In Africa while women make up 58% of self-employment and contribute about 13% of the continent’s GDP, there is a gender funding gap in sub-Saharan Africa of US$42 billion (±R781 billion), highlighting the gender imbalance in support for women entrepreneurs.
Locally, some 21.9% of South African businesses are owned by women, but the country’s ranking for women’s access to business finance has declined four places to 40th out of 65 countries, and government support for SMEs ranks 54th in the 2022 Mastercard Index of Women Entrepreneurs.
South African women face specific challenges of higher unemployment and a lower entrepreneurship rate than men, along with lower educational levels, cultural barriers to women working, and having to shoulder the greater burden of household and caregiving responsibilities even when they do work outside the home.
Entrepreneurship can be a more effective route to empowering women and broadening economic participation if the supporting entrepreneurship ecosystem is more effective at addressing the unique barriers that women face, says Stellenbosch Business School Lecturer in Strategic Management Thobile Radebe and contributor to the 2023 Women’s Report*.
She said the unique challenges faced by women “hinder their development and reinforce inequalities”, and that SA’s policymakers need to ensure that the entrepreneurial ecosystem provides targeted support to encourage and develop women entrepreneurs.
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 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 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 towards the country’s economy through the formalisation of economic activities which, at the same time, strengthens their economic and social power. Women entrepreneurs also have a crucial impact and benefit for local communities in addition to the benefits for economic growth,” Radebe said.
Research has shown 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 wider community, compared to only 35% reinvested by men.
“Enhancing women’s entrepreneurship has a great capability to 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 entering the entrepreneurial space and reaping the benefits,” Radebe said.
She said 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.
She said that education was 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.
A lack of quality entrepreneurship training in South Africa hinders the development of a culture of entrepreneurship as well as business skills, and Radebe said that entrepreneurship education and training was 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, she said evidence from the World Bank and the OECD indicated that women entrepreneurs received less support from financial institutions and funding agencies than men do.
“Effective entrepreneurship ecosystems thus need to be developed that take account of the specific barriers that women face, so that women entrepreneurs can flourish on an equal footing and create a stronger and more balanced economy,” she said.
Radebe said that while there was still a mindset that women should be household caretakers, the reality was 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.”
“They benefit from greater autonomy, freedom from employer constraints such as set work hours, the ability to act in line with their own interests and values, and to create formal economic activity, create employment, and empower themselves and their families.”
“Women entrepreneurs can then use their abilities and skills without being discriminated against and they are able to allocate time according to their own needs and responsibilities, which then gives them time to spend with their families,” she said.
* The Women’s Report, now in its 13th year, is published by Stellenbosch Business School and aims to offer evidence-based insights into the life and work experiences of women in South Africa.
The 2023 Women’s Report focuses on women’s entrepreneurship and can be downloaded at https://www.womensreport.africa/
[i] Lumley, B. (2023, May 10). Sky’s the limit for Africa’s female entrepreneurs. African Business. https://african.business/2023/05/long-reads/skys-the-limit-for-africas-female-entrepreneurs
[ii] Mastercard. (2022, March 8). South Africa grows number of women business owners, despite challenges — Mastercard Index of Women Entrepreneurs https://www.mastercard.com/news/eemea/en/newsroom/press-releases/press-releases/en/2022/march/south-africa-grows-number-of-women-business-owners-despite-challenges-mastercard-index-of-women-entrepreneurs/
[iii] Radebe, T.N. & Smith, M. (2023). The current state of women’s entrepreneurship in South Africa. In A. Bosch (Ed.), Women’s Report 2023: Women Entrepreneurs. www.womensreport.africa
[iv] Sajjad, M., Kaleem, N., Chani, M. I., & Ahmed, M. (2020). Worldwide role of women entrepreneurs in economic development. Asia Pacific Journal of Innovation and Entrepreneurship, 14(2), 151-160.
[v] Lumley, B. (2023, May 10). Sky’s the limit for Africa’s female entrepreneurs. African Business. https://african.business/2023/05/long-reads/skys-the-limit-for-africas-female-entrepreneurs