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4.2.1 The challenges and barriers of growth: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

Guest post by: International Labour Organization

Article Overview: Most women entrepreneurs face many growth barriers

4.2.1 The challenges and barriers of growth: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

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”.

Related Articles
  1.2 Mission Objectives: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
  1.3 Methodology: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
  8.0 Promotion of women’s entrepreneurship: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
  1.1 Background and Introduction: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
  8.1 Recommended actions – promotion: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

Article Tags: informal economy, Limited access, micro enterprises, successful women, women entrepreneurs, women entrepreneurs



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