Approved But Not Contracted: Assessing the Challenges of Women Owned Small and Medium Enterprises Integration into the Formal Economy in Malawi

Abstract

Women economic empowerment has become an established policy goal in a number of countries. There is currently increased belief that this goal can be achieved by supporting small and medium enterprises (SMEs). To this end, restructuring of economic activities to facilitate women participation in the formal economy is seen as a sure way to developing SMEs. Integration of women owned SMEs into the formal economy is particularly perceived as facilitating women owned SMEs access to investment capital, business and market opportunities. The process of facilitating new entrants into the formal market, however, involves negotiations and contestations among market actors. Employing the social capital concept, this paper examines the challenges of women integration into the formal sector in Malawi. Data for this paper was collected through structured interviews and focus group discussions with women owned SMEs. The study findings demonstrate that unless accompanied by enforcement mechanisms, women integration into the formal economy will remain symbolic than real. While there is a lot of rhetoric for the integration of women owned SMEs into the formal economy, formally registered women owned SMEs largely survive through informal transactions. In particular, the findings demonstrate that bridging social capital that enables entrepreneurs to operate in the formal economy is locked out for many women forcing them to depend on informal bonding social capital.