Read the major findings of ImpactHER’s survey regarding women-led SMEs in Africa

AfricaReport
By Online Desk
ImpactHER's survey regarding women-led SMEs in Africa

- Advertisement -

A survey with over 1,300 women SME owners across 30 African countries conducted by ImpactHER, an impact-driven organization that focuses on bridging the financing gap for women-owned SMEs in Africa, revealed that most women-led SMEs are at risk of permanent business shut down as a result of the pandemic.

The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) initiative, in collaboration with ImpactHER and UN Women, hosted a virtual high-level panel discussion on empowering women entrepreneurs in the fight against COVID-19.

Panelists and participants discussed the results of an ImpactHER survey of more than 1,300 women-owned small and medium enterprises (SMEs) in 30 African countries about the impact of COVID-19 on their businesses.

Impact of COVID-19 on Women-led Businesses

• Women-led businesses across Africa are already significantly impacted by COVID-19.

• The survey revealed that most women-led SMEs are at risk of permanent business shut down as a result of the pandemic.

• In responding to how COVID-19 has affected their business operations, 80% of the respondents reported that they had to temporarily shut down their business. Of those that are still fully or partially operating, 41% reported that they had significantly reduced the number of work hours, 34% reported that they laid-off workers, and 25% reported that they had to reduce their employees’ salaries.

• Similarly, in a survey conducted by UN Women with 165 women entrepreneurs in Mali, as much as 96% had seen their economic activity reduced in the first two months of the crisis.

• Also, women-led businesses are being impacted at a faster rate than SMEs led by men.

• Over 90% of ImpactHER’s respondents reported that they need the US $12,079,000 as a result of the impact of COVID-19 on their businesses – an average of $9,123 per business (this estimated financial needs was made approximately three weeks into the lockdown). The respondents reported that the funds will be used to pay salaries, office rent, and other ongoing operational support; as well as re-engineering their businesses to be more suited to the world’s new realities.

• A number of women interviewed also reported an increase in unpaid care work as a result of school closures due to the lockdown measures.

• The lockdowns have severely impacted women-led businesses cash flows, as women SME owners reported decreased revenue, while also having limited reserves to sustain their business.

Gender-Sensitive Policies

To mend the gap, stimulus packages and post COVID-19 policies must be gender-sensitive, they must take into account the barriers that women-led SMEs faced prior to the pandemic that prevented their businesses from achieving their economic potential. In addition to the gender finance gap, the barriers included:

– Gender gap in access to technology
– Lack of information
– Unfavourable Loan Terms

Short-Term Measures

• Stimulus packages must be designed and disbursed from a gender lens perspective to ensure that women-led SMEs can benefit. These packages could be structured such that there is a percentage allocation for women-led SMEs or separate stimulus packages are carved out for women-led SMEs.

• External collateral requirements should be relaxed or no longer be mandated by financial institutions for women-led businesses.

• Women should be involved in Africa’s economic recovery policy formulation processes, especially those that impact SMEs. Women business associations participation would promote targeted interventions that address the unique challenges that women entrepreneurs face during and after the pandemic.

• Governments should implement principles of affirmative procurement for goods and services related to the COVID-19 response, from food to provide food transfers, to masks or other protective equipment.

• African Central Banks and Financial Institutions should be intentional about availing loans with reduced interest rates and longer repayment period to women-led businesses during and after the pandemic.

• African governments should offer tax breaks to African Multinational Enterprises that outsource segments of their operations to African SMEs, especially women-led SMEs.

Medium & Long-Term Measures:

• African banks should work with women-SME organizations to structure viable products that are gender-sensitive, palatable, and address the unique needs of women-led SMEs. Such an approach would allow women entrepreneurs to be well-positioned to access capital.

• African Governments should offer tax breaks for individuals that invest in women-led SMEs. Such a practice would encourage private sector participation in bridging the gender financing gap.

• Financial institutions need to demystify the loan application process by offering credit literacy programs so as to encourage women to apply for loans.

“Finally, the post-COVID19 world will probably be very different from the world we lived in just a few months ago. As countries and societies think about their future and recovery plans and strategies are being shaped, there is an opportunity to Build Back Better and address some of the pre-COVID faults that have led to entrenched gender inequalities including in the world of business,” the policy brief stated.

“Policies which can be game-changers for women entrepreneurs in Africa in the future include land reforms that provide women with equal and effective rights to land, accompanied by the resources and necessary mechanisms to make them happen beyond paper. Also, as countries identify the sectors that will drive growth in the post-COVID era, from green jobs to re-industrialisation efforts, or as borders open up and African Continental Free Trade Area (“AfCFTA”) operationalization picks up, it is critical that women-led businesses are well-positioned in those key areas of the economy through the right combination of education, innovation and private sector development policies,” the brief added.

Online Desk 956 posts

Editorial Desk at Agrigate.Global

You might also like More from author