DURBAN - We need more female entrepreneurs in South Africa to help address our unemployment crisis and positively affect the economy.
In fact, if women globally started businesses at the same rate as men, the global GDP would increase by $28 trillion by 2025. Similar forecasts exist locally: by 2022, female entrepreneurs have the potential to boost the South African economy by R175 billion.
Positively, the 2019 Roll With The Punches Report, which we commissioned, revealed that 65 percent of small businesses are run by women. Yet on a male vs. female basis just 9 out of 100 women are involved in early-stage entrepreneurial activity compared to 13 out of every 100 South African men. This notably compares to other African countries such as Uganda and Nigeria where women-run SMEs are in the majority.
So what’s holding local women back? Access to finance is a common cause as is exposure to peers’ success stories as women are less likely than men to shout-out about their achievements in business. Women who operate in traditionally male environments may also struggle to build a network when their community is dominated by men.
Access to finance
In the US a recent Biz2Credit report found that the average size loan for women-owned businesses was 31 percent less than for male-owned businesses. Part of this can be attributed to the fact that women are more likely to bootstrap better and even save up more money before borrowing. However, women in the main lack accounting skills and trade know-how which can affect their ability to secure funding. Unfairly, men are also widely perceived to make better entrepreneurs than women – as mentioned previously they are considered to be more able to create networks, hold higher-ranking roles and command more money.
When they are adequately invested in, women saw a 27 percent credit turnover compared to just 8 percent achieved by businesses run by men. For financiers, women are also less likely to default on payments and have debits bounce. This is because women invest funding into their businesses purposefully and in turn, often see higher turnover than men.
Encouraging, in late December 2019 the International Finance Corporation (IFC), a member of the World Bank - through specialist risk finance company Business Partners – committed to investing R600 million into female-run businesses. This is a massive boost to the sector and we welcome it with open arms.
A need for female role-models
While women have made great strides in the world of business, and hold senior positions in the C-Suite or are the Chief Executive, overall there is a lack of women-in-business case studies. A reason for this might be because women have less of a desire to steer the ship and instead act in the capacity of a 2IC. Examples are Jennifer Consalvo who is Chief Operations of Tech Cocktail or Marne Levine who is COO of Instagram. Whatever the circumstance, the fact is there are generally fewer female role models.
The issue is compounded by the fact that traditionally, men have had access to more ‘boys’ club-style networks from which they generate business opportunities and is why we need more networking groups, in order for these important relationships to be formed among women, and men, and more importantly, from whom members can learn from. It’s not surprising then that there has been a rise in networks in South Africa such as Future Females, Women in Business Accelerator and Entrepreneur Organisation (EO).
Be financially literate
Women also often lack the financial prowess they need to get their businesses off the ground, keep it afloat and grow. Understanding how to access finance, credit processes and how lenders operate, in addition to having the right skills to balance the books and maintain a healthy cash flow, is essential to any business.
Fortunately there are ways to overcome this: read books about money and investing, and listen to podcasts about the same topics. Women can also upskill themselves by making use of business tools, income statements and balance sheets, understand business terminology and ratios and learn how to manage cash flow and supply chain.
Learn how to Lean In
While it’s extremely positive to see a rise in public and private programmes and initiatives that are aimed at women entrepreneurs – such as government’s commitment to prioritise women when it comes to access to training opportunities and procurement of services - it is also up to female business owners themselves to ‘Lean In’ as world-famous author Sheryl Sandberg encouraged in her book of the same name. In it she urges women to hone their negotiation skills, strive to fill leadership roles and tackle their professional lives full-throttle. In doing so, businesses run by women will increase, which in turn will positively impact South Africa’s sluggish economy and lower unemployment, as well as play a major role in inspiring the next generation of female entrepreneurs.
Erin Louw is the Chief Brand Officer at Retail Capital