By Gugu Mjadu
The South African Women Entrepreneurs’ Job Creators Survey found that women gravitate towards industries whose development supports job creation. The financial inclusion of women entrepreneurs as active contributors to the South African economy is, therefore, one of the most important building blocks of a more equitable and economically active society.
Collective and systematic efforts towards making this vision a reality is beginning to produce promising results, with more South African women becoming business owners.
According to Mastercard’s most recent Index of Women Entrepreneurs (MIWE), South Africa is one of 12 global economies where the rate of women’s entrepreneurial activity increased during the 2021 review period. This is despite several systemic challenges that have served to hamper the progress of gender equality in the realm of entrepreneurship.
The results of the MIWE are particularly compelling considering that of the 12 economies that reported the highest level of progress, six are in Africa.
This is indicative of the great strides being made on the continent towards prompting more women to pursue careers as business owners.
Professor Natanya Meyer, Associate Professor of Entrepreneurship at the University of Johannesburg, has referred to women as a “reservoir of entrepreneurial talent”.
Her research suggests that more than half of women in developing countries see entrepreneurship as a path to a better future, compared to just 25% in developed countries. These findings highlight the potential entrepreneurship has to alleviate some of the country’s most pressing socio-economic ills, such as poverty and unemployment.
For many South African women, the choice to embark on an entrepreneurial path is one of necessity. The MIWE reported a marked increase in necessity-driven entrepreneurship in South Africa (from 62.8% to 91.2%), where the motivation to start a business as a solution to the financial pressures of job losses during the pandemic years was particularly strong.
The axiom, “necessity is the mother of invention”, could not be more apt within the South African context.
This is what sets South African entrepreneurship apart from developed countries. South African women, who are renowned for their creative talents and innovative approach to solving business problems, start businesses because they are also primary caregivers who have families to support. Their drive comes from a deep place of need and the impetus that gives them is powerful.
But funding for women is an issue.
Putting the uniquely South African content into perspective, research by Google showed that in Africa, women entrepreneurs are less likely to receive funding. Similar conclusions have been drawn by several independent researchers, including Professor Meyer, who listed “access to funding” as one of the most significant obstacles to women entrepreneurship in South Africa.
This is supported by data published in the MIWE, which found that in countries like South Africa, women’s advancement is hampered by less supportive entrepreneurial conditions.
For example, South Africa found itself within the bottom quintile with a ranking of 55 for general access to finance – a lower ranking than other similar developing nations, such as Brazil (40), Mexico (48) and Saudi Arabia (33).
Fortunately, non-bank financiers and independent funders, such as venture capitalists, are stepping up to fill this funding gap.
The role of FinTechs as disruptors will become increasingly significant over the next decade, not only as potential sources of funding but also as business opportunities for innovative women entrepreneurs.
To further improve access to funding for women entrepreneurs, the concept of gender-aware economies and transformative funding must become a crucial cornerstone of the development of the SME sector. This is a concept that was introduced by the United Nations, which emphasises that financiers must take special care when making financing decisions and prioritise financing women.
While it is encouraging to see South Africa at the forefront of some positive developments in the women entrepreneurship arena, more needs to be done.
If we are to realise the agenda of stimulating women entrepreneurship and increasing the number of sustainable women-owned businesses in South Africa within the next few years, support will need to come from several fronts.
We need to pull together as a national collective in business, finance and civil society to support and finance women in their entrepreneurial endeavours and not only “buy local” but make a conscious decision to support local, women-led businesses in particular.
Gugu Mjadu is an Executive General Manager of Marketing at Business Partners Limited.
BUSINESS REPORT