South Africa boasts exceptional women entrepreneurs who are already playing a critical role in jump-starting the economy and getting the country’s food security, job creation and financial stability back on track after a tumultuous year.
More women-run businesses will be the tonic South Africa desperately needs because greater economic participation by women stimulates economies, reduces poverty and creates jobs.
In South Africa, according to research by Development Economics, women-owned businesses established between 2018 and next year may generate about R175 billion a year and create close to 1 million jobs. The World Bank also reports that women are critical for job creation.
Under-resourced, yet essential
Lack of funding, resources and skills training are still some of the greatest challenges women entrepreneurs face, according to global research. The Harvard Business Review recently found that less than 3% of venture-capital backed businesses in the US were women-led, while Crunchbase data has shown that global venture funding for women took a dive last year. The World Bank and World Economic Forum also report that women-led businesses around the world still don’t have equal access to capital.
We need to work on reversing these trends, because international research shows that empowering women holds enormous benefits for the global economy.
South African women have traditionally struggled with less access to capital and fewer assets than their male counterparts, and not owning property makes it harder for women to offer collateral for business loans, however, studies show that women are excellent investors, because they often achieve greater credit turnover, and women-led start-up businesses often deliver double the returns of other businesses, according the Harvard Business Review.
Women and food security
Women also play a critical role in ensuring food security, as recently highlighted by the UN, which noted the essential role women play in transforming society’s agri-food systems and ensuring that societies gain greater, more sustainable food security in the aftermath of the pandemic.
According to UN Women, more than 60% of employed women in sub-Saharan Africa work in agriculture. Women also account for about 70% of smallholder farmers in the region, yet only about 17% of landholders in sub-Saharan Africa are women.
Women also receive less than 10% of available credit and 7% of credit extension services, according to the international civil society organisation Solidaridad. Women feed their communities and create essential agriculture and food-related economic activity, so their importance in South Africa’s food economy cannot be discounted.
In South Africa, the investment community needs to become more alert to the fact that women play an essential role in the food security supply chain and deserve to be supported through investment.
The “she-cession” in South Africa
South African business liquidations were up by 33.2% over the third quarter last year, representing a 20.8% year-on-year increase in liquidations, according to Stats SA.
In addition, sub-Saharan African women, according to the International Monetary Fund, were disproportionately affected by the pandemic. The global 2021 Mastercard Index of Women Entrepreneurs, which tracks across 58 economies, also found that a staggering 87% of women business owners globally felt adversely affected by the pandemic, and that in South Africa, 59% of women-owned businesses worked in sectors hardest hit by the economic downturn, including retail, restaurants, food shops and domestic services. The International Monetary Fund and the World Bank reported similar findings.
Right now, women need more public and private sector support to close the gender gap in the economy and reverse the disproportionate effects of the recession on women.
While Africa is ranked as the top continent in terms of women entrepreneurship by the World Bank, women are still in the minority in South Africa’s entrepreneurial landscape. Although more than half of South Africa’s population is female, only 34% of small and medium-sized enterprises are women-led, according to a Facebook, World Bank and Organisation for Economic Co-operation and Development joint survey.
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While gender equity varies from country to country, on average, men remain more likely to be entrepreneurs. In South Africa, the ratio of male to female entrepreneurial activity has changed from 1.52 (12.5 men to 8.2 women) in 2017 to 1.14 (10.9/9.6) in 2019, which means that women entrepreneurship is growing. Although this is encouraging, considering that women constitute more than half of the adult population, this ratio should ideally be more equal.
Challenges present opportunities
The global boom in e-commerce due to Covid-19 presents a massive growing opportunity for women business owners. But, for women to take full advantage of the rapid digitisation brought on by the pandemic, they need greater access to affordable internet and digital resources in this country. This will also contribute towards closing the entrepreneurship gender gap.
Clearly one of the first places where we can make a difference to the face of women entrepreneurship is in the sphere of funding via South Africa’s multiple women-focused government and private programmes and funds, including the Industrial Development Corporation’s Women Entrepreneurial Fund, the Business Partners Women in Business Fund, the Isivande Women’s Fund and the Enablis Acceleration Fund.
Global research shows that women’s success is tied to the success of our communities and economies as a whole. With all the challenges facing South Africa right now, we need to invest more in women, not less.
Smit is an entrepreneurship expert and Citadel Advisory Partner