Are women-led businesses too risky to invest in? Or is it that the investor world does not understand the uniqueness of women-led businesses?
How to make businesses led by female entrepreneurs attractive to funders and investors was one of the issues in the concluded Sanklap Africa Summit 2023 held in Nairobi.
The summit seeks to bring together entrepreneurs, investors and other stakeholders to discuss issues around access to funding and the market for startups.
Access to capital
In almost every study that speaks on women entrepreneurs’ challenges, whether in Kenya, the rest of Africa or the world, access to finance tops the list.
Take for example research by Bayer Foundation which cites the same in a white paper published in September 2022 titled Accelerating Change in Sub-Saharan Africa by Supporting Female Entrepreneurs.
“Lack of funds was the biggest obstacle perceived by all applicants – with around two-thirds specifically mentioning this issue,” reads the research in part.
Recently, The Independent published research showing that half of businesswomen in the UK are turned down from accessing loans.
The women are even further branded ‘part-timers’ because of the other responsibilities they hold as mothers or wives in their families.
At a press conference during the summit, Chukwudi Onike, Program Officer at Visa Foundation emphasised that the issue with access to funds is not only a Kenyan or African issue.
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It is global.
“We are dealing with these issues in Europe, in the US and in Latin America,” he said.
Businesses they excel at
He dared to mention that research has proven that there are some business lines where female entrepreneurs have excelled compared to their male counterparts.
“But that has not translated to investment opportunities. And to be honest, it is not just in Africa but the world,” said Mr Onike.
One reason behind this, he notes, from the work Visa Foundation does in supporting inclusive economic growth through businesses and communities, is the perception of risk in women-led businesses which he said is very hard to overcome.
“And to be honest there is a lot of research that proves that women entrepreneurs are more successful than men in a number of areas,” said Mr Onike.
However, the market seems to view male and female entrepreneurs through the same lens. And as such, their male counterparts appear superior.
This works to the disadvantage of female entrepreneurs which explains why the research, as reported by UK’s outlet Independent, categorised women in business as ‘part timers’.
“Women face barriers that men do not face. For example, a lot of women take care of children and have other roles in families other than running the business,” noted Onike.
At the summit, Vis Foundation announced a Sh126 million ($1 million) grant partnership with two African organisations towards building an ecosystem for women entrepreneurs across the continent.
These two organisations are AfriLabs, the largest and most diverse community technology hubs for innovators and entrepreneurs in the continent and Graca Machel Trust, a women-founded and led Pan African non-profit raising the profile of women’s economic empowerment.
It was noted at the event, with reference from World Bank while Africa boasts of the highest growth rate of female-run businesses in the world, women only receive one per cent of funding from venture capital
“Women business owners continue to face challenges that are unique to them—ranging from patriarchy, cultural norms and unconscious bias that impacts women’s ability to access markets, finance, technology and networks,” read a statement announcing the partnership.
Lucie Pluschke East Africa Hub Manager for GIZ, German’s main development agency, noted that there is a need to have specific and well-targeted programmes for women.
“A lot of women reveal that they have to deal with a lot of self-doubts from even people closer to them questioning the viability of their businesses,” she noted.
A lot of women reveal that they have to deal with a lot of self-doubts from even people closer to them questioning the viability of their businesses
She said they(women) should be trained not only in their area of business but also to gain the confidence of facing the market and its challenges.
Mr Onike Program Officer from Visa Foundation cites that some challenges are structural and so it needs more than funding women entrepreneurs.
“It is not so much about investing more in women but it is also making sure we are tailoring solutions to the lives of the women,” said Mr Onike adding that this is an area where the foundation has done a lot of work.
These structural challenges will be what the Sh126 million funding seeks to break through the Graca Machel Trust.
Kenya is one of the countries that stand to benefit from the flagship enterprise development program ‘Women Creating Wealth’. Other countries are Uganda and South Africa.
The program targets 100 women-led small to medium-sized businesses.
“We are proud to partner with Visa Foundation to break down some of the structural barriers faced by women entrepreneurs in Africa,” said Graça Machel Trust chief executive Melizsa Mugyenyi.
“It’s an honour for our programs to be recognized by a leading organization like Visa Foundation, with a like-minded mission of spotlighting gender-lens investment and women’s empowerment.”