Africa has major socio-economic challenges that require rapid and innovative solutions, and the emergence of more women entrepreneurs and the growth of more women-owned businesses potentially offers the solution. So, what is holding women back from starting new entrepreneurial ventures and driving the African economy and society forward? Is it their own reticence or the apparent lack of support from the business and financial world?
Earlier this month, reading an interesting article in Venture for America by Andrew Yang, “Here’s the counter intuitive reason we need more women starting companies”. What he had to say made sense, not just in a US context, but was also highly relevant here in Africa. He was reflecting on some of the most recent successful women-founded businesses in the US such as the hugely successful Spanx started by Sara Blakeley, creating slimming and firming hosiery for women, which today is a billion dollar company; or Theranos an innovative blood diagnosis company founded by Elizabeth Holmes when she was just 19 years old, and whose company today is valued at US$ 9 billion. These inspirational women entrepreneurs are, however, in the minority in the US and there are a number of reasons for that, many of which will strike a chord to women here in Africa. For example, 88% of women-owned businesses in the US are sole proprietorships with no employees, and only 2% of those companies reach US$ 1 million in revenues. A similar pattern exists in Africa, with women starting their own businesses, many out of necessity, but simply don’t grow out of that solopreneur status, either because they don’t have the necessary financial or business support, or indeed the right nurturing environment in which their businesses have the opportunity to grow and employ others.
Yet, just as in the US, Africa really needs more successful and sizeable women startups if the economy of the region is to grow and become globally competitive. Also, it is a fact that women tend to startup very different types of companies to their male counterparts; they are more unique in their product and service offerings; they approach social challenges and problem solving in a different way; they tend to operate their companies differently, with a conscious attitude to making a positive contribution to society as a whole, not just a focus on the bottom line. Basically women startups that are successful and grow to a point where they can fulfil their potential, have the capability of creating a better and more socially conscious and responsible world. So, what is holding us back as women entrepreneurs here in Africa and what can be done to address the situation?
Firstly, women entrepreneurs in Africa need more role models in the form of other successful women who have blazed a trail before them, starting new businesses in difficult circumstances, and emerging triumphant having built new companies and brands from scratch. They need to see examples of women who are juggling complex lives, working long hours in the business and still managing to run a household, take care of children, and hold a relationship together with their spouses. Many established women entrepreneurs or aspirant young women entrepreneurs just starting to think about starting up a business, can take comfort from the fact that so many women have successfully battled all the challenges and role models to follow in the difficult times.
Secondly, there needs to be more financial and business support for women starting out in business, or looking to grow their existing companies. Women in Africa typically invest their own hard-earned money in the early days of establishing a new business venture, and due to the inequity of salaries on the continent for women, they always start out with a very limited amount of capital. This means that cash flow is always tight in the early years, and indeed, can often remain the case throughout the majority of the business operating years. Many women entrepreneurs are often learning the business ropes the hard way, on the job, and could often use more business advice and support to ensure they are operating their businesses in the most effective way.
Thirdly, the bulk of venture capital investments tend to go to male operated companies and the investment decisions tend to be made by male investors, simply because the number of angel investors and venture capitalists who are women are proportionately small. So, women need to become much more proactive in their approaches to secure the interests of these influential people and to be better prepared with solid business proposals in order to gain their attention and their positive decisions.
Finally, it is important that young women in their school and university years, if not earlier, are taught that they can be anything they want to be when they are older, including becoming successful entrepreneurs, building their own businesses and brands, and forging their own career and business paths. They need to be supported in that decision making process, and educated with sound business management and financial planning skills to assist them on their entrepreneurial journeys.
Women entrepreneurs have such a key role to play in the economic growth and social development of Africa – let’s make 2015 the year that we see many more of them emerging as business forces to be reckoned with.