Women and the private sector: Progress, pitfalls, and the importance of context

How can women benefit from private sector development? The answers may not be as straightforward as you would think.

In many low-income countries, the expansion of the private sector has been an important driver for economic transformation. But it can also play a crucial role in improving   women’s access to education, employment, and financial independence.

In a recent report commissioned by the Norwegian Ministry of Foreign Affairs, CMI researchers Viola Asri, Magnus Hatlebakk and Espen Villanger delve into the world of private sector development interventions. Their review of existing research explores how such interventions can benefit women in low-income countries, and how this is linked to reducing poverty and inequality. The report ends with a review of empirical evidence on the effectiveness of interventions.

Context matters
There is widespread agreement that private sector development interventions, like establishing industrial parks or microfinance programmes, can have the potential to support women in low-income countries. When reaching the intended target groups, such interventions—especially through government-supported initiatives—can improve access to capital, training, and employment opportunities for women. Big-push interventions that provide women with assets and skills, like farming equipment or training—also called the Ultra poor program or graduation approach—, have been successful in reducing poverty and increasing wages, particularly in rural areas. However, women face structural disadvantages: In many societies, they lack access to capital and decision-making and face restrictive social norms. In some cases, if the specific context is not taken into consideration, interventions may even backfire. The team of researchers behind the review emphasizes that interventions must be guided by a gendered and contextualised lens if they are to give women more and sustainable opportunities.

-Empowering women requires interventions that go beyond economic factors. For such interventions to be successful, they must also integrate social, cultural, and institutional dimensions in an effort to address gender inequalities in a holistic perspective, says Viola Asri, Senior Researcher at CMI.

In their report, the researchers take a close look at the importance and success of a wide range of different factors and interventions:

• Intra-household relations and interventions: Intra-household power dynamics play a crucial role in shaping the outcomes of interventions aimed at empowering women, but without strengthening women's bargaining power within the household, there is a risk that economic support, like cash grants, will be appropriated by male family members. Intervention design must focus on building assets that women control, especially human capital like education, vocational skills, and self-confidence. These intangible assets are not easily seized by others hence they have a lasting impact on women's autonomy and decision-making power.

• Job creation in labour-intensive industries: The establishment of industrial parks has become a popular policy to generate employment opportunities, particularly in Sub-Saharan Africa. In Ethiopia, this measure has expanded female employment in labour-intensive industries dramatically. In some factories, women comprise up to 74% of workers. While these jobs have had positive effects on poverty reduction and created new income opportunities for women, the impact on women's empowerment has been mixed. Research has shown that having one of these jobs did not give women more autonomy. It has also pointed to poor working conditions, low wages, occupational hazards, and quick turnover. In other words, for such policies to really empower women, more attention must be given to improved working conditions and workplace safety.

• Smallholder agriculture: Most people living in extreme poverty in rural Africa are small-scale farmers. Although women do less farm labour than men, they carry a heavy load of unpaid domestic work that is vital to household wellbeing. Interventions that reduce women's domestic burdens, like improving access to clean water, can free up time for them to engage more in farming and other income-generating activities. Supporting crops and livestock traditionally managed by women, such as vegetables or small animals, can increase their influence in household decisions, improve family nutrition, and strengthen their economic position. To be effective, farming interventions must take the local context and gender dynamics into account.

• Financial inclusion and microfinance: Microfinance and financial services like loans, savings accounts, and mobile payments can empower women. Such interventions can help women manage money, invest in education, or start small businesses, boosting their independence and role in family decisions. But access and control are keys to success when it comes to empowering women: In some contexts, or situations, male relatives or husbands tend to take control of the money. Programs that include gender-focused training or give women more control over their income tend to be more successful in empowering women.

• Entrepreneurship development programs and job skills training: Lack of access to education and business experience is a crucial barrier to women’s empowerment and decision-making power in low-income countries. Tailored programmes that teach practical business practices or provide vocational training have shown promise, leading to better job access and higher incomes for women. Yet, the programs that are more successful are programs that go beyond mere technical skills by also including for example mentoring, support for childcare or transport, and help build entrepreneurial mindsets. Such programs are especially effective because they are designed with challenges like rigid gender roles or limited social networks in mind.

• Primary, secondary, and tertiary education: Despite global progress, gender gaps in education persist, especially in secondary and tertiary levels. Evidence shows that returns to education are often higher for women than men, particularly in Africa and Latin America, suggesting that investment in girls’ education can be especially impactful. Securing access to education for girls and young women in low-income countries is vital for both individual and societal development. Education equips women with basic skills necessary for employment and entrepreneurship, enabling them to earn higher incomes, improve working conditions, and contribute meaningfully to economic growth. Ensuring girls’ and young women’s access to education is crucial on a wide variety of levels. It delays early marriage and childbirth, improves women’s autonomy, and foster long-term development benefits for future generations. Some of the most effective strategies to improve girls’ access to education are to remove the financial barriers, and to make it easier to get to school and home from school. The review of existing research also shows that there is still a long way to go when it comes to the quality of education.  

Big potential, but be aware of the pitfalls
Concluding the research review, the CMI researchers Viola Asri, Magnus Hatlebakk and Espen Villanger again stress that private sector development interventions have a big potential, but that multifaceted, context-specific interventions are required. While women are active in smallholder farming, informal sector businesses, and formal sector jobs, the challenges they face differ across these sectors.

-This wide range of occupations and challenges means that basically any development intervention may affect female employment and may or may not empower women. For example, any intervention that eases the burden of domestic work, such as access to electricity or drinking water, is likely to free up women’s time and increase female employment, says Magnus Hatlebakk, Senior Researcher at CMI.

The report also points to the importance of not straying from the ultimate goal of empowering poor women. Understanding the local context is essential for designing interventions that resonate with women’s experiences and challenges

-Experiences from the textile factories in Ethiopia, for example, or from providing women with equipment or money, show us that some of the measures originally thought to empower women can fail or even backfire. The final objective must be to empower women, and for that to happen, any measure that is to be successful must consider the norms, attitudes, and constraints that prevail in each different context, says Espen Villanger, Director at CMI.