Although women in South Africa start businesses at roughly the same rate as men, significantly fewer of them continue to operate established enterprises after three and a half years. This indicates a substantial gap between starting an entrepreneurial venture and the ability of the business to survive and grow.
According to data from the Global Entrepreneurship Monitor South Africa, only 4.1% of women aged 18 to 64 manage established businesses, compared to 7.9% of men. This imbalance persists even though Africa holds the highest rate of female entrepreneurship globally, according to AXIAN Group. This group notes that female entrepreneurs on the continent still face an estimated funding deficit of $49 billion.
Small and medium-sized enterprises (SMEs) are considered the backbone of the South African economy, as industry estimates show they account for over 60% of employment and about one-third of the gross domestic product (GDP), making their success critical for economic growth and job creation.
Barriers
Data from the Global Entrepreneurship Monitor shows that personal and family circumstances are cited as the reason for business closure by women in 21.5% of cases, compared to 12.1% for men. Difficulties in securing financing also lead to business closures in 21.5% of women's cases versus 17.8% of men's.
Hugo Mjaddu, Executive General Manager for Marketing and Impact Investing at Business Partners Limited, asserts that women continue to encounter obstacles that have little to do with the quality of their businesses. She observes: 'Investor and procurement decisions are still based on assumptions about who looks like a reliable option.'
Lomo Senoamadi, founder of Bashumi Instruments & Control Services, which she established in 2003, states that she regularly has to contend with assumptions regarding who owns or handles the technical aspects of the company. She emphasizes: 'This doesn't happen once, in one meeting. It happens repeatedly, over many years, in various forms.'
Trudy Malek, founder of Ambesha Africa, shares a similar experience, recounting: 'I had to deal with people who assumed I was a secretary, not the founder.'
Financial Gap
The consequences of these barriers become more severe when entrepreneurs require capital for expansion. Wendy Dlomo, founder of the hospitality and property business The Living Collective, shared that applying for early-stage funding required 'excessive preparation just to be considered.' She added that her 'male colleagues came with half the documentation and twice the confidence, and somehow that confidence was often interpreted as reliability.'
For Feziwe Mpaku, founder of Independent Girls Business Enterprise, the lack of accessible funding can determine whether an entrepreneur can seize an opportunity. She explains: 'We are not from families where we can simply borrow money, so we turn to places with higher interest rates, and that eats into our profit.'
Mjaddu believes that compliance costs disproportionately affect small businesses, while networks assisting companies in transitioning from small to medium-sized businesses remain predominantly male. Furthermore, she insists that childcare should be viewed as economic infrastructure, not merely a social welfare issue.
The potential economic cost of this phenomenon is enormous. A Citi study estimates that eliminating the gender gap in business growth globally could add between $1.6 and $2.3 trillion to global GDP and create up to 433 million jobs.
Some Barriers Are Easing
Nevertheless, some practical hurdles to expansion are becoming easier to overcome. Fastway Couriers reports that businesses start in bedrooms, garages, and home offices, and courier infrastructure allows small operators to reach clients far beyond their immediate communities. The company notes that businesses in sectors such as beauty, medical distribution, 3D printing, and perfumery have grown from small or home operations into nationally distributed brands.
Ryan Gaines, CEO of Fastway Couriers South Africa, states: 'Today, many entrepreneurs start businesses at home with ambitions to serve clients nationwide. Reliable courier networks make this possible. Logistics has effectively become the foundation that allows small businesses to scale beyond local communities and build a national client base.'
However, easier access to customers does not eliminate the financial and structural barriers that dictate business survival. For Malek, whose business celebrates its 10th year this year, surviving the initial phase has simply changed the nature of the problem. She says: 'The first year was about survival. Getting any client. Paying rent. Now it's cash flow, large contracts, managing 20 employees, and exporting across borders.'