women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training”.
Black women constitute the largest self-employed group in South Africa. Up to now, this has, owing to various obstacles, been an underachieving market segment, with financial difficulties remaining problematic. Financial institutions have been increasing their efforts to tap into this market segment and grow the economic impact of the plethora of micro-enterprises that exist on both the informal and formal business platforms across the country, and so assist by turning them into profitable businesses. But financial assistance for women remains inadequate.
The National Small Business Act defines informal businesses as those which are usually started by unemployed people, generate income below the poverty line and which provide only the minimum means. Little or no capital is invested in these businesses and opportunities for growth are very few. In fact, the Act describes these as ‘survivalist enterprises’.
Obstacles Remain Simple and Basic
One of the most basic obstacles women face in obtaining finance is that of financial illiteracy. Even those with a matric education cannot be assumed to be financially literate, since school subjects do not necessarily include the knowledge needed to read financial statements, prepare a business plan or, at an even simpler level, complete a loan or funding application.
The past couple of years have seen a shift among mainstream banks in their attitude to lending a developing hand to enterprising women, yet the playing field is still not level and women as a subgroup are not making the contribution to gross domestic product (GDP) that they should be doing.
Of course, lack of financial confidence plays a role as well. Women, who traditionally believed that they would be unable to obtain funding, or start up or grow a business into a flourishing entity, have difficulty in taking the steps necessary to apply for funding. And, in the absence of a mentor or coach, a woman may well be unable to overcome her initial hesitance.
In fact, it has been noted that micro-entrepreneurs need support for business registration as well as a helping hand to develop technical, financial and business management skills so as to be able to grow sustainable, profitable businesses.
On the Home Front
Women face obstacles in the home as working mothers and breadwinners, and starting a business adds to their overall burden and demands more time and inputs. Home responsibilities and housekeeping add another dimension that their male counterparts do not have to face in the everyday scheme of things. According to the SABPP (SA Board for People Practices) 2011 Report, family–work and work–family conflict has its own set of challenges. The Report states that women view motherhood as their central life interest, and this priority could lead to greater conflict between work and family demands. Issues such as guilt, support structures or the lack thereof, self-reliance and family structure, as well as the need to spend quality time with children and family are all components of the women entrepreneur’s life that add to her time load. However, not all women experience conflict between work and family life, the Report states, for some find the two complementary. The Report contends that, to arrive at the correct balance between all these roles, a woman needs to be physically and mentally healthy.
From Subsistence to Micro-business?
In line with global trends, women-owned businesses in South Africa often start off as subsistence businesses. These businesses are usually established because the woman concerned is unemployed and has a family to support. Many of these enterprises continue as ‘survivalist enterprises’ as defined in the Small Business Act. They remain below the poverty line, can provide only a meagre income, and there is little opportunity for growth. Some of them, though, do break through the poverty line and become formal micro-enterprises.
What is important is that, to apply for development funding, whether from a commercial bank or any other funding mechanism, a formal business plan needs to be developed. Some institutions do not fund start-up businesses but will consider a business that is six months old that has shown some potential for success. There are funds available from, among others, government institutions like the Department of Trade and Industry (the dti), the Masisizane Women’s SME Fund (Old Mutual), the Industrial Development Corporation’s (IDC) Women Entrepreneurial Fund (WEF), and the International Finance Corporation (IFC). Funding is also made available through certain United Nations programmes.
Women need to access the information pertaining to these programmes, which is often a barrier in itself. According to the Small Enterprise Development Agency (Seda), 76% of micro-enterprises (0–6 people) are owned by women, with around 40% of small enterprises (businesses with up to 50 employees) also being owned by women.
Access to Markets
Once the financial hurdles have been overcome, access to markets is the next hurdle. Women situated deep in the rural areas mention that even upgrading the surface of an almost impassable road can make a major difference in starting and running a business, since no product can be traded it if cannot reach its market.
Despite the barriers facing women in the entrepreneurial segment of the market, such as the financial hurdles outlined above, prejudices, stereotyping, cultural beliefs and many more, women are increasingly entering the entrepreneurial field and are taking steps to become entrepreneurs. And many of them will succeed and continue to make an ever-increasing impact on the South African economy.
Scaling the Wall and Obtaining Financial Assistance
It is an accepted reality that access to business finance is not equal across all groups and that historical gender disparity still exists. Globally, it is agreed that South Africa’s constitutional and legislative framework is progressive, so much so that it has been hailed by many as a model framework. In particular, it highlights the importance of gender equality.
The most notable addition to our legislation that has come into being to address this inequality has been the Broad-Based Black Economic Empowerment (BBBEE) Act 53 of 2003, which expresses the need for: “increasing the extent to which communities, workers, cooperatives and other collective enterprises own and manage existing and new enterprises and increasing their access to economic activities, infrastructure and skills training; and increasing the extent to which black
Enterprise Development Feature
by Ilse Ferreira