If women and men participated equally as entrepreneurs, this could boost global economic growth by $2.5-5 trillion. Women also tend to reinvest more in health, education and nutrition of their families and communities, leading to greater development impact, writes Tryphosa Ramano.
In a speech 26 years ago, then-president Nelson
Mandela said: “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.
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B-BBEE silent codes
That is why the Broad-Based Black Economic
Empowerment Act (B-BBEE) 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
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% of registered small
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 6% 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% 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% 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 $2.5-5 trillion. Additionally, when women cross over into
male-dominated sectors, their businesses have been found to be as profitable as
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 underrepresented
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
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.
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.
At the Women Economic Assembly (WECONA), we want to
work with more financial institutions to share our expertise, reach and
practical guidance so that we can start to level the playing field of financial
access. We need to attract more women investors and
advisors into venture capital and business angel networks and form women-led
networks to invest in women-owned enterprises.
We need to expunge laws requiring women to
have a male relative or husband co-sign for financial assistance or a business
Gender lens investing
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
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.
Tryphosa Ramano is chairperson of the Women Economic Assembly Finance Committee and a board member of the International Women’s Forum of South Africa. Views are her own.