Nigeria, and Senegal, in the formal and informal sectors, 60 percent of female new entrepreneurs and 40 percent of male new entrepreneurs report finance as the main stumbling block when they set up a new business (Hallward-Driemeier, 2013).

Being young makes it harder to access funds to start a business. Youth have lower rates of financial inclusion than adults, and they have had less time to accumulate savings or assets that can be used as collateral, a precondition for most formal loans. According to financial inclusion data from 2014 (Demirguc-Kunt and Klapper, 2015), young adults (age 15-24) in Sub-Saharan Africa are 14.7 percentage points less likely to have saved money in the past year and 6.1 percentage points less likely to have borrowed to start, operate, or expand their business than older adults (age 25+). Women (age 15+) were similarly 4.1 percentage points less likely to have saved and 1.3 percentage points less likely to borrow for business purposes than men. While these figures may reflect lower demand for funds, additional data suggest that access to funds is limited. When asked if individuals could come up with 1/20<sup>th</sup> of their local per capita GNI within a month in the case of an emergency, young adults were 9.0 percentage points less likely than older adults to say it was possible, and women (age 15+) were 11.9 percentage points less likely than men to say it was possible. The differential for young people may be partially attributed to constrained informal borrowing due to smaller and more capital-poor networks. Young adults are 6.6 percentage points less likely to have borrowed from family or friends than older adults, while there is no apparent differential for women and men (Demirguc-Kunt and Klapper, 2015).

Women may face more difficulty than men in accessing capital when starting a business, to the extent that they have lower endowments in assets due to norms or laws that limit women’s asset ownership. We lack evidence on whether young women are more affected by these challenges than older women, since most of the empirical evidence cited does not distinguish between the two. Available evidence is mixed with regard to women’s ability to borrow to start or operate a business. Gajigo and Hallward-Driemeier (2010) find evidence of larger entry barriers, including access to start-up capital, for women to start a new business than for men in four African countries. Using data from nine African countries and 43,908 individuals, Aterido et al. (2013) find a gender gap in the use of formal financial services by both individuals and existing enterprises, although the difference is not significant once key characteristics of the individual and firm are controlled for. In their study, industry and firm size account for much of the unconditional gender gap for existing entrepreneurs, as women tend to operate businesses in sectors that require less external finance. There is some evidence that women may be self-selecting into sectors that require less start-up capital, which could contribute to occupational segregation. However, the direction of causality is unclear. Women may also have lower access to formal savings, as suggested in a study by Dupas and Robinson (2013), which found that female market vendors’ excess demand for savings in Kenya was so high that they were willing to pay for the ability to save, in contrast to male bicycle taxi drivers.

Finally, there is also evidence that women who are already in business may be disadvantaged in their use of capital. Fafchamps et al. (2014) suggest that female entrepreneurs are less able to make effective use of capital and to separate business capital from household finances, either due to present bias or a greater risk of expropriation from family members.

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