Women Economics and Women Entrepreneurship

by Eunice Musasa

The focus on African women’s Small to Medium Enterprises (SMEs) is based on the belief that they can ultimately have a positive development impact on their economies. Higher female earnings and bargaining power translate into greater investment in human capital especially children’s health and nutrition, education thus inevitably leading to a long-term economic growth.

There is also recognition that economically empowering women is essential and is a win-win solution to achieve broader sustainable developmental goals such as the reduction of household poverty, increase in the economic growth and welfare. Thus economic empowerment is one of most powerful tool as it has been shown that women invest extra income in their children thus paving a way to sustainable development. Hence discrimination against women is economically inefficient.

The study entails a detailed review of the literature about development among women in small entrepreneurship business. It is imperative to note that other women in Africa typically start out their businesses with a comparative fewer endorsements than the male counterparts. This is because of the overall operating environments which are less hospitable than those in which other women enterprises operate in the developing world.

Studies have confirmed that African women in business have faced a lot of barriers that other women in the developing world are facing, but even more so. In addition, most poignantly, they are suffering from unequal power relations with men that carry over entrepreneurship. Most importantly the activities that are readily available to African women are those that are tended to be akin to their domestic tasks.

African women-owned small enterprises are being underscored, as they are embarking on their business venture at a disadvantage of starting out due to lack of access to financing, information, productive resources and markets. Moreover their businesses tend to suffer from the added disadvantage of a lack of relevant businesses, education and exposure, placing them at a greater disadvantage in accessing markets.

Therefore as a result a lot of women-owned enterprises face market saturation because they are often stuck in crowd sectors with low entry barriers. A vicious cycle is being noted thus women–SMES (Small and Medium Enterprises) without access to funding and information they are being ill-positioned to be innovative and without such innovation they are unable to gain greater market access.

Notably, high compliance costs are found to be particularly onerous for African women owned enterprises because the associated costs tend to represent a greater share of their disposal income. Such costs are related to the time and money involved in learning about and meeting government regulations and informal penalty costs related to favors requested by the government. Collectively, the constraints African business women face are being exacerbated by the need to compete in an aggressive business environment with rapid technological changes and the globalization of production, trade and financial flows.

New insights glean from the study of about African women–owned enterprises included an illumination of what entrepreneurial activities mean to them. It was found that such endeavors are not only a means of economic survival but they have positive social repercussions for the women themselves and on their social environment. The issue of how the women feel about their enterprises is difficult to discern from literature the case studies are instrumental in shedding more light on this phenomenon. The experience of the women highlighted that the enterprises are a source of self-esteem that give meanings to their lives in ways that might not be even possible. Entrepreneurial behavior is both complex requiring a broad range of competence and intention.

Women-owned SMEs tend to be concentrated in less profitable industries. Globally, the largest share of women entrepreneurs both in nascent and established businesses are active in consumer-oriented activities, while women entrepreneurs are at least present in extractive industries such as mining, oil and gas.

Women are more likely to be home-based and operate within household. In such cases many of these businesses are not registered. Comparisons between women-owned and men-owned enterprises reveal the differences in profitability and productivity. Such differences are in size, educational profile of the owner, and sectorial profile of the firm with differences between formal and informal sector being very important. According to studies women entrepreneurship is high, but skewed towards smaller firms. On average, businesses owned by men in developing countries are twice as large as women owned-business.

The choice of enterprise or economic activity is the critical piece to understand gender gaps in entrepreneurial opportunities. Women’s concentration in the  personal services sector and their under-representation in the more lucrative professional services and construction industries is noted, while  at the same time the choice of activity itself may be affected by other constrains such as access to finance. Women entrepreneurs are more likely to be informal sector running smaller firms.

Moreover, one can assume that such entrepreneurial business embarked by women is a source of employment opportunities and skills training for other unemployed women. Thus they must be a catalytic role in assisting the promotion of women’s entrepreneurship activities addressing their needs, concerns as well as their constraints that they are facing in trying to start, manage and grow their business.

Not surprisingly, the lack of access to capital emerged as the major constraint. Given that loan officers in banks are typically male, they are often less receptive to the business proposals of women especially if they do not involve traditional business and businesses that have been male dominated. In such cases, the loan officer might not have confidence in the ability of the woman to be successful in such businesses.

An important part of the problem, which was noted, had nothing to do with women per se, but with the financial sector itself, which lacks depth and capacity. As a result women nowadays self-finance their business initial start –up from their own savings because they lack collateral and guarantees required to access bank loans. Consequently and necessarily all of the SMEs studied started out as microenterprises then grew into SMEs.

Eunice Musasa is a writer based in Zimbabwe. She attended the United Nations World Congress in South Korea from 4 – 15 August 2014 organised by the Duksung Women’s University in collaboration with UNWomen. Therefore this article is a review of the issues presented at the Congress under the theme: “Serving Together: Education for the Empowerment of Women.” For feedback and comments please feel free to write her on eunicemusasa@gmail.com.