Inmost African countries, inadequate government support in regards to policies,services and laws has been noted as a barrier to many women entrepreneurs,Jamali (2009). Research on factors hindering women entrepreneurs in developingcountries shows that taxation and regulations play major constraints for womenowning small scale enterprises, Haxhiu (2015).
Regulatorysystems causes various different impacts which vary from one business to another.Research has it that even though some regulations may be of advantage to somesmall scale businesses, in general the unfavorable impact of regulations onSMEs can be extremely dangerous, OECD (2004) reason being many women ownedsmall scale enterprises are less equipped to counter negative impacts thatarise from regulations because they are inept in terms of ability as comparedto well established businesses to maneuver through the complexities ofregulatory systems. Small scale enterprises are at high risk of hindrances byregulations because their strength stems from their flexibility. Someregulations for example those designed by well-established and dynamicbusinesses to bar small scale businesses entry into the market are extremelydetrimental to the survival of SMES.Moreover,due to the “fixed-cost” nature of regulations, its cost of burden would be morefor small enterprises than would be the case for well-established enterprises:i.
e. administrative costs entailed in compliance have a disproportionateeffect on small firms. A lot of times compliance is based on an initial fixedcost for all firms regardless of size. This means that average compliance costsper employee are much higher for small firms. For example, in Holland, of the Gld7 billion spent yearly on footing administrative costs, firms with employees between0-5 workers were required to pay yearly administrative costs of about 4,000 perworker, while firms with staff 500 and over would pay only 200 per worker, OECD(2004).
Therefore, cost of compliance to regulation affects negatively theinvestment ability of women owned small scale enterprises since it deflects anexcessive amount of resources in terms of their finances.