Most women entrepreneurs face many growth barriers Women in growth modes who require financing “beyond the low cap micro-finance levels” are seriously restricted by their inability to successfully obtain loans from financial institutions, even if they are referred to them, because they are unable to meet the loan conditions pertaining to security.
Limited access to support services is another constraint for these women. Key informants advised that women entrepreneurs lack access to advice, counselling and encouragement. This is largely attributed to a lack of donor-supported services. Women, in most cases, do not have the funds to pay for these services, and those that can afford user-pay programming do not prioritize funds to pay for these services.
Many of the laws and regulations affecting businesses (including licensing procedures) were designed for relatively large enterprises and are therefore beyond the reach of most MSEs, particularly the micro-enterprises, which are predominantly owned by women. Corruption and bureaucracy make matters worse especially for women, who do not have the same opportunities as men to meet and negotiate (bribe) with predominantly male public officials. The UDEC (2002) report expressed amazement that any women in the informal economy managed to achieve the transition to a formal enterprise in such a difficult environment.
Limited access to proper business premises Outside of lending groups, few women are members of women-targeted organizations. As a result, they lack opportunities to enhance their management knowhow by learning from successful women entrepreneurs.
An additional constraint for women in growth firms identified by researchers and confirmed by key informants is the lack of strategic orientation towards growth enterprises in government policy and donor-support programmes. Almost all resources are concentrated at the lowest end of the MSE scale in an attempt to alleviate and reduce poverty, rather than contributing to the development of sustainable enterprises.
In summary, all women operating in the MSME sector are subject to a number of cultural, socio-economic and operational barriers that limit their ability and capacity to take their enterprises to the next stage of development. In addition, women in different stages of transition from the informal economy to the SME sector face other unique challenges. For those who run informal micro-enterprises (where most of the women are engaged), the main challenges are: dealing with costly and complicated formalization procedures (if they wish to formalize); harassment due to operating in locations and premises that are not meant for business; and finding the time required to attend training supported by donors and NGOs. For those who run formal micro-enterprises, the unique critical challenges are in dealing with high and multiple taxes, complex tax compliance procedures, and access to finance. For women entrepreneurs who are already running small enterprises, the main challenges are: limited access to quality and affordable business development services; access to term finance and sufficient working capital to meet their needs; multiple taxes, and compliance with labour laws.
The challenge is to determine what needs to be done to:
• assist women operating in the informal economy to become formal, microenterprises; • assist women formal micro-enterprisers in efforts to become small enterprises; • assist women with small enterprises to grow into larger-small and medium-size enterprises.
Additionally, efforts should be made to identify high-potential “would-be” women entrepreneurs and provide them with an orientation that will lead them to starting small (as opposed to micro) enterprises that are “stronger from the start”.
To learn more about this author, visit International Labour Organization's Website.
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