Business: Female founders and Africa’s economic growth

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March has evolved as a very important month globally because it is the month designated for celebrating women. Precisely, tomorrow the 8th of March is International Women’s Day 2021, a global day celebrating the social, economic, cultural, and political achievements of women.

Women-owned ventures are strong catalysts for economic development, and when female enterprises thrive, this reflects positively on society and is happy- a win-win situation for everybody. Today, more and more audacious women are taking the lead in the entrepreneurship space across the globe. In Africa, the 2020 Mastercard Index of Women Entrepreneurs (MIWE) report ranked Uganda (39.6 per cent), Botswana (38.5 per cent), and Ghana (36.5 per cent) as the world’s three leading economies with the most female business owners.

Since the Index’s benchmark indicator is calculated as a percentage of total business owners, what this translates into is the welcome reality that women make up the majority of entrepreneurs. A recent World Bank report also lends credence to this fact. Ironically, however, women entrepreneurs across sub-Saharan Africa continue to earn lower profits than men – 34 per cent less on average. In addition, numerous female-led ventures are micro and small businesses with little or no opportunity to grow and scale.

“Most of these businesses tend to have no employees and have low growth expectations: they are, for the most part, one-woman enterprises oriented to consumers,” a CNN report stated as far back as 2015.

However disheartening the situation might be, female entrepreneurs refuse to give in or break even in the face of economic and other social challenges peculiar to them. Instead, they are flexible enough, increasingly demonstrating a low fear of business failure, innovativeness, creativity, and a zealous commitment to contribute to their communities.

We live in an era where, to a large extent, representation matters, yet a significant underrepresentation of women still exists in the tech sector as well as other male-dominated industries.

Eunice Baguma Ball, founder of the London-based Africa Technology Business Network (ATBN) argued that if given the right incentives, African women can unleash their potential in the continent’s growing tech sector.
The gender gap in the tech sector is nowhere near closed. As such, it needs to be given more attention, especially in Africa where gender inequality is high.

For this reason, we need an all-hands-on-deck approach to change the present narrative. Basically, everyone has a part to play ranging from investors, decision-makers in tech-driven organisations to the governments.

Why is there so much attention around women-owned ventures? There are excellent reasons some of which include the social and economic benefits they add to their communities in accord with the UN’s SDG Goal 5. That said, consider the following as measures to enable women to forge ahead in this period of global digital transformation.

Bridging the funding gap

Although the tech sector is slowly shifting to accommodate more female-owned startups, the investment landscape is still heavily skewed towards established male-led tech companies and digital unicorns.

Interestingly, study upon study reveals that not only do female-led ventures perform better than males; they generate higher investment returns than their male counterparts. If that’s the case, supporting thriving and high-potential female-owned startups should be a piece of cake, right? The stats tell the opposite.

In 2019, less than five per cent of VC funding for African startups went to companies with women co-founders.

In 2020, Crunch base data reveals that global venture funding to female-founded companies dropped significantly. Considering that more than 800 female-founded startups globally received about $4.9bn in venture funding in 2020, through mid-December, the report discloses that compared to the same period in 2019, there’s a 27 per cent decrease.

SOURCE: PUNCH NIGERIA

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