People 'n' Issues

South African women fall behind in owning business

March 8th, 2017
While South Africa has made significant progress in creating equal access for women to financial services and tertiary education, the number of women business owners are still constrained.
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While South Africa has made significant progress in creating equal access for women to financial services and tertiary education, the number of women business owners are constrained due to the lack of perceived business opportunities, funding, and motivation, according to findings from the inaugural Mastercard Index of Women Entrepreneurs (MIWE).

South Africa ranks 21st (64.4) on the Index, which tracks female entrepreneurs’ ability to capitalise on opportunities granted through various supporting conditions within their local environments. The index uses three components made up of 12 indicators and 25 sub-indicators to look at how 54 economies, representing 78.6 percent of the world’s female labour force, differ in terms of the level of Women’s Advancement Outcomes, Knowledge Assets & Financial Access, and Supporting Entrepreneurial Factors.

Despite a healthy MIWE score, women account for only 19.1 percent of business owners in South Africa (rank 44), indicating that women’s progress in entrepreneurship has been disappointingly low compared to its global counterparts. Uganda (34.8 percent) and Botswana (34.6 percent) rank first and second in the world for Women Business Owners, with other developing countries such as Russia, Bangladesh, China and Vietnam also in the top 10. New Zealand (third) and Australia (fifth) are the developed countries with highest rates of female business owners.

“South Africa’s resourceful women are one of its biggest assets, yet it is evident that South African women’s full potential and value as entrepreneurs and business owners are yet to be unleashed,” says Mark Elliott, Division President, Mastercard South Africa. “We must accelerate our efforts to dismantle the structural obstacles and biases that impede female entrepreneurship so that women can play an enlarged role in South Africa’s economic growth story.”

Looking at the Indices’ three components, South Africa has an average Women’s Advancement Outcome score of 52.7 (rank 27), indicating that women’s progress and degree of marginalization economically and professionally as business leaders, professionals, entrepreneurs and labour force participants is on par with its global counterparts.

Gender inequality towards women remains in the workplace, particularly in the areas of leadership, with three women business leaders for every 10 business leaders. This is mirrored by a low labour force participation rate, with only 46.3 percent of women compared to 60.6 percent for men in South Africa’s workforce, and a low rate of women’s entrepreneurial activity, with only seven percent of working age women in the labour force engaged in early-stage entrepreneurial activities compared to 11.6 percent for men.

Mastercard’s research shows that women in South Africa excel in the Knowledge Assets & Financial Access Component (81.9, rank 3), which gauges women’s progress and degree of marginalisation as financial customers and academically in terms of tertiary education enrollment. Not only are they as well-educated as their male counterparts in tertiary education, they have good access to financial services, and Small Medium Enterprise (SME) support.

Despite this, women’s progress and growth in the business world has been severely undermined by a low perception of business opportunities, and poor self-confidence, which are further compounded by a high level of business discontinuance, effectively feeding the already high fear of failure.

“We observe that indicators such as SME support and financial inclusion are important in supporting women’s entrepreneurship in South Africa, but are not necessarily the drivers of women’s advancement as business owners.  An accelerated and concerted focus on improving business skills, funding and business opportunities while reducing deterrents such as crime will be key in pushing South African women’s progress in the business world,” says Elliott.

The Supporting Entrepreneurial Conditions Component benchmarks how supportive entrepreneurial conditions are as enablers or constraints of women business ownership. Here, South Africa ranks 31st with a score of 62.7. While South Africa performs well for quality of governance and moderately for ease of doing business, it scores slightly lower for cultural perceptions of women entrepreneurs.

“While South Africa has made some solid progress in creating supportive conditions for women entrepreneurs, more must be done to ensure women fully harness these opportunities. It’s vital that the public and private sector work together with development organizations to support South African women in fulfilling their potential as business owners and innovators. When that happens, the whole of society will benefit,” says Elliott.

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