Tailored support for women entrepreneurs will raise SA’s job creation and economic growth prospects
South African women are exiting their businesses at a higher rate than they are starting and running businesses indicating they need more support in growing start-ups to the established stage of more than 3.5 years.
This is a key finding of the Global Entrepreneurship Monitor (GEM) South Africa Report 2023/2024 by Stellenbosch Business School, launched this week, on Women Entrepreneurship in South Africa.
The gap between men and women entrepreneurs widens as businesses mature, with almost double the number of men owning established businesses (7.9% vs 4.1% of women), indicating that women find it more challenging to sustain a business than to start one.
Natanya Meyer, lead-author of the report and associate professor in the Department of Business Management and SARChI for Entrepreneurship Education at the University of Johannesburg, says the lack of business support tailored to women’s specific challenges and needs, puts South Africa’s women entrepreneurs on the back foot in realising their potential to make a greater contribution to economic growth and job creation.
“Women entrepreneurs matter. Women make up half the global population but are less engaged than men in entrepreneurial activities. It thus makes sense to find out how better to invest in and support women’s entrepreneurship, with its high potential to be one of the most effective means to achieve sustainable economic growth,” she says.
“Moreover, supporting women entrepreneurship potentially has a significant impact on development, as women entrepreneurs tend to allocate more of their funds towards the improvement of health, education, and overall welfare of their families and communities. Women are also more motivated to go into business to make a social impact.”
While GEM has tracked women’s entrepreneurial activities at a global level over the past 25 years, the Special Report on Women Entrepreneurship 2023/2024, titled “Women Entrepreneurship in South Africa: What does the future hold?”, is the first GEM report to focus on the motivations, progress in business, and support needs of women entrepreneurs in South Africa specifically.
Prof Meyer co-authored the report with Stellenbosch Business School research fellows Mahsa Samsami and Angus Bowmaker-Falconer. The GEM SA national study team is hosted at Stellenbosch Business School and supported by the Small Enterprise Development Agency (Seda), the University of Johannesburg and Ontbytsake.
She said the “starkly different” reasons for women and men exiting their businesses highlighted the specific barriers that women face in sustaining a business.
The top reason for exiting businesses was lack of profitability for both women (34.4%) and men (21.5%) whilst their other leading reasons differed thereafter.
Women’s next two main reasons were personal and family matters (21.5%, almost double that of men at 12.1%) and problems obtaining finance (21.5% vs men 17.8%). After lack of profitability, men mostly exited their businesses due to an opportunity to sell (18.7%, vs 10.8% of women).
Women face not only unequal access to business finance and support resources, but also gender stereotypes and prejudice. As women bear the majority share of caregiving and family responsibilities, they face a greater burden of managing conflicting demands on their time as they juggle business and family needs.
“It is widely acknowledged that women in business have greater challenges in balancing business and home life, due to societal expectations of women as primary homemakers and caregivers.”
“This influences how women in business are perceived, by funders for example, resulting in adverse outcomes,” Prof Meyer said.
The research had previously found that women entrepreneurs were far less likely than men to obtain credit in their founding year, even though those women who did receive start-up loans had a lower default rate than their male counterparts.
Lack of access to funding and support resources, along with women’s more considered approach to risk, were possible reasons for women-led businesses remaining “modest in scale and lacking substantial prospects for expansion,” she said.
The GEM SA research found a notable gender gap in business growth, with 11.8% of men’s business ventures reaching the threshold of employing 20 or more people, while only 4.9% of women-owned businesses had done so. Meanwhile, women were more likely to be “solo-preneurs”, at 4.9% compared to 1% of men.
“The data highlight gender disparities in business scaling, with men owning larger businesses at a disproportionately higher rate than women. This could reflect various obstacles women might encounter in business expansion, including limited access to funding, networks, mentorship support and resources,” Prof Meyer said.
Although women’s involvement in entrepreneurship showed a healthy increase from 9.5% in the 2022 GEM SA survey to 13.5% in 2023, men’s involvement showed a greater increase, from 11.1% to 19.9%.
“Given women’s higher unemployment rate – although it is positive to see an increase in their entrepreneurial activity, it is concerning that it remains low and lags behind that of men.”
“The results of this survey highlight the importance of improving the supporting environment for entrepreneurship for both women and men in order to reduce high unemployment,” Prof Meyer said.
Co-author and research fellow at Stellenbosch Business School, Angus Bowmaker Falkoner, says the involvement of young women in entrepreneurship was low, at 11.3%, and that with half of South Africa’s youth unemployed (50% of economically active aged 15-34 in Q1, 2023), it was essential to improve exposure to entrepreneurship education at school level.
Lack of exposure to entrepreneurship as a career choice for young women links to the study finding that women are less likely to view themselves as being capable of starting a new business, at 66.2% compared to men at 72.4%, even though about two-thirds of both men and women say that they see good opportunities to start a new business in the area where they live.
“However, when we narrow this sample down to only people already entrepreneurially involved, women entrepreneurs’ perceptions of available opportunities and their own capabilities to run a business are higher than those of male entrepreneurs. Women already running their businesses also have a much lower fear of failure than women in the general population, says Bowmaker-Falkoner.
“This highlights the positive effect that engaging in entrepreneurship has on women’s entrepreneurial mindset and business confidence.”
He sees the report findings as an important contribution to advancing the economic influence of women entrepreneurs, as it provides policymakers, enterprise development agencies and future funders with a comprehensive understanding, backed by data, of the factors that contribute to developing women in entrepreneurship.
“The GEM methodology provides hard data and analysis on South African women’s level of engagement in entrepreneurial activity across all the stages from intention to start a business through to established businesses more than 3.5 years old, and the timing and reasons for exiting their business,” Bowmaker-Falkoner said.
In addition to data on actual and forecast job creation, growth expectations and perceptions on the business enabling environment, the report provides detailed insight into the personal motivations and cultural context of women business owners, as well as information on the types of businesses and sectors they engage in.
“This research provides important insights to enable informed decision-making, targeted interventions and effective support programs to foster a more conducive environment for women’s entrepreneurial development and success in South Africa,” Bowmaker-Falconer said.
Recommendations
The GEM SA Special Report on Women Entrepreneurship in South Africa 2023/2024 makes several recommendations to improve the entrepreneurship ecosystem in support of women entrepreneurs.
- Improved implementation and awareness of policies. South Africa has a progressive set of policies to promote gender equality, but lacks in effective implementation. The report recommends better promotion of government policies and programmes that offer mentorship, financial and other support to entrepreneurs, along with rigorous protocols to evaluate the impact of support programmes.
“Government policies promoting women entrepreneurship should prioritise a gender-neutral legal framework, reduce bureaucratic obstacles, and increase access to finance for women entrepreneurs.
“Financial literacy and business management skills training should be enhanced for young women, especially in rural areas”.
“Family-friendly policies should be promoted, and developing specific laws for women-owned small enterprises could significantly impact their success.”
- Promotion of women networks and associations. The researchers recommend that women-oriented business networks be developed and promoted by local governments, business incubators and private sector initiatives.
“Establishing small, women entrepreneurial groups led by successful women business owners can promote confidence and increase business growth.”
- Greater media attention on women entrepreneurship. Society still perceives entrepreneurship as a men-dominated field. Increasing media coverage of women entrepreneurship, women’s business capabilities and profiling successful women in industry will contribute to reducing stereotypes and stigma. This would positively impact society and boost confidence in women entrepreneurs.
- Exposing women to the business environment from a young age. Mentorship and exposure to business environments early in life can contribute to future entrepreneurial intentions, the researchers say. This includes providing more readily available information and practical guidance to young women to stimulate entrepreneurial intentions.
Recommendations include visits to local entrepreneurs, hosting school market days and promoting gender equality initiatives, particularly in rural areas with limited resources for education and entrepreneurial initiatives.
- Supporting digitalisation and social and environmental sustainability. The Covid-19 pandemic led many entrepreneurs globally to adopt digital tools, resulting in increased sales and employment. The report recommends development of comprehensive policies and strategies to empower women entrepreneurs for digitalisation of their businesses and access to digital infrastructure and services.
Sustainability initiatives can be costly for small businesses, especially in highly-regulated industries. Impact investing and government incentives can support sustainability practices, especially as research has shown that women entrepreneurs prioritise social, health, educational and environmental impacts over profit.
More about the research and the report
Data for the GEM SA Special Report on Women Entrepreneurship was gathered from a representative sample of over 3 000 adults aged between 18 and 64 (52% women, reflecting South Africa’s gender ratio), who were interviewed on their entrepreneurial involvement, attitudes and intentions.
The second leg of the research involved 45 national experts in areas including finance, policy, entrepreneurship support and education and training, who rate the quality of a set of factors and conditions that either hinder or enhance the enabling environment for entrepreneurship.
The report also contains 20 case studies on women entrepreneurs’ stories across diverse sectors, including agriculture, transport, publishing, textile manufacturing, an entrepreneurial hub, television production and animation, health and beauty, business support services, and food services. The case studies provide real insights into women entrepreneurs’ motivations, challenges and decision-making on their journeys to creating successful, and impactful businesses.
The 25-year-old Global Entrepreneurship Monitor is considered the most authoritative annual survey of the state of entrepreneurship, within countries and globally. GEM tracks entrepreneurial activity levels and attitudes, the quality of the enabling environment and the contribution of entrepreneurship to national economies and jobs; and informs governments on strategies and policies to support new venture creation.
Stellenbosch Business School is the leader of the GEM study team for South Africa, as part of a large-scale international research collaboration.
The full report can be downloaded from the Stellenbosch Business School website www. www.stellenboschbusiness.ac.za
Notes to Editors:
- Reference: All the data in this release are sourced from the research for the GEM SA Special Report 2024 Women Entrepreneurship in South Africa: What does the future hold?
- More about the Global Entrepreneurship Monitor
GEM was founded in 1999 and is the world’s largest, most extensive and longest-running study that provides measurements of both national and global entrepreneurial activity and the factors that either support or hinder entrepreneurship.
GEM is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs and has surveyed over 3.5 million people in more than 120 countries over the past 25 years. The research is conducted by a consortium of national teams that each use the same methodology and survey tools in order to ensure that the results can be compared across economies and over time.
Stellenbosch Business School hosts the GEM national team for South Africa.
