Entrepreneurship is a crucial driver of long-term economic development, especially in developing nations facing social challenges and high unemployment. Women, who make up half of the global population, are particularly important in addressing these issues. Supporting women entrepreneurs is effective in promoting sustainable economic growth.
Hence the importance of a timely Special Report entitled Women Entrepreneurship in South Africa: What does the future hold? Authored by GEM South Africa researchers Natanya Meyer, Mahsa Samsami and Angus Bowmaker-Falconer, the report notes that despite their potential, women entrepreneurs in South Africa face significant barriers. Women entrepreneurs often allocate more resources to health, education, and community welfare.
Among the data points is that fear of failure among women entrepreneurs is higher in South Africa (52.5%) than the GEM average (49.8%). In terms of women perceiving that they have the capabilities to start a business, the rate is higher in South Africa than the GEM global rate (66.2% compared to 55.4%). For perceiving opportunities, women in South Africa are at 61.7% compared to 55% at the GEM global average.
For entrepreneurial activity, men show a higher inclination to entrepreneurial phases compared to women across the board in South Africa. For example, among nascent entrepreneurs, there are 9.4% of men compared to 6.9% of women, and for established business owners, men are at 7.9% compared to 4.1% of women.
Alarmingly, women in South Africa have a higher percentage of discontinued businesses compared to men (5.1% compared to 4.8%). The number one reason for business discontinuance among women is not being profitable (34.5%), followed by family or personal reasons and getting financing, both of which are at 21.5%.
The report notes: “It is concerning to see that the business exit rate was higher than the new and established business rates, suggesting that more women disengaged in business activities than own and manage businesses. These findings suggest that women need more support in managing and developing their new businesses into established ones.”
The report concludes with a chapter dedicated to policy recommendations, authored by Natanya Meyer. Below is a summary of these recommendations.
- Research and Understanding: Policymakers should enhance their understanding of women entrepreneurship by conducting targeted research. GEM has been able to provide a comprehensive collection of data on entrepreneurship in over 120 economies. An emphasis on the participation of women in entrepreneurial endeavors has consistently been a central focus and will continue to be of growing importance in future investigations. Special reports, such as this one, are crucial to placing focus on women’s entrepreneurship.
- Effective Policy Implementation: South Africa has the potential to become a leader in gender equality policies, but the effectiveness of these efforts is often questionable. The lack of proper advertising of these policies and programs, coupled with a lack of awareness among entrepreneurs about mentorship and financial support, contributes to their lesser impact.
- Networks and Associations: Developing strong, women-oriented business networks through local initiatives and support from the private sector can foster entrepreneurship. Smaller, focused networks can be more effective.
- Media Attention: Increasing media focus on successful women entrepreneurs can help reduce stereotypes and boost confidence.
- Early Exposure: Mentorship and early exposure to business environments can increase entrepreneurial intentions among young women, especially in rural areas.
- Representation: Greater representation of women in top management and business roles can inspire future entrepreneurs and drive gender equality.
- Digitalization and Sustainability: Digitalization presents challenges, especially in developing economies and rural areas. Policymakers could adopt a comprehensive strategy to empower women entrepreneurs, focusing on improving regulations, legislation, and infrastructure and increasing access to digital financial services.
The report features the inspiring stories of many women entrepreneurs in South Africa. Report sponsors are Stellenbosch University, Stellenbosch Business School, The Small Enterprise Development Agency (SEDA), University of Johannesburg and OntbytSake.
Access the full report using the following link.