An investigation into the financial barriers facing women entrepreneurs operating in SMMEs in Tshwane, South Africa

Germinah Evelyn Chiloane-Tsoka

doi:10.4102/jef.v6i2.264

Abstract

The South African women emancipation policy statement and gender equality are critical tools established by government to eradicate poverty among entrepreneurs operating in small business. Khula was established to act as a financial wholesaler to emerging entrepreneurs who needed finance to start and grow businesses. The Small Enterprise Development Agency was established to provide training needs to small business operators. Lack of finance is a major stumbling block to women entrepreneurs reaching their full economic potential in South Africa. Financial collaterals are barriers for women operating in SMMEs in Tshwane. The objective of the study was to investigate the financial barriers facing women entrepreneurs in Tshwane when starting or growing businesses. In order to achieve the results a structured questionnaire and interviews were used as method of collecting data. A sample of 300 women operating SMMEs in six townships of the Tshwane metropolitan area was analysed per a quota of 50 businesses per township. The results indicate that women entrepreneurs lack the financial collateral that is demanded by financial institutions when applying for finance to start or grow their business.

Highlights

The Small Business Act No 106 of 1996, as amended in 2003, was introduced to enable an environment conducive to small business, and medium and micro enterprises
Since the advent of democracy, the South African government has been transforming all sectors for the benefit of disadvantaged South Africans
The South African government, through its ministry of the Department of Trade and Industry (DTI), established the South African women entrepreneurship network (SAWEN) as a vehicle intended to provide mentorship and create more opportunities for women to speak with one voice in South Africa

Summary

Introduction

The Small Business Act No 106 of 1996, as amended in 2003, was introduced to enable an environment conducive to small business, and medium and micro enterprises. Entrepreneurial activity in South Africa, as captured in the GEM report of 2012, indicates that the Total Entrepreneurial Activity (TEA) of South Africa is only 9.1% This was arrived at by measuring the proportion of the country’s adults (aged 18-64) who were involved in starting or running new businesses. According to Maas (2006) women still face financial barriers: banks are unwilling to provide capital to women entrepreneurs and this inhibits their business success when compared to their male counterparts. The GEM report states clearly that women entrepreneurs provide all required start-up capital themselves, whilst their male counterparts, on the contrary, often list investors, bank loans, or personal loans in addition to personal funds as sources of start -up capital. Naidoo articulated that finance is one of major obstacles hindering entrepreneurs This finding confirms the findings by Maas (2006), in the GEM report

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Conclusion