally register a business in the same way as married men as the business registration procedures differ for women and men. Such unequal procedural requirements are similarly noted in Suriname and Bhutan.
Legislative reforms in countries that restrict women in starting a business are necessary to increase financial growth in local markets. Comprehensive legal frameworks that ensure discrimination based on gender is prohibited and removal of legal provisions that require women to obtain their husband’s permission to exercise their legal rights are key to developing a conducive environment that allows female-owned business to thrive.
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