More needs to be done to support female entrepreneurship in South Africa


The McKinsey Global Institute report: how advancing women’s equality can add $12 trillion to global growth, which was released in 2015, should be creating significant headlines about the potential to boost economies by 2025 and the important role that female entrepreneurs will play in the future growth of global economies.


The statistics from this report are replicated in South Africa. Reports indicate that, by 2022, female entrepreneurs have boosted the South African economy by R175 billion a year. Further, they have created close to one million jobs. “Entrepreneurship is vital for its ability to advance the role of women in society and to generate wealth. Further, entrepreneurship is not only important for families, but for the whole business ecosystem that supports the business,” says Dr Marlini Moodley, an Academic, Business Advisor and an Author in the Marketing Department at MANCOSA. She adds that it is important to acknowledge, appreciate, and support the significant role that female entrepreneurs play in societies during International Woman’s month which is celebrated in March each year.


Driving change

While major corporates play a massive role as key economic drivers, statistics points out that entrepreneurship makes up as much as 60% of most economies and employs about 70% of the population in some countries.


“Entrepreneurs are constantly innovating to bring new and improved products to the market. further, they offer unique goods and services that are highly sought after in the markets which they serve. Entrepreneurs break away from tradition and are more adaptable to embrace disruptive technologies thus reducing the dependence on obsolete systems conventional business models. The current need to embrace this approach was highlighted during COVID,” says Moodley.


In the aftermath of apartheid, South African women (particularly from previously disadvantaged individual’s backgrounds) were left decades behind female entrepreneurs from economies in other countries. This was particularly evident when it comes to the availability of resources. “Apartheid caused vertical discrimination. This is essentially state-driven discrimination against individuals and encouraged the growth of corporate favouritism on the grounds of race and gender. Separate services existed for the different racial groups, meaning that certain groups of customers received sub-standard amenities,” pointed out Dr Moodley. She adds that while this has improved significantly since the birth of democracy in 1994, more needs to be done to improve the role of female entrepreneurs in South Africa.


The realities that many female entrepreneurs face

In a recent speech, President Cyril Ramaphosa pointed out that by Q2 of 2022, 40.7% of South African women aged between 15 to 60 years were regarded as economically inactive.


“As we start the third decade of the 21st century, female entrepreneurs are increasingly being considered as important catalysts for economic growth and development in South Africa as they are proven to be significant employers. Yet, these entrepreneurs face countless challenges while juggling the responsibilities of a home and family against business demands. Equally, they struggle with various barriers including access to finance, financial literacy programmes, training, business consulting and socio-cultural constraints,” points out Dr Moodley.


A 2019 report released by US-based online credit marketplace Biz2Credit found that, while the gender equality gap was closing, the average loan size for female entrepreneurs was still 31% less than their male counterparts. Part of this discrepancy can be attributed to women being more likely to more of their personal savings into their business before seeking out credit.


“Looking at entrepreneurship from an education perspective, the reality is that women generally lack the accounting skills and the general skills that one needs to run a business. This ultimately impacts their ability to secure funding. Additionally, they often they also lack the financial prowess required for their businesses to secure the momentum to get it off the ground as well as develop the business into a profitable venture. Understanding how to access finance, how lenders operate, and the demands of the credit process is essential to any business. Equally important is possessing the skills to balance the company’s books and maintain a healthy cash flow,” says Moodley.


She adds that if more women had equal access to entrepreneurship opportunities, and could accumulate wealth, the gender wealth gap will reduce. “Within the South African context, this will have a significantly positive impact on the country’s economic challenges. This will not only diminish unemployment levels, but it will also create brand ambassadors and role models for the next generation of female entrepreneurs,” says Moodley.


She adds that a challenge that is all too common is South Africa is that of Black Economic Empowerment fronting which is a practice whereby a company is registered under a woman’s name but is run by her husband who benefits off the company’s BEE status. “BEE has done a lot to address the wrongs created and enabled by apartheid. However, more needs to be done to address the BEE fronting issue. Over the past two decades, I have had the privilege to cross paths with some amazing women who have demonstrated outstanding resilience in challenging business environments. This needs to be celebrated,” says Dr Moodley.


How can we enhance the support to female entrepreneurs?

Moodley points out that there are several Government grant initiatives that are available for South African entrepreneurs. These are funded and driven by the Department of Trade & Industry (DTI) which has a specific focus on the manufacturing sector.


“However, there is currently no initiatives that are focused on female entrepreneurs. However, it must be noted that women can apply for any of the incentives that are listed within the DTI, and – according to its rating system – female entrepreneurs score more points than males. More mentoring, coaching and short courses are required for female entrepreneurs to be successful. Particular attention needs to be given to financial literacy, taxation, marketing and making their business model scalable. The various SETA’s open up training windows from time to time and can be valuable. However, there needs to be more incubator programmes for female entrepreneurs, especially in the manufacturing sector,” says Moodley.


Advice for female entrepreneurs

There is a South African proverb which says: when you strike a woman, you strike a rock. The role of female entrepreneurs in South Africa is growing with many strong female business leaders challenging the conventional stereotype of female entrepreneurs not being able to compete with their male counterparts on an even footing.


“The role of female entrepreneurs in South Africa is growing and female business leaders can do a lot to address the current economic challenges facing South Africa. My advice to any female entrepreneurs is to keep it simple, do a lot of research as to whether there is a demand for their product. Further, they should avoid taking huge loans and should consider alternate ways of raising capital from friends and family. Finally, as with any entrepreneur, women need to realize that they cannot do everything themselves and that a gap analysis is required. Engage professionals to help fill in these gaps,” says Dr Moodley.