FEMALE INFORMAL ENTREPRENEURS: CONSTRAINTS AND OPPORTUNITIES Marty Chen WIEGO Network Harvard Kennedy School World Bank and University of Michigan Conference Female Entrepreneurship: Constraints and Opportunities June 2-3, 2009

REMARKS Female Informal Entrepreneurs Who are they, what do they do? Why are we concerned? What constraints and risks do they face? What can be done to address these constraints and risks? But first a few global facts…

GLOBAL FACTS self-employment represents a far higher share of total employment in developing countries (33-50%) than in developed countries (around 12%) self-employment is growing in all regions a larger share of female workers, than male workers, is self-employed self-employment is heterogeneous, including: –by employment status: employers + own account operators + unpaid contributing family workers –by class: entrepreneurial non-poor (mainly employers) + working poor (most own account operators and unpaid family workers) women are over-represented among own account operators and unpaid family workers (the working class) and under-represented among employers (the entrepreneurial class)

FEMALE INFORMAL ENTREPRENEURS: WHO ARE THEY? WHAT DO THEY DO? Occupation or Sector: –petty trade and commerce: especially sale of fresh and cooked food –light manufacturing: notably textiles, garments, and craft manufacturing –food and beverage processing: including liquor brewing in some societies –personal services: e.g. beauticians Employment Status: –relatively few owner-managers who hire others –many own-account operators in single-person or family enterprise –many industrial outworkers producing under sub-contracts for supply chains –many unpaid contributing workers in family businesses Note: in many societies, women are seen or treated as unpaid contributing family workers even when they are the de jure or de facto head of the family businesses Size: concentrated in smallest enterprises without hired workers Place of Work: often the home

FEMALE INFORMAL ENTREPRENEURS: WHY ARE WE CONCERNED? # 1 Women less likely than men to be in wage employment # 2 Female-run enterprises and women’s earnings contribute to… Household Welfare: to family income and welfare –daily cash flow of households –female-headed households Gender Equity and Women’s Empowerment: women’s status and ability to control their own well-being Economic Growth: although small in size, women’s informal enterprises are numerous, represent large share of all enterprises in many countries, and contribute to growth

INFORMAL ENTERPRISES: COMMON AND FEMALE CONSTRAINTS Constraints common to all informal enterprises: these tend to be particularly severe for female informal enterprises –limited access to resources: productive assets + financial services + skills/education –limited access to business development services: especially innovation and competitiveness enhancing services + clusters + networking and inter-firm linkages –limited access to infrastructure: basic infrastructure (water, electricity, sanitation) + public infrastructure (roads, communication) + business infrastructure (backward and forward linkages) –unfair or hostile wider environment: macro-economic conditions, sector policies, procurement bids, laws, and regulations Additional constraints specific to female entrepreneurs: these constraints are often more severe for female informal entrepreneurs than for female formal entrepreneurs –limited property rights: due to which women have fewer productive assets + less collateral to leverage capital –gender division of labor: by which women are seen to be the primary care givers + responsible for child rearing and domestic chores + responsible for daily cash flow of the household (which subsidizes the search for higher-return activities by men) –norms of female modesty: which restrict women’s physical mobility and interactions with strangers

INFORMAL ENTERPRISES: COMMON AND FEMALE RISKS Risks common to all enterprises: exposure to these risks tends to be higher for informal enterprises than for formal enterprises + female entrepreneurs often have a harder time, than male entrepreneurs, coping with common risks –seasonality and natural disasters: associated with the weather –volatility in the market and economy: demand, competition, prices, exchange rates, depreciation –business risks: lack of contract enforcement + bankruptcy protection + negative return on investment –uncertain or unpredictable environment: policy, law, and regulation enforcement + general “law and order” situation –uncertain or unpredictable basic infrastructure: water, electricity supply –idiosyncratic crises and emergencies: illness and accidents + fires and robberies + costly life-cycle events (marriages and deaths) Additional risks specific to female entrepreneurs: exposure to these risks is often higher and the ability to cope is often lower for female informal entrepreneurs than for female formal entrepreneurs –care responsibilities: when other members of the family fall sick or become disabled –verbal harassment: by family, kin, or neighbors for working outside the home –sexual harassment: in the marketplace or by business partners

ADDRESSING CONSTRAINTS AND RISKS OF FEMALE INFORMAL ENTERPRISES: A THREE-PART POLICY FRAMEWORK Part I: Systemic Challenges Micro-Enterprise “Half-Revolution”: need to do for non- financial services what the “micro-finance revolution” has done for financial services – including the focus on female informal entrepreneurs and “smart subsidies” for R & D Economic Policy Dualism: need to reduce the biases and barriers inherent in many economic policies against informal enterprises in general and female informal enterprises in particular Gender Norms: need to empower female entrepreneurs to be able to negotiate the gender norms that constrain their time, physical mobility, and/or interactions in the marketplace

ADDRESSING CONSTRAINTS AND RISKS OF FEMALE INFORMAL ENTERPRISES: A THREE-PART POLICY FRAMEWORK Part II: Sub-Sector Development Premise: financial + non-financial services to individual entrepreneurs are often not sufficient to address systemic constraints and risks Sub-Sector Development: has significant potential for developing whole sectors of under-served informal enterprises of women and/or men – promising examples involving sub-sector infrastructure and linkages + service delivery + policy advocacy include: –craft and textiles in Bangladesh (BRAC) –poultry in Bangladesh (BRAC) –alpaca in Bolivia (Enterprise Works Worldwide) –embroidery in India (Self-Employed Women’s Association) –milk in India (Amul Dairy) –honey in Kenya (Honey Care Africa) –textile waste in Philippines (Partners for Subsector Development) –silk in Thailand (Jim Thompson)

ADDRESSING CONSTRAINTS AND RISKS OF FEMALE INFORMAL ENTERPRISES: A THREE-PART POLICY FRAMEWORK Part III: Enabling Conditions To inform economic policy-makers and negotiate appropriate policies and interventions, female informal entrepreneurs need: Visibility: through improved labor force and other economic statistics Voice: organization into member-based associations and representation in economic policy-making and rule-setting institutions Validity: legal identity and official recognition as economic agents who contribute to the economy