# _(A)_ _<u>Contextual factors</u>_

The setting in which women establish their businesses plays an important role in determining their level of investment, the decision to compete, the degree of sophistication of their business and the sector of activity they select. This influence operates through multiple mechanisms: (i) by directly impacting strategic choices, and (ii) by interacting with women’s endowments and revealed preferences. Within these contextual factors we distinguish between the underlying constraints arising from legal discrimination and those arising from social norms.

# _(i) Legal discrimination_

Given the recent strides made in removing regulatory discrimination, business law may not be strongly binding for female entrepreneurs in Africa. While rigorous measures of the impact of legal reforms promoting gender equality in business outcomes are still lacking, African economies have adopted these reforms at a fast pace. In 2012, Mali removed legal restrictions which prevented married women from registering a business. Zimbabwe’s 2013 constitutional reform ensures that customary law is no longer exempt from protection against gender discrimination.

However, even when business law is gender neutral, family law may introduce constraints to married women and their ability to manage their businesses (Hallward-Driemeier, 2013). For instance, in Cameroon, Côte d’Ivoire, Chad, the Democratic Republic of Congo (DRC), and the Republic of Congo, the law gives husbands sole control over marital property (World Bank Group, 2015). Such provisions restrict women’s ability to buy, own, sell and use property. This makes it more difficult for married women to obtain loans to finance their businesses, as these loans usually require collateral in the form of property. On the other hand, work by Deininger et al. (2008) in Ethiopia indicates that joint ownership of land in marriage increases the position of women. In the context of Figure 2, marital property issues are examples of the interaction of different constraints -- here, legal discrimination interacts with differences in assets endowment, and these constraints jointly limit women's opportunities.

Even when statutory law provides for gender equality, such as with a non-discrimination clause in the constitution, women may face important restrictions if customary law takes precedence over statutory law. The 2016 Women, Business and the Law report (World Bank Group, 2015) highlights that customary law still plays a significant role in Sub-Saharan Africa and that its influence is stronger than in any other region of the World. For example, in Lesotho 89 percent of people who have ever been married did so under customary law, with just 5 percent having married under civil law (World Bank, 2015). While the Constitution of Lesotho includes clauses on non-discrimination and gender equality, it also recognizes customary law and does not consider customary law to be invalid if it violates the gender protections included in the constitution. This is a serious problem for Basotho women because customary law in Lesotho is patrilineal and inheritance is intestate, so daughters cannot inherit from their parents (World Bank, 2015).

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