Female entrepreneurship in South Africa

A new report finds that countries are not meeting the most fundamental conditions required for female entrepreneurs to prosper.

The second annual Gender-Global Entrepreneurship and Development Index (GEDI) 2014, commissioned by Dell, ranked South Africa 11th out of 30 countries surveyed – in a 2nd tier of ‘moderate performers’.

South Africa ranked 9th in the original survey, with a score of 43 out of 100, although the original index only contained 17 countries. In 2014, the country’s score was at 42 out of 100.

The highest performing countries in the 2014 Gender-GEDI rankings are all OECD member countries with highly developed economies, and for the second year in a row, the US (83) and Australia (80) came out on top, followed by Sweden (73), France and Germany (tied at 67).

2014 Gender-GEDI rankings

# Country Score
1 United States 83
2 Australia 80
3 Sweden 73
4 France 67
4 Germany 67
6 Chile 55
7 United Kingdom 54
8 Poland 51
9 Spain 49
10 Mexico 43
11 South Africa 42
11 South Korea 42
11 China 42
14 Peru 40
14 Japan 40
16 Panama 39
17 Thailand 38
18 Turkey 36
18 Russia 36
20 Brazil 35
21 Malaysia 32
22 Jamaica 30
23 Nigeria 29
24 Morocco 27
24 Ghana 27
26 India 26
27 Uganda 19
27 Egypt 19
29 Bangladesh 17
30 Pakistan 11

2nd tier countries

The fourteen countries in this category included both OECD countries and emerging economies predominantly in Latin America and East Asia but also in Eurasia and Africa.

“The main strength seen in these countries is their balanced results: this tier performs moderately well across most pillars, rather than exceptionally well in just a few areas. In most cases, there is a reasonably good business environment and fairly good access to resources,” the report said.

It noted that these countries also tend to do well in terms of women’s willingness to take the risk of starting a business and are not deterred by failure.

“They do reasonably well for access to finance and female startup activity rates. A noticeable weakness is the lower level of female leadership.”

Other weak areas tend to be the same as for top performers: low levels of tech start-ups and low levels of growth oriented female entrepreneurs, the report said.

In order to improve, countries in the second tier would need to:

  • Break up monopolies in the business environment that crowd out newcomers; and;
  • Improve the use of and investment in new technologies;
  • Increase opportunities for and shift attitudes towards women in senior management and;
  • Develop and support programs that promote female entrepreneurs’ equal access to finance and the resources to grow.

Africa

The highest ranking country in the Africa region is South Africa, with Nigeria, Ghana and Uganda also featuring.

The Africa region is characterized by a high level of female entrepreneurial drive, particularly in the case of Opportunity Perception, with an average of 69% of the female
population identifying opportunities to start a business, the report said.

The female start-up activity rate is also high at 8.6 female start-ups for every 10 male start-ups. Ghana, as an example, has more female start-ups than male at a rate of 121 to 100.

Also, the Africa region has on average good female representation in leadership: 39% of managers and senior officials are female, the report noted.

Overall, in 83% of the sample countries, female managers make up less than 40% of total managers. Only five countries have 40% or more female managers. Jamaica leads with the highest percentage of female managers (59%), followed by Ghana, Panama, the United States and Nigeria.

South Africa is ranked 15th, at a fraction over 30%.

In addition, for four countries, the percentage of women in management is 10% or less:
South Korea (10%), Turkey (10%), Japan (9%) and Pakistan (3%).

For countries in Africa, the report said: “The region’s weaknesses are mainly related to low educational attainment amongst women in general and female entrepreneurs in particular.”.

Of the African countries surveyed, only 46% of the adult female population has completed secondary education and only 13% of female business owners have a college education. Also, there is little availability of equity finance.

The report said that access to a formal bank account is critical for high potential female entrepreneurs, especially since it is a necessary precursor to financing bank loans, credit lines that fuels business growth.

However, in 14 of the 30 countries included in the Index, 50% or more of the female population is unbanked.

For South Africa, 51% of women have access to a bank account at a formal institution, the report said.

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Female entrepreneurship in South Africa