Credit constraint to micro, small and medium enterprises (MSMEs) is a well-known challenge in Ghana but a new study has revealed that small firms owned by female entrepreneurs are less affected by this development compared to their male counterparts.
The study, ‘SME Credit Constraints: Revisiting the Gender Dimension of an Old Development Policy Challenge,’ found that the gap was mainly due to female favouritism and not on merit.
The study examines credit constraint differentials between male and female manufacturing entrepreneurs, using firm level data from 16 Sub-Saharan African (SSA) countries, including Ghana.
The favoritism
A visiting Professor from the Department of Economics, University of Copenhagen, Denmark, Prof. John Rand, said if credit was allocated based on competences and individual capabilities, female-operated firms should be more credit constrained than male-operated ones.
However, he said, gender differences in credit constraints were small and, if anything, there was female favoritism rather than discrimination in the formal SSA credit markets.
He presented the study at the Development Policy and Practice Talks (DPPT) series, organised by the University of Ghana’s Development Policy Poverty Monitoring and Evaluation (DPPME) Centre of Excellence, in collaboration with the Institute of Statistical Social and Economic Research (ISSER) and Centre for Studies and Demography Development (CSED).
