by MS. Amanda Khozi Mukwashi, President, International Executive Board, Akina Mama wa Afrika(AMwa),UK / Zambia
“Women remain the world’s largest untapped resource…” Amanda Khozi Mukwashi
Six out of ten of the world’s poorest people are women who must, as the primary family caretakers and producers of food, shoulder the burden of tilling land, grinding grain, carrying water and cooking. This is no easy burden. In Kenya, women can burn up to 85 percent of their daily calorie intake just fetching water. Yet some 75 percent of the world's women cannot get bank loans because they have unpaid or insecure jobs and are not entitled to property ownership. This is one reason why women comprise more than 50 percent of the world’s population but own only one percent of the world's wealth.
Equality between men and women is more than a matter of social justice - it’s a fundamental human right. When women have equal access to education, and go on to participate fully in business and economic decision-making, they are a key driving force against poverty, injustice and inequality. Women with equal rights are better educated, healthier, and have greater access to land, jobs and financial resources. Their increased earning power in turn raises household incomes. By enhancing women’s control over decision-making in the household, gender equality also translates into better prospects and greater well-being of children, reducing poverty of future generations.
Everywhere I go at the moment, I hear it being said that this is the century for Africa. At a recent public debate in London where I was moderating a discussion on reframing women’s rights as Human rights, Cherie Booth QC talked of Africa’s possibilities in this century.
“The 21st century is being touted as Africa’s century. This is because since the beginning of this decade, African growth rates have finally exceeded those of the world in general- a very welcome and positive development. Since the mid 1990s, the percentage of the population living with less than US$1 per day and less than US$2 per day has declined. Between 2001 and 2008, growth in gross domestic product (GDP) on the continent averaged 5.9 percent annually. This growth was accompanied by significant flows of Foreign Direct Investment (FDI) into the region, leading to a near doubling of FDI stocks between 2003 and 2007 according to UNCTAD. In 2008, Africa grew by an impressive 5.2 percent; the sub-Saharan African (SSA) region grew even faster, at 5.5 percent.
While this growth has allowed African countries to reduce poverty in recent years, income levels remain low and there is still much to be done in order to realize the MDGs by 2015. The African growth rates also continue to be much lower than those of the group of developing countries from Asia, a region that has raised the living standards of its citizens significantly over recent decades. The financial crisis around the world also played a part by halting and worsening a lot of the progress that has been achieved.
The recent UNDP Human Development Report warns that climate change may be the single factor that makes the future very different, impeding the continuing progress in human development that history would lead us to expect. While international agreements have been difficult to achieve and policy responses have been generally slow, the broad consensus is clear: climate change is happening, and it can derail human development. It is expected to significantly affect sea levels and weather patterns and possibly human settlement and agricultural productivity.
Women are on the front lines of climate change — often the first to face its impacts on their livelihoods and very lives. Now you may be asking and wondering what this has got to do with women and entrepreneurship in Africa. Women’s everyday activities as managers of household resources — such as water, fuel and food —become increasingly burdensome. As small-scale farmers, they endure environmental stress more often, with far fewer resources than men to cope. As migrants and refugees pushed from areas of climatic stress, they are at higher risk of disease and violence. And during natural disasters like floods and hurricanes, they count higher among the dead.
Conversely, as farmers, entrepreneurs, managers of households, scientists and politicians, women are poised to drive positive change and contribute to the vast portfolio of strategies needed to address this threat. Women’s empowerment reaps benefits across the climate-related terrain: in ecological health, food security, disaster preparedness and increased community resiliency to natural disasters, as well as reduction in the carbon footprints of households, communities and countries. The challenges that we have seen women facing over the last few decades in terms of breaking through in the area of entrepreneurship such as access and control over resources and factors of production could be further at risk.
It is therefore critical to look at where women are at the moment and where they need to get to in order for Africa and the world to fully benefit from their efforts. Available data shows that they grow up to 70% of the food produced on the continent. We are seeing a growing class of determined women who own their small businesses and they are increasingly being engaged in formal employment and entrepreneurship. They also play substantial roles in micro and small scale businesses and trade and they make up about 60% of the informal sector.
Female entrepreneurship can be a driving economic force to spearhead job creation, increase production, boost market innovation as well as augment human resources and skills development. World Bank research has established that women are more likely than men to contribute additional income to household poverty reduction, meaning that giving more women access (and control) to credit and increasing their
economic power is likely to translate into improved livelihoods for a higher proportion of society.
Entrepreneurship and business creation are also a growing alternative for young people whose age group often faces a labour market with high unemployment rates. Traditional career paths and opportunities are gradually disappearing and many young people are taking up the challenge of starting their own businesses as an alternative form of employment. Many countries and several international donors and institutions have identified entrepreneurship as a key priority in the promotion of youth livelihoods and employment.
The next step we have to take is to focus on other necessary reforms that will lead to economic development. One such is to create the enabling environment that will support the real sector, such as small and medium-sized enterprises (SMEs). Our growth story needs to continue and this can be facilitated through the diversification of our economy. An excellent channel is through the development of our financial systems. Our financial systems are currently dominated by the banking system which means there is an urgent need to develop our financial markets. Financial deepening especially helps those industries more dependent on external finance and also helps to reduce financing constraints, particularly for smaller firms.
For many developing countries, the promotion of SMEs has also been a powerful engine of wealth creation. It helps create wealth for individuals seeking business opportunities and provides them with the chance to pursue entrepreneurial aspirations. Both a new business and the wealth the owner can obtain will help boost the economy by providing new products as well as the spending power created for the entrepreneur. It is also often said that SMEs contribute to a more equal distribution of income or wealth. To the extent that SME owners and workers are in the lower half of the income distribution, promoting the growth of SMEs may lead to a more equitable distribution of income.
Notwithstanding the widely acknowledged role of SMEs in fostering economic growth and development, they have continued to face a variety of constraints. Some of the challenges they face are inadequate infrastructural facilities, shortage of skilled labour, high rate of enterprise mortality, low level of entrepreneurial skills, lack of a conducive operating environment, restricted market access and cumbersome regulatory requirements. One of the major difficulties SMEs come across, however, is the issue of access to finance. SMEs, especially in developing countries, suffer from lack of access to appropriate (term and cost) funds from both the money and capital markets. This is due in part to the perception of higher risks resulting in high mortality rate of the business, information asymmetry, poorly prepared project proposals, inadequate collateral, absence of, or unverifiable history of past credit(s) obtained and lack of adequate historical records of the company’s transaction.
In some cases, there is a virtual absence of capital market facilities and instruments that SMEs can access. For instance, the financial systems in most African countries are underdeveloped and provide few financial instruments. Capital markets are still evolving while other conventional sources have no confidence in the credit worthiness of the SMEs.
Non-bank financial intermediaries, such as micro credit institutions, could play a greater role in lending money to the smaller SMEs but do not have the resources to monitor their customers when they expand. The main source of capital for SMEs are their retained earnings and informal savings and loan associations, which are unpredictable, not very secure and have little scope for risk sharing because of their regional or sectoral focus.
In addition to the above challenges that are faced by SMEs, Women entrepreneurs in most of African countries also lack necessary support from the government and relevant organs, hindering their active participation in businesses, according to Grofin Tanzania chief investment officer, Guido Boysen. Speaking in Dar es Salaam, Boysen said women entrepreneurs lacked requisite support to exploit their potential. “Africa is facing a serious shortage of vibrant and progressive women entrepreneurs,” he noted.
According to the expert, many women entrepreneurs in Africa, including Tanzania, are engaged in SMEs as their main source of income because of lack of other opportunities in the formal sector. He said agriculture was one of the sectors, which employed many women. However, Boysen said many African businesswomen were struggling to improve their businesses—from small business to SMEs level but they were constrained by financial and social limitations.
“In most of African societies, women are bread earners. They spend most of their income in family matters instead of using it for developing their businesses,” he said, adding;
“This problem prevents progressive development of women entrepreneurs. It limits their capacity to move from a small-business stage to the next improved business stage.”
In looking ahead and thinking through some of the things that need to happen in order for us to enhance access to capital and improve business skills for women, there is real need to look at both small and big interventions.
What is the role of government, civil society and the private sector in this conversation? In August this year, I attended the COMESA Business Forum in Swaziland. People who attended the forum came from governments, some civil society organisations and the private sector. What was interesting to note was the lack of a visible and articulated women’s presence on issues of business and the private sector agenda. Although discussions were held on issues such as emerging challenges from climate change or indeed opportunities provided by the COMESA/SADC/EAC trading regime, there was still a lack of a real sense of recognition that women entrepreneurs have a role in wealth creation.
Several things emerge
At government level and intergovernmental levels – creating a conducive environment for women entrepreneurs – what does this mean?
At Private sector level – enabling and facilitating women to be more competitive in the market place
At civil society level – Championing the need for policy change on issues such as land rights to enable women access to and control over resources to be a live agenda item on the tables of governments.
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