Unraveling the Gender Performance Gap in Tanzanian Enterprises: A Sectoral and Regional Decomposition Analysis

In modern economies, high firm performance correlates with long-term growth and better survival rates. However, the compounding gender penalty on firm performance adversely affects women-controlled enterprises. Prior research shows that firm-owner traits and distinct firm-based factors exacerbate this gender performance penalty. This study uses data from the 2022 Tanzania Enterprise Survey (TES) to examine the gender performance gap in Tanzanian enterprises, using an advanced Blinder-Oaxaca decomposition model with Inverse Probability of Treatment Weights (IPTW) to decode the endowment and return effects and address selection bias. To ensure robustness, the analysis was complemented by propensity score-matching techniques. The findings reveal a gender profit penalty of 46.8% for disadvantaged female-owned enterprises. This imbalance significantly affects female owners with relatively lower educational levels who engage in agribusiness, manufacturing, and trading and are spread across the Coastal, Border, Lake zones, and Zanzibar Island areas. However, gender differences diminish with increased formal education and favorable regional contexts, particularly within the Lake zone. This study offers critical policy recommendations to policymakers addressing the gender–performance gap in Tanzania. Targeted interventions, such as increasing female education, technical and managerial training, and targeted regional, are crucial for improving the performance of women-owned firms, particularly in underperforming sectors and localities.