Job losses, business closure — Covid hit female entrepreneurs. Here’s how to support them

Studies show 10 to 30% of enterprises registered as ‘women owned’ are not actually owned or run by women. Covid has worsened the situation.

Representational Image | Women from a self-help group making masks | ANI

Godavari Chandrasekhar, 31, used to run a small vehicle repair shop with an annual income of just Rs 1-2 lakh. She gradually started offering diversified services and scaled up her business to a vehicle servicing centre, which now earns her more than Rs 6 lakh annually.

Godavari has transitioned from being a necessity entrepreneur to an opportunity entrepreneur. However, this is not true for millions of women entrepreneurs in India, many of whom remain stagnating in micro and small survivalist enterprises.

Increasing economic opportunities for women is the key to accomplishing the vision for development set forth in the United Nations Sustainable Development Goals (UN SDGs).

Women constitute 13.3 per cent (8 million) of the total 58.5 million entrepreneurs in India, 82 per cent of them in micro-units run as sole proprietorships.

Studies suggest that 10 to 30 per cent of the enterprises registered as ‘women owned’ are not actually owned, controlled, or run by women. The pandemic has further worsened the situation and put women entrepreneurs at higher risk of business closure. Recent research by Microsave highlights that as many as 82 per cent of women-owned micro, small or medium enterprises (MSMEs) reported a decrease in their income, as compared to 72 per cent of male-owned enterprises. They face greater restrictions, decreasing demand, rising costs of inputs, inability to access markets, and an increased burden of care work at home, among other factors that severely affect their income. The story is no different for the startup sector. Funding for women-founded and co-founded startups in India fell by 24 per cent due to the impact of Covid-19.

Need for initiatives

Why is it urgent to create, sustain and help more women to run growth-oriented profitable businesses?

During the Covid-19 pandemic, women faced more job losses and closure of their businesses than men. This was coupled with the automation of routine jobs, which means that economic opportunities for women may continue to shrink. Furthermore, the increased burden of care work also means women have less time for work outside the home that earns them an income. In the absence of a suitable ecosystem promoting women’s entrepreneurship, there is a risk of women’s labour force participation declining further.

Entrepreneurial ecosystems are much like biological environments where different important elements — regulatory, cultural, and economics, in this case — interact with each other to form an optimal environment for talented individuals and innovative organisations to create value if they are appropriately combined and supported. The caveat here is optimal integration and support. Such an integrated system to promote opportunity-oriented entrepreneurship among women in high-value and high-growth sectors is an urgent need.

Numerous studies and our field observations suggest that lack of relevant financial products and enterprise development services along with gender specific barriers discourage women from pursuing entrepreneurship.

Yet, not all is lost. Innovative initiatives to promote women’s entrepreneurship, driven by private and public sector partnerships like Niti Aayog’s Women Entrepreneurship Platform (WEP), offer promise. The WEP acts as a single window for women entrepreneurs to obtain information about government schemes, marketing assistance, funding, and compliance support for their businesses. Another important initiative has been government-led market linkage support for artisans and self-help group-based women entrepreneurs. The annual ‘Saras Aajeevika Mela’ (fair) and events like ‘Hunar Haat’ enable a direct consumer connect for women from all corners of the country. These fairs attract huge footfalls and provide markets and visibility to women entrepreneurs.

More recently, UN Women has enabled State Bank of India (SBI) to launch a Women Livelihood Bond scheme. This scheme is designed as an innovative financial instrument to drive social impact. It gives the private sector the opportunity to invest in women-led enterprises, while allowing SBI to raise low-cost funding. This unique scheme will not only increase women’s access to institutional credit but will also provide support to scale their businesses, consequently spurring rural economies and job creation. Amazon’s timely launch of a store exclusively for women-owned businesses in association with UN Women is a wonderful opportunity, especially in the aftermath of the pandemic where businesses are turning to technology to access markets. As suppliers and customers move online, a conducive atmosphere is being created for women entrepreneurs to negotiate prices, market their products, and reach consumers anywhere in the world.

Ways to enable women-led startups

We suggest six key enablers that would encourage more women to take the road to entrepreneurship:

The first is family support. Social norms and the level of family support can influence and shape women’s decisions, such as the location of the businesses, feasibility of work travel, time spent on business activities, and networking. A recent paper shows how policies meant to encourage female entrepreneurs to migrate to higher-return enterprise sectors should aim to effect change in gender norms at home.

The second enabler is facilitating women’s access to markets and networks. Women’s limited mobility, along with a greater burden of unpaid care work, means that women are not well integrated into formal and informal networks. They do not have access to markets, with low or no representation in local business associations. Better access to market information is a well-documented benefit of mobile phones. However, the digital divide impedes access to e-markets. As per the National Family Health Survey 5 (NFHS 5), less than 3 out of 10 women in rural India, and 4 out of 10 women in urban India have ever used the Internet.

Third, we must make more women leaders in business visible to create role models for young girls, and encourage mentorship wherein successful business leaders contribute back to society by mentoring potential and early stage entrepreneurs. This will create a pipeline of future women entrepreneurs.

Fourth, education in business skills and technology can be a great enabler. Deliberate efforts are required to improve women’s participation in industry-aligned skilling programmes at all levels, across low, medium, and high-skill industrial sectors, preparing women for entrepreneurship opportunities in future-oriented industries.

Fifth, access to capital, or sufficient capital, is a necessary precondition for any enterprise’s creation and expansion. While all entrepreneurs navigate complex challenges and competitive markets, women entrepreneurs face specific regulatory and social hurdles that limit equal access to the assets, credit, and capital required to establish and grow their businesses. UN Women recently ran a survey of 105 women entrepreneurs to understand the impact of Covid-19 on women-owned businesses. The survey found that 70 per cent of women-led enterprises have no history of taking formal loans. Appropriate and relevant products, easing access to long-term and affordable capital for different segments of women entrepreneurs is crucial.

Sixth, it is important to have a supportive public and private sector. The cultures and practices of public and private sector institutions and businesses have a significant impact on women’s economic opportunities. Public and private sector entities have the levers of control to sway the ecosystem in favour of women entrepreneurs when they desire to do so. For example, the government has steadily increased the share of public procurement from women-owned businesses from zero in 2017 to 0.55 per cent in 2020-21. Before Covid-19, only 17 per cent of women entrepreneurs reported awareness about government schemes. It is important to address this information asymmetry and increase convergence among different government programmes for women. It is also important to provide incentives and recognition to industries sourcing from women entrepreneurs, as well as certifying women-owned enterprises. Private sector entities can better integrate women in their supply chains, invest in promising women-led start-ups, and support the creation of an affordable, quality universal child-care system for the country.

Public and private sector players must work on these ecosystem enablers to create future business leaders.

Women business leaders will help achieve the Sustainable Development Goals through their energy and innovation. Women business leaders with a seat at the decision making table can contribute to solving humanity’s toughest challenges like climate change, poverty and disease. We need one hundred per cent of our business talent to kick start the global economy, post the pandemic. This will depend on our ability to unlock the choked pipeline of women’s talent.

Susan Ferguson is a representative of UN Women India. Graham Wright is the Group Managing Director, MicroSave Consulting. Sonal Jaitly is Gender Lead, MicroSave Consulting. Views are personal.