Discussion Paper No. 226 of 2019 on Gender Productivity Gap in Kenyan Informal Enterprises

Abstract

This study explored gender dynamics in informal establishments in Kenya. The objective was to uncover the underlying factors that cause difference in productivity between men and women-owned establishments in Kenya’s informal sector. Using a nationally representative sample from the 2016 Micro, Small and Medium Enterprises (MSMEs) Survey, the study employed OaxacaBlinder decomposition technique to identify contributors of gender productivity gap. From the findings, men-owned establishments have a higher productivity compared to women-owned establishments. The productivity gap between the two genders is largely attributed to differences in endowment of factors of production, establishment and entrepreneur characteristics. Firm size, number of working hours, startup capital and use of technology are key contributors to gender productivity gap exhibited in Kenya’s informal sector. To bridge this gap in productivity, there is need for a gender targeted approach in business development trainings to enhance entrepreneurial mindset among women entrepreneurs and encourage them to compete with their male counterparts; foster formation of SACCOs among women entrepreneurs for ease of credit access, and ease time constraint faced by women to engage in economic activities by engaging men in child care provision. In addition, there is need to increase awareness and sensitization on technology adoption to informal establishments.