Innovation needed to fast-track female entrepreneurs
Women play a substantial role in growing the economy and the lagging participation of women in South Africa’s economy is manifesting in less innovation, fewer exports and fewer jobs being created. Many Enterprise and Supplier Development (ESD) programmes in South Africa favour the development of women and youth, and in 2019 we need fast-track approaches for women entrepreneurs, given the unconscious bias that exists against them.
This bias manifests in the stats. Under 40% of South Africa’s businesses are women-owned. The multi-country GEM survey has shown conclusively that firms owned by women tend to be smaller in both turnover and number of employees than those owned by men. And men in South Africa are up to 1.6 times more likely than women to be involved in early stage entrepreneurial ventures.
Some of the solutions are obvious: more education, more networking and more support and representation on various programmes. Government has made some effort to include women in the various charters, such as a 33% target for black women in the financial sector charter, expanding opportunities for the historically disadvantaged and including women in the mining sector charter. The ICT Sector Charter states that black women should be between 40% - 50% of the beneficiaries of all elements on the scorecard.
There are some women economic
empowerment programmes, such at the South African Women Entrepreneurs Network, The Isivande Women’s Fund and the B’avumile Skills Development Initiative. Government has these few initiatives, but are they visible and impactful enough?
To fast-track women’s development efforts, a more critical look and edgier approaches are needed to give women a distinct advantage. Some practical and innovative solutions have been effectively implemented overseas and are worth exploring in South Africa. In India for example, income tax rules provide a higher tax exemption limit for women, which leaves more money in their hands. There are also banks which have special incentives for women entrepreneurs such as a 5% reduction in the interest rate, no processing fee, easy payment options and no penalty for repayment. Hello FNB, Standard Bank, Absa and Nedbank — is there anything specific you can do for women in South Africa? It would be a serious differentiator for you.
In Bangladesh, India’s neighbour, the Bangladesh Women’s Chamber of Commerce and Industry made 30 recommendations to improve the policy environment for women entrepreneurs. The central bank issued an instruction to commercial banks to increase lending to women-owned businesses, including collateral-free loans, at a reduced interest rate. Imagine the results of an initiative like this, if the South African Reserve Bank were to do something similar? It would help to create thousands of new jobs. In Bangladesh, loans for women entrepreneurs increased from 19% in 2007 to over 50% today. Additionally, more than 65% of Bangladeshi banks have dedicated desks for women borrowers, with specifically trained staff who cater to the needs of women entrepreneurs.
The US also has programmes for women and minorityowned small businesses. An equivalent programme would require tweaking of our broad based economic empowerment initiatives. In the US, work contracts are set aside for diversity suppliers with the goals of boosting diversity and business ownership. Essentially these programmes put women-owned businesses in a stronger position to bid for work with major corporates and government. Women-owned businesses can apply to have their businesses certified if at least 51% of the business is owned by at least one woman.
While researching my recently released book, Play to win: What women can Learn from Men in Business, I spoke to many women about their experiences in corporate South Africa. In my role as chief executive of Seed Engine — a social innovation, for profit company on a mission to create an economically inclusive South Africa through building the skills and capacity of the youth, funding and supporting entrepreneurs to grow their businesses, and working with Corporate South Africa to take businesses to scale — I engage with many female entrepreneurs. It is clear that strong role models are especially powerful. I would therefore encourage successful women to mentor and support other women where they can. Successful women entrepreneurs are both an example of what is possible and a source of funding for other women.
Uplifting women in the workforce and in their own businesses has a far-reaching impact. In South Africa, women are generally supporting entire families, and research has shown that they are more likely to make a social contribution than men. It is a monumental tragedy to keep women on the outskirts of the economy.
Donna Rachelson is the chief executive of the Seed Engine Group. She is also a branding & marketing specialist, entrepreneur, author and investor in businesses. Her focus is on social impact and creating economic inclusion for all through entrepreneurship