Ethiopian Women Entrepreneurs Face Rising Business Losses Linked to Harassment

A World Bank-backed study in Ethiopia found that women entrepreneurs who experienced sexual harassment were 37% more likely to shut down their businesses within five years, despite often earning higher profits initially. The research highlights sexual harassment as a major but overlooked economic barrier affecting women-owned firms and inclusive growth.

A major new study by researchers from the World Bank Africa Gender Innovation Lab, UC Berkeley's Haas School of Business, and the World Bank's Prosperity and Finance divisions has uncovered a troubling reality for women entrepreneurs in Ethiopia: sexual harassment is pushing many women out of business.

The research followed 790 women-owned firms across six Ethiopian cities over five years and found that harassment is not just a social problem but also a serious economic barrier. Women who experienced sexual harassment were significantly more likely to shut down their businesses, even when those businesses were profitable and growing.

The findings reveal how gender-based safety concerns can quietly undermine women's economic participation and weaken entrepreneurship in developing economies.

Customers, Not Colleagues, Were the Main Harassers

The study found that 16 percent of women business owners reported experiencing sexual harassment within a single year. The incidents included unwanted sexual proposals, inappropriate touching, and other forms of sexually inappropriate behavior.

Researchers believe the real number may be even higher because many women hesitate to report harassment due to fear, shame, or social stigma.

One of the most surprising findings was the identity of the perpetrators. In most cases, the harassment did not come from employees or business partners. Instead, customers and clients were responsible for the majority of incidents.

This means that for many women entrepreneurs, everyday business interactions became unsafe and stressful. Simply serving customers or running a public-facing business exposed women to risks that male entrepreneurs rarely faced.

Young and Successful Women Faced Greater Risks

The research showed that harassment was more common among younger and unmarried women. Women working in cafés, restaurants, retail, and other customer-facing sectors also faced higher levels of harassment.

But the most unexpected discovery was that women who experienced harassment were often among the more successful entrepreneurs.

At the start of the study, women who reported harassment were earning higher profits than women who did not report such experiences. Their businesses were active, visible, and performing well in the market.

This challenges the idea that only struggling or vulnerable businesses are affected. Instead, successful women entrepreneurs may become more exposed because they interact more frequently with customers and operate in male-dominated business environments.

Harassment Was Linked to Business Closures

Over the five years, more than half of the women who experienced harassment eventually closed their businesses. Among women who did not face harassment, the closure rate was much lower.

After accounting for factors such as education, profits, business size, marital status, and location, researchers concluded that women who experienced sexual harassment were about 37 percent more likely to shut down their firms.

Importantly, these women were not leaving because they found better opportunities elsewhere. Women who closed their businesses later earned lower incomes than those who continued operating their firms.

The study argues that harassment may be forcing productive women-owned businesses out of the economy. Instead of markets rewarding the strongest firms, some women entrepreneurs are being pushed out because of unsafe working environments.

Why the Findings Matter Beyond Ethiopia

The research highlights an issue that is often ignored in discussions about women's entrepreneurship. Governments and development institutions frequently focus on loans, training, and access to finance, but safety concerns receive far less attention.

The authors argue that economic empowerment programs cannot fully succeed if women continue facing harassment in workplaces and marketplaces. Stronger protections, awareness campaigns, support networks, and efforts to change social attitudes are needed to create safer business environments for women.

The study ultimately presents sexual harassment as more than a personal or workplace issue. It is an economic challenge that affects business survival, women's incomes, and overall economic growth.

For many women entrepreneurs, the greatest threat to their business may not be competition or lack of funding, but the daily struggle to work safely and with dignity.