Picture: African News Agency (ANA) – Female entrepreneurs Thuli Dlamini, Zanele Sibiya, Ntombifikile Sibiya and Philile Sibiya opened their own bakery business in KwaMashu M-Section, KwaZulu-Natal.
By Tryphosa Ramano
In a speech 26 years ago, President Nelson Mandela declared: “As long as women are bound by poverty… as long as outmoded ways of thinking prevent women from making a meaningful contribution to society, progress will be slow. As long as the nation refuses to acknowledge the equal role of more than half of itself, it is doomed to failure.”
One could say that Madiba’s speech on Women’s Day in 1996 was prophetic. Hindered by unequal access to basic financial services, women are less likely than men to report that they can access the financing needed to start a business.
When a woman wants to start or grow her own business, the odds of securing a business loan are heavily stacked against her. Women in business face a number of barriers and prejudice remains an issue.
This gender gap can be associated with gender-biased credit scoring and gender stereotyping in investment evaluation.
Public policy can facilitate access to finance for women and address market failures, thus closing financing gaps.
BBBEE silent codes
That is why the Broad-Based Black Economic Empowerment Act (BBBEE) promotes “increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training”.
The Act further notes that “to comply with the equality provision of the constitution, a code of good practice and targets therein specified may distinguish between black men and black women”.
Unfortunately the Act is silent on gender equality in terms of financial services outreach, enterprise development and in procurement finance, hence black women in particular remain marginalised.
Global facts and figures
Globally, female participation as entrepreneurs and employees is critical to economic development, with women-owned businesses representing over 38 percent of registered small businesses worldwide.
A United Nations report concluded that economic development is closely related to the advancement of women. In nations where women have advanced, economic growth has usually been steady. By contrast, in countries where women have been restricted, the economy is stagnant.
According to a United Nations Development Programme report, gender inequality costs sub-Saharan Africa on average $105-billion a year — or six percent of the region’s GDP. It says this jeopardises the continent’s efforts for inclusive human development and economic growth. Evidence shows that if all countries worldwide reached gender equality, the global gains in terms of economic growth would be 26 percent, with Africa gaining 12 percent in terms of GDP.
It has also been estimated that women reinvest up to 90 percent of their income in the education, health and nutrition of their families and communities compared to 30-40 percent for men, thus creating greater development impact.
According to the International Finance Corporation, women own 34 percent of private businesses globally, including almost six million formal Small and Medium Enterprises in the developing world.
Boston Consulting Group’s analysis found that, if women and men participated equally as entrepreneurs, this could boost global economic growth by USD 2.5-5 trillion. Additionally, when women cross over into male-dominated sectors, their businesses have been found to be as profitable as men’s.
The Financial Alliance for Women, an international consortium of financial service providers focused on championing the female economy, found that, for the fifth consecutive year, women outpace the market in customer, credit and deposit growth yet remain under-represented in all segments.
In addition, banks that have had a women-focused programme in place for three or more years have a higher share of women customers.
All these facts and figures highlight the multiple challenges faced by women, compared to their incredible potential if given the resources and support they need.
Patriarchy and financial inclusion
The fact is without access to finance, women face difficulties in growing their businesses, let alone pulling their families and communities out of poverty. As a result, women remain largely excluded from the formal economy.
In this patriarchal society where male dominance prevails, where women are subject to discrimination, women face more hurdles in developing and sustaining their own identity because it is a common belief of men, that only men have the right to earn, while skilled and capable women are forcibly excluded from economic participation.
As we search for a solution to the inequality between men and women in accessing finance, the answer could be simple: Financial institutions should acknowledge that women are a high-value investment. Also, banks should tailor services to female entrepreneurs that will trigger a ripple effect across the economy.
Gender lens investing
Our country needs Gender Lens Investing (GLI), an impact investment strategy which deliberately integrates gender analysis into investment strategy and decision-making. GLI has generated increased global attention in recent years and can involve the combination of investing in women-owned or led businesses or investing in organisations that offer products or services that improves the lives of women in a sustainable manner.
There is no doubt that one way to alleviate poverty is to empower women economically, especially through entrepreneurial projects and financing that encourage women to engage themselves in entrepreneurial income generating activities.
Women should never have trouble accessing bank loans and other financing. After all, a large number are long-term bank customers whose financial needs have been ignored and their business growth stunted by a lack of access to financial services and products.
Women entrepreneurship is vital to job creation and economic development and given the appropriate support, WOBs can drive South Africa’s economic recovery and growth.
Let us remember that while women seek to contribute to the political agenda, their contribution to economic recovery and growth is equally important for lasting change.
Therefore, investing in women-owned business is good business! Women must not only be seen but regarded as equal partners in sustainable economic development.
Ramano is chairperson of the Women Economic Assembly Finance Committee and a board member of the International Women’s Forum of South Africa.
