The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian female entrepreneurs generate a greater return on investment than their male counterparts despite accessing on average 42 percent less funding, it has been revealed.

The Inter-American Development Bank (IDB), in a recently-released paper drawing on data from the Small Business Development Centre (SBDC), also known as the Access Accelerator, disclosed that women-owned start-ups and entrepreneurs generate $1.74 in sales for every $1 in funding that they receive. In contrast, it said the return for Bahamian male-owned start-ups and entrepreneurs, as measured by sales, was $1.68.

The multilateral lender, in a report detailing a $700,000 project designed to improve post-retirement economic inclusion and participation for elderly Bahamians aged 65 and older (see other article on Page 1B), said the data justified continued investment in women-led businesses as they are “efficient in turning funding into economic value”.

“In The Bahamas, it was discovered that women entrepreneurs have accessed less funding on average compared to men - $27,385 per female entrepreneur compared to $47,153 per male entrepreneur, a 42 percent disparity,” the IDB report found.

“While women-owned businesses may receive less funding, the return on investment is higher. For every $1 of funding, women-owned businesses generated $1.74 in sales compared to $1.68 for men. This indicates that women are efficient in turning funding into economic value, further justifying investment in women-led enterprises.”

Bahamian male-owned businesses on average thus access almost $20,000 per more per approved financing application than their women-headed counterparts even though the returns are less for every single dollar invested. And the approval rate for financing applications by Bahamian women entrepreneurs is also much higher, standing at 92 percent when compared with 85 percent for men.

The SBDC, which was created by the Government to help Bahamian entrepreneurs, start-ups and micro, small and medium-sized (MSMEs) enterprises better access the financing, technical support and mentoring that they need to succeed, said in the report that the IDB is drawing upon that women sought less funding on average than their male counterparts despite seemingly making greater, and better, use of their dollars.

“Women have made significant strides in entrepreneurship and new venture creation over the past three decades. Still, the number of businesses currently owned by women is significantly lower than the number of businesses owned by men in many developing countries,” the SBDC said in documentation prepared for its guaranteed loan programme targeted at female entrepreneurs.

“Statistics reported by the SBDC for women entrepreneurs in The Bahamas appear to be more favourable. The SBDC was launched in September 2018 and, over the past four-and-a-half years, we helped 953 women-owned businesses to access $26.098m in grant, loan and equity funding.

“This equates to roughly $27,385 per female entrepreneur. We also helped 976 men-owned businesses to access $46.021m in grant, loan and equity funding. This equates to roughly $47,153 per male entrepreneur.”

Analysing this data in more detail, the SBDC added that financing applications by male-owned businesses exceeded those from their female counterparts by just 2 percent - a difference of 18. “However, the disparity between $27,385 approved per female entrepreneur versus $47,153 approved per male entrepreneur is 72 percent,” the SBDC added. 

“To understand the latter disparity, please note the total funding requested by women entrepreneurs is $28.284m with an approval rate of 92 percent ($26.098m approved versus $28.284m in applications). In comparison, the total funding requested by men entrepreneurs is $54.235m with an approval rate of 85 percent ($46.021m approved versus $54.235m in applications).

“Since the approval rate is higher for women than men, the fact the average woman accessed 42 percent less funding than the average man simply means women have requested considerably less funding than men through the SBDC.” Tribune Business calculations show the average woman accessed 42 percent less funding than their male counterparts.

“Based on the SBDC’s economic impact survey for the calendar year 2021, for every $1 of funding men-owned businesses received, $1.68 was generated in sales over a 12-month period. Whereas for every $1 of funding women-owned businesses received, $1.74 was generated in sales over the same 12-month period,” the SBDC report added.

The IDB, in its paper, said the SBDC data highlights yet another “gender disparity” and why elderly women and other “marginalised groups” bear the brunt of challenges that include “vulnerability to poverty, inadequate housing conditions, limited access to healthcare and social isolation”.

“Women and other marginalised groups within the elderly population are disproportionately affected. Gender disparities, as seen in the lower loan amounts accessed by women entrepreneurs compared to men, further exacerbate financial vulnerability in older age,” the IDB paper added.

Pointing to factors affecting female entrepreneurship, the SBDC said: “Multiple studies suggest women’s debt appetite and risk tolerance are tied to their entrepreneurial self-efficacy, ability to recognise opportunities and fear of failure. In an entrepreneurial context, self-efficacy is defined as a woman’s confidence in her ability to succeed in entrepreneurial roles and tasks.

“Therefore, if a woman is not confident in her ability to succeed as an entrepreneur, she may avoid entrepreneurship altogether or avoid entrepreneurship in specific industries she perceives to be male-dominated like technology, energy, construction, transportation, fishing and landscaping.....

“Some studies have concluded men in developing countries have superior education, training, experience and networks than women and, as a result of their human capital, men are better equipped to recognise commercial opportunities than women are,” it added.

“Perhaps this finding does not apply to The Bahamas fully, but it is worth investigating if local men better utilise their human capital for entrepreneurial opportunities (as opposed to career opportunities) than women do, generally speaking.

“It is also worth investigating if men are more optimistic about the local and global economy than women are, and if optimism or pessimism enhances or inhibits entrepreneurs from recognising commercial opportunities. What is not left for debate is the fact the Global Entrepreneurship Monitor project examined entrepreneurial activity in more than 70 countries, and the results show women in all countries (with the exception of Japan) reported fearing failure more often than men.”