How support for women entrepreneurs can drive economic development

Supporting women entrepreneurs can drive more balanced economic development. While women in Africa make up 58% of self-employment and contribute about 13% of the continent’s gross domestic product, there is a gender funding gap in sub-Saharan Africa of $42 billion (R781 billion).

This highlights the gender imbalance in support for women entrepreneurs. In South Africa, women own 21.9% of businesses but the country’s ranking for women’s access to business finance has declined by four places to 40th out of 65 countries, while government support for SMEs ranks 54th in the 2022 Mastercard Index of Women Entrepreneurs.

Women in South Africa face specific challenges of higher unemployment and a lower entrepreneurship rate than men, along with lower education levels, cultural barriers to women working and a greater burden of household and caregiving responsibilities, even when they do work outside the home.

“Entrepreneurship can be a more effective route to empower women and broaden economic participation if the supporting entrepreneurship ecosystem is more effective to tackle the unique barriers that women face,” Thobile Radebe, lecturer in strategic management at Stellenbosch Business School and contributor to the 2023 Women’s Report says.

She points out that the unique challenges women face “hinder their development and reinforce inequalities” and South Africa’s policymakers must ensure that the entrepreneurial ecosystem provides targeted support to encourage and develop women entrepreneurs.

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All entrepreneurs are not equal

Entrepreneurial ecosystems, the interdependent “actors and factors” that enable or hinder entrepreneurship, assume that all entrepreneurs have equal access to resources but in South Africa, with its high levels of inequality, specifically for women and more so for black women, this is not the case, she says in an article published in the 2023 Women’s Report, co-authored with Prof Mark Smith, director of the Stellenbosch Business School.

Public and private sector SMME development and funding agencies, education and training, startup and innovation incubators, interaction with established businesses and investors, networking and mentorship opportunities, a culture of entrepreneurship, enabling policies and entrepreneur-friendly markets all form part of an enabling entrepreneurial ecosystem.

“Women entrepreneurs can make a significant contribution to the country’s economy through the formalisation of economic activities which at the same time strengthens their economic and social power. They also have a crucial impact and benefit for local communities in addition to the benefits for economic growth,” Radebe says.

Research has indicated that women’s entrepreneurship has wide-reaching, long-term positive impacts on social well-being and development, education and health, more so than for men. The United Nations reports that women reinvest 90% of their income in the health and education of their children and the wider community, compared to only 35% reinvested by men.

“Enhancing women’s entrepreneurship can transform society and empower not only women but everyone in the country. However, while entrepreneurship may help women to overcome some of the barriers that compromise their development and empowerment, they face numerous barriers to enter the entrepreneurial space and reap the benefits,” Radebe says.

She emphasises that women’s inequality in economic participation started in the home and with a culture in some communities that sees men as breadwinners and unpaid caregiving of children and the elderly as women’s primary role in society.

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Education also important for women entrepreneurs

Education is important to teach society about the importance of women having an equal role in the economy and the value of entrepreneurship for individuals as well as society at large, she says.

A lack of quality entrepreneurship training in South Africa hinders the development of a culture of entrepreneurship, as well as business skills and Radebe says entrepreneurship education and training is too focused on theory, with not enough time spent on real-world business experience and practical skills.

While access to business finance is a constraint for most entrepreneurs, evidence from the World Bank and the OECD indicates that women entrepreneurs receive less support from financial institutions and funding agencies than men do.

“Effective entrepreneurship ecosystems must therefore be developed that take account of the specific barriers women face, so that women entrepreneurs can flourish on an equal footing and create a stronger and more balanced economy,” she says.

While there is still a mindset that women should be household caretakers, the reality is that many South Africans are raised in female-dominated or female-headed households.

“In today’s labour market of falling real wages and job insecurity, sharing the responsibility of economic activity is a rational choice. Entrepreneurship in this context can allow women to overcome barriers to economic participation as well as cultural norms, by creating their own jobs.”

Radebe says they benefit from greater autonomy, freedom from employer constraints, such as set working hours, the ability to act in line with their own interests and values and to create formal economic activity and create employment, as well as empower themselves and their families.

“Women entrepreneurs can then use their abilities and skills without being discriminated against and they can allocate time according to their own needs and responsibilities, which then gives them time to spend with their families.”

The Women’s Report, now in its 13th year, is published by the Stellenbosch Business School and aims to offer evidence-based insights into the life and work experiences of women in South Africa.