Lars Thunell
27 October 2007
opinion
Starting a business in the Democratic Republic of Congo can be quite a challenge. It takes 13 procedures and 155 days and costs five times the country's annual income per capita.
The challenge is even greater for women. A married one needs the husband's consent, while a single one requires a judge's approval. It is no wonder therefore only 18 per cent of small businesses in the country are run by women.
The DRC and other countries that place such restrictions on women should rethink the approach. They illustrate that women are being treated with less than an even hand when it comes to the rules, laws and practices which restrict their ability to be full partners in the economic growth of economies across the world.
Moreover, many laws made to "protect" women a the work place often end up excluding them from job and business opportunities. In fact, women are three times as likely as men to be hired "informally" in developing countries with no legal or social protection.
EACH YEAR, THE WORLD BANK compares regulations affecting the ease of doing business in 178 economies ( www.doingbusiness.org ). Higher rankings on the ease of doing business are associated with more growth, more jobs and a smaller share of the economy in the informal, unregulated sector. The latest report, Doing Business 2008, says the benefits of reforming business regulations and levelling the playing field are especially large for women.
Countries with higher rankings have more women entrepreneurs and more in jobs. The findings are reinforced by a wider body of research showing that women's economic empowerment helps to improve family welfare and nutrition, lifts education levels for girls and improves economic growth for society as a whole. The message is clear: reform is good for women and fuels development.
As in the DRC case, some laws and regulations explicitly discriminate against women. In Yemen and the United Arab Emirates, women are forbidden by law to work at night. In Yemen, a woman cannot travel abroad for business without her husband's written permission to obtain a passport and travel.
In many African countries, women have fewer inheritance rights, either by law or custom. One consequence is that they cannot provide the collateral needed for business bank loans.
In Swaziland, legislation stipulates that a woman shall open a bank account or obtain a loan only with the consent of her father, husband or other male family member. Not surprisingly, while 52 per cent of the men have bank accounts and only 30 per cent of women do.
Sometimes laws aiming to favour women have negative consequences. In Jordan, companies are required to provide a nursery if they employ 20 or more married women, leaving them with little incentive to hire more than 19 women. While providing for child care is important, countries can address this issue better by drafting laws that offer nurseries for all employees, male and female.
This helps to ensure that there is no unintended discrimination against women, while at the same time achieving the social objective intended.
Benefits from reforming cumbersome business regulations and procedures can be larger for women. Women may be less able than men to afford long and expensive business registration procedures, and as a result, may choose to keep their businesses informal.
In Uganda, complex start-up regulations that allowed more contact between entrepreneurs and public officials opened opportunities for bribery.
Forty-three per cent of female entrepreneurs trying to register reported harassment from government officials, while, overall, only 25 per cent of all entrepreneurs did. When reformers simplified business start-up, the increase in first-time business owners was 33 per cent higher for women than men.
Removing restrictions on women's ability to own and grow their businesses is not just about their being dealt a fair hand; it is about smart business and it is good for growth.
THERE IS MUCH TO BE DONE. Governments should clear away all the unnecessary regulatory obstacles to starting and running a business.
Some governments have recognised the potential benefits, and have started to reform.
In Lesotho, where women used to be classified as legal minors, a new law allows married women to engage in legal activities without their husband's signature. If other countries could follow suit and focus on creating opportunities for women, their economies would soon start reaping the benefits.
The dramatic impact of microfinance programmes for women entrepreneurs in the developing countries over recent decades can inspire this effort.
The writer is the executive vice-president and chief executive officer of IFC, a member of the World Bank Group
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