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Access to finance – women are still struggling to survive in the business environment

Written by Editor

February 21, 2023

By Bushra Razack

Entrepreneurs and small businesses in South Africa face numerous challenges in their efforts to be sustainable and successful. These challenges are exacerbated for women who struggle more than men to access the necessary funding and are confronted by both gender and cultural biases as well as inadequate support systems, amongst others. 

The Mastercard Index of Women Entrepreneurs reveals that women’s advancement in South Africa is constrained by less supportive entrepreneurial conditions compared with other global economies, ranking just 37th in the global ranking of supporting entrepreneurial conditions.  Encouragingly, the latest index revealed that despite the gender gap and impact of the Covid-19 pandemic, women in South Africa are making progress as entrepreneurs, moving up a place to rank 37th on the 2021 index. The country also moved up two places on the Women Business Owner Benchmark.

Despite these encouraging metrics, Mastercard’s research found that South Africa has room for improvement when it comes to women’s access to finance – ranking 40th globally – and government SME support – ranking 54th globally – as well as financial inclusion – ranking 36th globally. 

In a country characterised by high levels of unemployment, it’s important that more women are supported to start their own businesses, particularly as research indicates that women tend to gravitate towards industries that create jobs. According to the South African Women Entrepreneurs Job Creators Survey, employment creation is one of women’s key motivating factors with 90% of women entrepreneurs saying it was either ‘very important’ (74%) or an ‘important’ (16%) consideration. 

The challenge, however, is that South Africa’s well-documented failing infrastructure and local service delivery failures have an outsize impact on township and rural communities with the growing digital divide in townships fuelling inequality. 

Townships were never designed to become major economic drivers. The result of this is that today they are characterised by high rates of unemployment, inadequate housing and challenges with education, healthcare, transport, and crime. Furthermore, inadequate digital access and uneven broadband distribution is fuelling a growing digital divide. 

World Bank economist Sandeep Mahajan says what is missing from many urban townships in South Africa is a viable middle-ground, middle-income economic structure that hosts a range of robust businesses, both labour-intensive and small enterprises suitable for absorbing the available skills levels amongst unemployed township residents. 

That’s exactly the vision behind the establishment of Philippi Village, an integrated, mixed-use development situated in the Cape Flats township of Philippi in the Western Cape. The village aims to provide a community-centred safe space for both local residents and businesses, offering a business hub which includes affordable rental of office and workshop space as well as communal workspaces and conference space. 

The mission of Philippi Village is the co-creation of a vibrant space that connects the Philippi community to services, employment, educational opportunities and cultural activities. Supporting women entrepreneurs with access to training and opportunities for development is key to this mission. We recognise that in townships such as Philippi, women are in many respects locked out of the economic system. Although there is no one solution to removing these obstacles, we believe that Philippi Village can play a role in reducing them.

 

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The mission of Philippi Village is the co-creation of a vibrant space that connects the Philippi community to services, employment, educational opportunities and cultural activities. Supporting women entrepreneurs with access to training and opportunities for development is key to this mission. We recognise that in townships such as Philippi, women are in many respects locked out of the economic system. Although there is no one solution to removing these obstacles, we believe that Philippi Village can play a role in reducing them. 

We are doing this by fostering a culture of collaboration and facilitating an environment that allows members of the local community, especially women, to build their own economies. We currently have a number of initiatives in place aimed at systematically addressing the many challenges that women in particular face. 

While Philippi Village boasts world-class fibre and wireless internet access, we are currently exploring how to use IT and technology to become more efficient. We’re also working with partner organisations Afrolabs and CoderLevelUp to help address the digital divide. At the same time, Afrolabs is working closely with Philippi Village to better understand how technology and humanity work together. 

We offer support programmes that help informal traders by connecting them with cashless payment options as well as by providing them with technology demonstrations and training. We also provide the local community with access to computers when necessary. 

Coming from a place of community sovereignty, Philippi is strategising an approach of technology for, and of, the people. This involves decentralised algorithmic governance and microeconomics that focus on stakeholder belonging and responsibility over its economies and environment. We are incredibly excited to begin a journey with Benjamin Gellie, a Social Ecosystem designer to better understand the ways in which digitisation is a double-edged sword. It is a tool to control and that allows control. Philippi hopes to aid in digital skill building within the community that will flip the traditional wielders of technology and allow digital agency within the community.

The hub is home to technology tenants including Women in Tech South Africa, a global organisation that fosters inclusion, diversity, and equity in STEAM with a particular focus on young girls and women, and Close the Gap, an international social enterprise that aims to bridge the digital divide by offering high-quality, pre-owned IT devices to educational, medical and social projects in developing and emerging countries. 

Cognisant that one of the biggest barriers women entrepreneurs face is access to finance, we provide access to stronger networks with investors, as well as large group of peers who can provide feedback and guidance in terms of how to access venture capital. 

We have also established a number of women-focused support networks, forums and groups specifically aimed at women in business and we are working to grow and support women entrepreneurs through strategic educational workshops. 

To provide women entrepreneurs with the necessary childcare support, we offer an early childhood development centre as well as after-school and holiday programmes to assist working mothers. 

None of these initiatives in isolation will be sufficient to address the many constraints and challenges that women in business face. However, it’s important that we make a start. And Philippi Village, by design, is ideally suited as a space to co-create solutions that start to move the needle in terms of helping women to succeed as entrepreneurs and as business owners. 

 

Bushra Razack is a South African-born community development specialist and CEO of Philippi Village, a business and community hub located in Philippi, Cape Town. 

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