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In Africa, more than half of all entrepreneurs are women with 70% of them from the informal sector with limited access to financial services. So, how exactly have women business leaders managed to stay focused and determined to build their companies even when the odds seem stacked against them? Ashleigh Butterworth from Finch Technologies reports.
Only 17% of 25- to 34-year-old women have attained a tertiary education in South Africa. This is one of the lowest among African countries according to the Organisation for Economic Co-operation and Development.
Knowledge is power, especially in the case of women business owners who may not have received formal education because of gendered career paths. If you are looking to upskill, organisations such as Get Smarter and the Cape University of Technology, offer business management short courses targeted at entrepreneurs in South Africa.
A less formal route of financial and business education is also an option, with sites like Fincheck Academy and Sage’s blog being invaluable resources for entrepreneurs. Financial literacy is key for women entrepreneurs. It allows them to be in control of their money and to make smart decisions about costs and cash flow. This is vital for small businesses, as it can help them increase their chances of survival.
Networking and leveraging your communities are especially important in your early growth stages. Building these strong networks can lead to business growth, but also increased confidence which is something women leaders often lack.
According to Harvard Business Review, women can benefit from taking a strategic approach to networking. The report further states that focusing on a higher level of centrality and connecting with people who are connected to multiple networks should be vital in your strategy.
LinkedIn reiterates this need to get started on networking, with 14% to 38% of women globally being less likely than men to have a strong network – one that’s both large and diverse. Organisations like Future Females, a community-based learning experience for women, and Women Who Build Africa, a network for women in tech, offer women in South Africa an opportunity to thrive in the business world.
“Entrepreneurship is a team sport,” says Lauren Dallas, co-founder and chief executive of Future Females. “Having a network of supportive peers, mentors, coaches and team members is critical for success. At Future Females, we approach networking like any other function in our business.
“My co-founder, Cerina, and I have targets each month for the number of connections made, and relationships built – whether it’s online through LinkedIn or community groups or online at events or through social circles. After all, people buy from people.”
Access to finance
Business funding is probably one of the biggest barriers for women entrepreneurs. For example, in 2019 we saw less than 5% of VC funding for African start-ups going towards companies with female founders.
In Sub-Saharan Africa currently, there is a $42 billion dollar funding gap for women entrepreneurs, and if the gender gap is bridged, it’s estimated that a $316 billion GDP could be gained by 2025. These statistics highlight the need for new lending models and more women-focused lending institutions.
Women entrepreneurs in South Africa generally own fewer assets than men, and because they don’t have this collateral it often makes the loan process more difficult. Networks like Xena Connect, give women access to funding tailored to their needs – by doing so, they are unlocking the potential of the women economy.
FundingHub is another such platform which puts the power at the fingertips of the borrower, by letting she-preneurs choose between offers from various lenders. According to Sage, women manage credit much better than men do, and when invested in, women have a 27% credit turnover, compared to 8% in a male-run business.
Empowering women entrepreneurs
Lara du Plessis, head of product and partnerships at FundingHub, says, “Historically finance has been a male-centred part of businesses, however, today business finance comparison platforms like FundingHub, make access to finance more tangible for female entrepreneurs, saving them time and money.
“FundingHub goes beyond comparing offers, they break down the details of all the different kinds of business finance out there in South Africa so that SMEs ultimately get the best finance for their business needs. If female entrepreneurs can confidently own their business finance journey, it places them in a better position to grow and scale their business venture”.
Government, especially, needs to take the necessary steps to give women entrepreneurs better financial support. NEF Women Empowerment Fund and Isivande Women’s Fund, are two such funds (aimed at black female business owners) that have been created with the help of both the government and large banks.
Having formal financial structures like these in place for women to use, will catapult their businesses from ideation to success in no time. There’s no denying that businesses led by women are just as profitable as those led by men, if not more so. But what’s even more valuable is that these businesses are more likely to have a positive social impact.
“The majority of our members have found the network incredibly useful for building much needed connections and seeking advice ranging from how to market their business, to scaling their business, and how to pitch their businesses to investors,” explains Cate Williams, head of product at Xena.
“Not surprisingly, though, one of the most frequently asked questions is where to get funding for their business. Our data suggests that a mere 5% of female entrepreneurs have taken business funding offered by traditional financial institutions, with most having been declined business loans due to outdated and irrelevant scorecards or lending criteria.”
If women are to be equal players in the entrepreneurship game in South Africa, support needs to be facilitated by government, lenders, private companies and mentors. This support combined with the drive and determination to succeed will be pivotal in growing the number of thriving women-owned businesses.