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Let’s Celebrate Quality, Not Just Quantity Of Women-Owned Businesses

On the face of it, the progress is impressive: four out of the top 10 countries with high women business owner percentages are in Africa.

Indeed, since the recent release of the 2019 Mastercard Index of Women Entrepreneurs, Ugandans have been proudly sharing the report on social media. The Mastercard Index profiles the progress and achievements of women-owned enterprises in 58 countries around the world. It also measures changes in the environments within which these businesses operate.

In this 3rd edition of the report, Uganda, Ghana, Botswana and Malawi are among the top ten countries with high women business owner percentages. In Uganda and Ghana, nearly 4 of every 10 businesses are woman-owned.

This is a commendable achievement, especially in light of the high hurdles that women business owners in Africa must overcome in order to successfully pursue their business dreams.

As we celebrate these numbers, I am reminded of Africa’s drive for Universal Primary Education (UPE). The resulting increase in pupil enrollment was not always matched by an improvement in the quality of education.

Ghana introduced UPE in 2005. While enrollment numbers increased, a 2014 analysis of pupil performance in the Basic Education Certificate Exam (BECE) found that the number of pupils who achieved the passing grade decreased from 60% to 50% between 1998-2011.

Uganda introduced UPE in 1997. By 2019, the number of registered pupils in primary schools had almost tripled from 3 million to 8.7 million. While those figures are impressive, UNICEF Uganda found that less than half of the enrolled children were literate at the end of primary school.

While we celebrate the global recognition for the African countries that show the highest number of women-owned businesses, I cannot help but wonder about the quality of the businesses we are celebrating. Information on quality would give us an indication of the businesses ability to survive, become profitable and grow. Profitable businesses contribute positively to the livelihood of the proprietor and the broader economy at large.

In addition to providing the number of women-owned businesses, researchers would greatly contribute to an understanding of the quality of the participating businesses by investigating and including the following areas at a minimum: the nature of business, the duration of business existence and the business size.

Several studies show that limited access to credit facilities causes women to start businesses that require low levels of investment. These businesses are typically in line with women’s gender roles for example, catering services, daycare services, hairdressing and light food processing. In turn, these low investment enterprises typically yield low returns.

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By including information on the nature of businesses, the Index would strengthen our understanding of the sectors in which women-owned businesses operate. It would enable us to review whether women gravitate to low investment – and often low return – businesses that make a minimal contribution to the economy.

It would also be interesting to further our understanding of the reasons behind the differences, if any, in the nature of businesses that women lean towards in the different countries. Over time, we would be able to track any changes in the nature of businesses that women tend to launch. For example, we would be able to tell if there was a shift from low-tech to high-tech start-ups over time and understand the reasons why.

Low business survival rates in Africa provide one of the reasons why it is important to understand how long the participating women-owned businesses have been in existence.

In 2017, Ghana’s Minister for Business Development, Ibrahim Awal Mohammed observed that 75 percent of businesses in Ghana fail within the first three years. He also noted that businesses that survive the three-year mark do not last beyond ten years of operation. In the case of Uganda, various reports put the business survival rate at just 50 percent.

By including data on business longevity, the Index would help us understand more about the types of women-owned businesses that stand the test of time.

Another important set of information to understand is the size of the participating businesses as measured by revenue and number of employees.

In a 2017 article in the International Journal of Research & Reflection in Management Science, Samuel Muriithi quotes data from Uganda’s Ministry of Trade (2015) showing that Uganda’s SMEs contributed 18 percent to the Gross Domestic Product (GDP) and 90 percent to employment. The same report quotes data showing that in Ghana, SMEs contribute 70 to GDP and 49 percent to employment.

We most certainly celebrate the global recognition received for the quantity of women-owned businesses in Africa. However, when assessing progress and achievements, quality matters too.

The Mastercard Index of Women Entrepreneurs demonstrates a commitment to deepening our understanding of the progress and achievements of women-owned businesses. But we need more. By adding quality measures to the numbers in future reports, Mastercard would make a valuable contribution to changing Africa’s business landscape.

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