Global Resources

Small and medium scale enterprises in African setting: the place of women

Author: I. C. Igbanugo, M. C. Uzonwanne, R. U. Ezenekwe
Publisher: International Journal of Economics, Commerce and Management
Publication Date: Mar 2016

Small and medium scale enterprises (SMEs) are a major driver of economic growth in developing countries, and with between 31-38% of SMEs run by women, it is vital to recognise and support women entrepreneurs as a critical component of national economies. However, in some areas such as North Africa, only 14% of SME’s are owned by women, testament to both systemic barriers, and a vast, untapped resource for economic growth. To shed light on this issue, this study examines the contribution of women to SMEs in Africa, and identifies the factors that limit the success of women business owners.

 

The study gave women-owned SMEs a structured questionnaire, chosen using a random sampling technique, and resulting in 240 completed responses from multiple African countries. Before presenting the findings, the authors lay out the conceptual and theoretical frameworks used in the study, namely Solomon and Freire’s ‘Theory of empowerment’, and Peter Drucker’s ‘Theory of opportunity’. Next, an empirical literature review is presented, with a number of potential variables, or barriers, identified. These are then used as the basis for the creation and analysis of the survey and its resultant data, which then undergoes Chi-square testing and logit regression model to test the hypothesis.

 

The results show that 89.2% of women said they could not secure financial assistance, mostly because of their social status. This represents a highly significant impediment to business growth. A positive impact of management and business training was found; of women who had received business training, 88.2% registered some growth to their business, whether through increased turnover, increased profits, or improvements in management or service delivery. A negative relationship is identified between religious value systems and women’s entrepreneurial efforts, though while 93% of Hausa/Yoruba Muslims indicated that their setting and value system undermined their work, only 45% of Christian respondents felt the same.

 

A key finding regarding family responsibilities and child care was that the majority of the overall growth registered by respondents was from those who were either married and beyond child-bearing age (54%), or single women without children (29%). Only 17% of the overall growth was through married women who are still bearing and caring for children, showing that family responsibility and childbearing have a significant negative effect on the performance of women-owned enterprises. The final key factor identified by the data is the importance of networks and societal position, with 86% of respondents reporting large social and economic networks recording significant growth rates.

 

The authors make recommendations to different stakeholders based on the findings of the study:

 

 

  • The governments of African countries should ensure that legislation provides equal opportunities for women and men. Where legislation is gender-neutral, government should also make sure that non-discrimination is ensured.

  • Government should partner with financial institutions to enhance women’s access to finance, with the aim of substantially closing the wide credit gender-gap.  

  • African women leaders should help women to form business groups that will enhance their networks, and their access to information and credit.

  • NGOs should embark on sensitisation and education campaigns aimed at gender equality, and changing the societal perspective that is inhibiting the social status of the African women.