By Emeka Umeche
Over and above the need for gender equality, the importance of women’s economic participation cannot be overstated because it offers women more negotiating power at home, strengthens economies, and enhances the health and educational outcomes of children.
Research has shown that when women are economically powerful, they mostly use their incomes to raise the standard of living for their families and the general population. Opportunities in small and medium-sized firms are particularly crucial because they generate 45% of all employment. It is therefore vital to explore mechanisms to empower women-owned and -managed businesses to support improvement in the standard of living.
In South Africa, as with most of the continent, women are active in the economy. However, their participation is constrained because of a number of factors, including culture, access to funding and traditional perceptions. These factors among others limit the number of women who are able to access much needed funds for their businesses, thus hindering the potential impact to be unlocked.
Research undertaken by the McKinsey Global Institute found that by supporting women industrialists, an additional $12 trillion could be added to the global economy by 2025. However, the question must be asked, is South Africa providing enough support to women-owned businesses, especially with providing funding for women industrialists?
Research undertaken by Mastercard’s Index of Women Entrepreneurs in 2021 found that 21.9% of all businesses owned in South Africa are women-owned. The report also found that women entrepreneurial activity rates in South Africa grew in 2021 despite the economic impact of Covid-19, indicating the resilience and determination of women entrepreneurs to succeed.
Additionally, experts agree that support for women industrialists is key to achieving some of the goals of the Agenda 2063 of the AU, and a number of targets in the UN's 2030 Agenda for Sustainable Development.
Among these are:
Goal 1: eradicating poverty
Goal 2: ensuring food security
Goal 3: promoting good health
Goal 5: attaining gender equality
Goal 8: fostering full and productive employment and decent labour for all, and
Goal 10: decreasing disparities. Even though research has shown that when women businesses succeed, households fare better, society is better off and social bonds are improved, female industrialists face steep challenges to start new businesses and to scale. While some of the challenges women industrialists face are quite similar to those faced by their male counterparts, female industrialists also face other unique challenges especially with regards to unlocking funds for their businesses.
In South Africa some of the local cultures do not allow women to inherit properties and assets. This means women owned businesses struggle with qualifying for access to certain financing instruments as they do not have the assets to leverage as collateral. Additionally, this also means women enter the economic landscape at a lesser economic level than their male counterparts. This backdrop automatically disadvantages women industrialists as assets that could otherwise be used in accessing debt finance are taken off the table because of cultural impediments.
Consequently, most women industrialists face a more difficult challenge in unlocking necessary financing for their businesses. This cultural disadvantage when merged with historical disadvantage that women have faced has proven to be a fatal stumbling block in accessing finance for women industrialists.
A bottleneck that has far reaching consequences when the state of unemployment as well as the de-industrialisation of South Africa is taken into context. It is therefore pertinent for efforts to be to support women industrialists via developing tailored financing instruments, such efforts should be primarily driven by government and backed by the private sector.
In our experience, we have seen certain women focused funding instruments, however, there is a gap in the number of women focused funding instruments versus the number of women industrialists in the country. This gap is clear as most women businesses are constrained to the domestic or informal sectors, specifically in South Africa. This is a worrying trend as research has shown that women businesses across the world make a significant contribution to the global socio-economic position.
Consequently, as part of efforts to redress the declining socio-economic status of the country, it is critical that government and the private sector prioritises the support of tailored financing instruments to fund women industrialists to unlock the unique social benefits that these businesses provide as well as to support re-industrialisation efforts in the country.
The challenges faced by women industrialists are complex and improving women’s economic performance in South Africa requires investment from all sectors of society, however, government need to be the main drivers by providing avenues for more women-focused funding.
We have seen that when women are empowered as business owners, society benefits since women business owners help communities flourish socially as well as economically. Empowering female industrialists, particularly those in high-growth industries, has the potential to boost employment, raise wages, help thousands of families escape poverty, and bring about more significant economic and social change.
* Emeka Umeche is a Project Manager at Ntiyiso Consulting Group
** The views expressed do not necessarily reflect the views of Independent Media or IOL.