Women’s entrepreneurship boosts Africa’s economy. Assisting it means supporting growth and employment. Yet there are many barriers to its development. While some are due to social or cultural factors and will take time to overcome, it is possible to overcome others with solutions that are relatively simple to implement. But they require will, work and financial resources.
Women have become the backbone of Africa’s economy1 They particularly play a key role in entrepreneurship. Despite this considerable economic contribution, women’s entrepreneurship in Africa is most often tantamount to an obstacle course. Access to financing is one of the main barriers to its development, while the cultural, social and legal norms necessary to set up a business contribute to maintaining women in situations of vulnerability. Supporting women entrepreneurs in Africa therefore means supporting the economy and employment. And in a situation where Africa’s working age population is expected to reach a billion people by 2030,2 this is essential for both Africa and Europe. To effectively achieve this, and notwithstanding specific local situations, improving conditions to access financing remains a necessary, but insufficient, part of the solution. Financing must be combined with quite customized training programs, including both hard skills, especially technological tools, and soft skills (relational intelligence, communication skills, interpersonal skills, etc.). African women entrepreneurs who take part in a mentorship program, while being integrated into local, regional or international networks, are unquestionably better equipped to succeed.
African women entrepreneurs who take part in a mentorship program, while being integrated into local, regional or international networks, are unquestionablybetter equipped to succeed.
ACCESS TO FINANCE: THE KEY TO ENTREPRENEURIAL SUCCESS
In most cases, African women become entrepreneurs out of necessity, meaning for their livelihoods. Indeed, they do not really have any other option due to the still limited access to education, persistent cultural barriers and restrictive legislation.3 By its nature, subsistence enterprise results in small companies, with modest financing needs for which microfinance provides a relatively good response. However, subsistence enterprise is not sufficient to economically and socially empower women.
For women entrepreneurs whose activity requires more capital to develop, the solutions still have shortcomings. Access to financing is limited4 during all the phases (seed, start-up and growth) of the entrepreneurial project. All African countries are concerned, even those with the most mature financial systems. While larger companies manage to have recourse to traditional banks, financial service providers show little interest in MSMEs. This results in African women entrepreneurs often being discouraged by the formalities, for both psychological and cultural reasons, but also due to a real need for technical assistance.
Centralizing the support for MSMEs by reducing the number of people and institutions to contact would contribute to accelerating the development of women’s entrepreneurship in Africa.
Supporting women entrepreneurs in Africa therefore requires looking into the range of financing offered to them, as well as the programs that will allow them to acquire the technical skills for understanding and requesting this financing. Another priority is to strengthen the “psycho-cultural” assistance available for women entrepreneurs, so that they feel legitimate and supported by the community to set up businesses on a larger scale.
In terms of the range of financing, several major projects need to be carried out at the same time. They are closely linked to the education and cultural policies that need to be implemented. This firstly involves improving access to the banking system for women, which is currently limited.5 It should be noted that having an account in a financial institution depends on access to education and that the countries with the highest rates of access to the banking system are the most advanced in terms of their education system.
Other priority projects include the development of banks loans and a specific range of services for women entrepreneurs, given that only 5% of them currently obtain loans. To this end, it seems essential to provide women with services tailored to their needs, for example, offer training in the steps necessary for the allocation of a loan. It is also essential to tailor the range of services to the profile of these women entrepreneurs who generally do not own real estate due to the legislation in force in most African countries.
Another key project to support women’s entrepreneurship in Africa is to develop mesofinance, which aims to bridge the missing link in financial services between microcredit and more traditional bank loans. And for all these responses to be implemented, there remains an urgent need to simplify the formalities.
To complete these measures, it is necessary to work on the legal aspect in order to introduce more equal provisions on owning assets, which will ultimately strengthen the solvency of women. Discussions with Central Banks in each country would also be useful to encourage them to develop an enabling environment for MSMEs, such as extending the type of guarantees accepted or financing national databases on these companies to facilitate risk analysis procedures by financing institutions and thereby making the loan allocation process more transparent and efficient.
Similarly, centralizing the support for MSMEs by reducing the number of people and institutions to contact would contribute to accelerating the development of women’s entrepreneurship in Africa.
PROGRAMS THAT PROMOTE THE EMPOWERMENT OF WOMEN ENTREPRENEURS
To give business projects led by women the means to realize their full potential and encourage women entrepreneurs to think bigger, it is essential to support communication, education and training programs, as well as mentorship and networking programs.
In practical terms, communication programs aim to raise awareness of women entrepreneurs, their history and their background. Their objective is to encourage and stimulate new career interests and also fight against phenomena of self-exclusion.
Education policies, for their part, concern all levels, from literacy to higher education, to allow women entrepreneurs to develop digital businesses, whereas they are generally lagging behind in terms of technology as most of them do not deploy high-tech solutions.6
Targeted “technical” training programs offer women the opportunity of acquiring relatively quickly the skills required to develop their structure (learn how to prepare a financing application, pitch their project, etc.).
“Soft skills” training programs are also essential to boost women’s entrepreneurship. They will allow women to appreciate their own value and dare to believe in their project. Basically, simply to give them “self-confidence”.
Mentorship and networking programs offer women the opportunity of developing their skills and finding responses to the problems they face. They also allow them to come out of their isolation, rely on a network and thereby be psychologically “stronger”.
The solutions that need to be implemented to develop women’s entrepreneurship in Africa are relatively simple and could have a major impact on growth and employment on the continent.
- Roland Berger, WIA – Women Entrepreneurship in Africa: A Path to Empowerment, 2018 – 24% of African women have set out on the entrepreneurial adventure, thereby largely dominating the world In addition to this fi , estimates show that this women’s entrepreneurship accounts for 7 to 9% of Africa’s GDP, i.e. a total of between USD 150bn and USD 200bn.
- Africa’s working age population is expected to increase from 705 million people in 2018 to almost a billion by 2030. At the current labor-force growth rate, Africa must create about 12 million new jobs every year to contain the increase in Source: “African Economic Outlook 2019”, African Development Bank (AfDB).
- These structural barriers can be seen by analysing the “Women Entrepreneurship Readiness” index. This index evaluates the prerequisites for the
emergence of women’s entrepreneurship.
- Roland Berger, WIA – “Accelerating Women’s Entrepreneurial Dynamics in Africa”, 2020.
- 34% of African women have access to banking services on average, against 47% of the male population. All African countries, whatever their
group, reflect this difference, which ranges between 11 and 18 points. Roland Berger WIA – “Accelerating Women’s Entrepreneurial Dynamics in
- “Women Entrepreneurship in Africa: At the Heart of a Promising Hive of Activity”, Roland Berger, WIA, 2019.