One of the most commonly used phrases in the job market is, “there is nothing much more fulfilling than running your own enterprise or business”. Some indeed say this to gratify a desire for leisure and pleasure attributable to being entrepreneur, while others also say this to illustrate their quest to satisfy a life-long passion for latent creativity and innovation. In fact over “76% of ordinary Africans believe that, entrepreneurship is a good career choice”- a joint report by Finance Competitiveness Innovation (FCI) & Gender Innovation Lab (GIL) has revealed. However, sometimes, it is not easy to live to the reality of dreams of running your own business, most especially when you are an African woman. For the African woman, it is a winding journey, interspersed, inter-alia, with intricate tapestry of socio-cultural and politico-economic inequalities, and access to finance constraints.
In Africa, larger chunk of Micro & Small Enterprises (MSMEs, including Agric-SMEs) are owned by women. According to the World Bank, 58% of all MSMEs in Africa are women-owned. However, “Women-led Micro-Enterprises (W-MSME) are deemed 34% less profitable than men” the report concluded. Similar studies done by the Global Entrepreneurship Monitor (GEM), an international entrepreneurship research think tank, had same results. This is partly due to the fact that, women enterprises are overly concentrated at less capital-intensive ventures and are also less diversified.
This large proportion of W-MSMEs in Africa is a missed opportunity, which when revisited with appropriate interventions, could unlock the potentials for accelerating the achievement of SDGs 1=No poverty, 2= Zero hunger, 5=Gender equality, and 8= Decent work & Economic growth. What are we talking about?!- The fact that W-MSMEs generate lesser income (and return on equity) has intrinsic consequential lesser impact on poverty alleviation and social inclusion agenda espoused by the SDGs.
It is in this light that clarion invitation is made to International Development Organizations and the African public and private institutions to redirect attention to women-led MSMEs sub-sector.
The journey begins by first of all understanding the issues (factors) inimical to women-led enterprises in Africa, and thereafter, developing an appropriate policy framework that systematically addresses same.
Firstly, social inequality remains topmost issue on our list. Women are severally disadvantaged in many ways originating from once cherished socio-cultural norms in Africa. These norms are however deemed detrimental to women’s social freedoms, and transcend into their economic evolutions. For example, in some African societies, women are precluded from owning properties, such as farm lands, buildings, cars, etc. Others prevent women from venturing into businesses perceived to be men’s-only. Several others predominantly cosign women to only child-bearing/childcare, and household chores. These norms tend to rubbish the woman’s otherwise creative and entrepreneurial skills, and thereafter exacerbate the gender inequality gap. Studies conducted by Boston Consulting Group found that, “if women and men participated equally as entrepreneurs, it could boost global economic growth by USD 2.5-5trillion annually”. Additionally, “when women cross over into male-dominated businesses with equal access to capital and market, their businesses are found to outperform that of men”.
To overcome this challenge, such social norms and values identified above, must systematically be abolished with strong politico-cultural will. Women must be allowed to own properties, encouraged to venture into male dominated businesses, and delimit them from household chores and child-bearing duties-only. They must have equal access to market, networking, etc. This is living SDG 5.
Secondly, Access to Finance & Technology is no mean a problem. Women are variously discriminated in their attempts to access reliable working capital fund to augment their businesses. In some instances they are exploited with exorbitant rates on loans granted to them. Others are robbed off their life-time savings by unscrupulous MFIs. The IFC + FMO joint report suggests that, 68% of Women-led MSMEs in developing countries do not have adequate access to finance, representing $1.5trillion financing gap. Several other W-MSMEs lack access to relevant technologies and digitization that could increase their production capacities and yields on their farms.
To overcome this, several International Development Financial Institutions (DFIs) such IFC, GIZ, EIB, UNCDF, IFAD, AGRA etc have already switched considerable attention to Africa, with specific focus on women-led micro-businesses and AgriSMEs, by promoting access to finance and digitization. This must be commended energetically. The African Development Bank (AfDB) has also allocated substantial budget in this regard. Leaders and Governments on the continent are also encouraged to design workable financial invention programs, such as venture capital vehicles to remedy this situation. For AgriSMEs, specific interventions such as resilience to pest, climate change, drought, and floods are strongly welcome. “Supporting small-holder farmers is key to end hunger in Africa”- Dr. Agnes Kalibata (President, AGRA,) has observed.
Lastly, Business Development Services (BDS) and Capacity Building Services (CBS) programs should be offered to these women-entrepreneurs unabated. This is especially important because most W-MSMEs do not keep proper financial data on their business activities. Many more are still financial illiterates. Several others lack leadership skills and business continuity plans. To overcome this, Governmental and Non-governmental institutions are encouraged to integrate BDS and (CBS) with interventions designed for W-MSMEs. Such institutions must scale up to be visible in the communities within which these women operate. BDS and CBS provide, for example, basic training on book keeping, safe and healthy food handling, packaging, climate-smart farm practices, leadership skills and business management practices, etc. These trainings have huge potentials to constructively equip women entrepreneurs to confront challenges in their businesses. Financial institutions are not left out in this regard. Digital financial literacy for women must vigorously be promoted. Studies indicate that, when BDS & CBS are collectively offered to women-led MSMEs together with financial services at right proportions, the resulting impact on their businesses outperforms their male counterparts, and financial institutions also benefit at last.
In fact, the SDGs are in sight, when women-led businesses thrive! This is just smart economics!!
Samuel Kojo Darko
SME Banking Researcher
Tel: +233 24082912