By Bridget Irene, Coventry University
Entrepreneurship Policies through a Gender Lens
Report
OECD Studies on SMEs and Entrepreneurship
Table of contents
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South Africa
Background
The South African Department of Trade and Industry’s (DTI) policy on gender equality seeks to address barriers to women’s entrepreneurship by promoting social and economic integration. The policy recognises that inclusion and gender equality are integral to economic development and are required to increase women's self-confidence, self-reliance, and help women set their own business agenda. To this end, in 2006, DTI created the Gender and Women’s Empowerment Unit (GWE) with the mandate to advance gender equity at the national and international level (DTI, 2006). The Department of Trade and Industry, in partnership with the ILO, also revised the Draft Strategic Framework on Gender and Women’s Economic Empowerment to provide guidance and to advance specific recommendations for the support required to assure the full involvement of women in the South African economy.
In 2013, the Women’s Empowerment and Gender Equality Bill (WEGE) was introduced to the National Assembly by the Ministry of Women, Children, Youth and People with Disabilities (MWCYPD) in order to fast track promotion of gender equality. It was the second national initiative to address the disempowerment and systematic inequality of women. The Bill addressed pervasive discriminatory patriarchal attitudes and lingering effects of the apartheid system that were considered as barriers to women. The Bill also dealt with the “social development” of women, via education and training aimed at eradicating gender-based discrimination and violence and increasing education around access to healthcare, as well as equal representation. Studies show that Black and Coloured women are more likely to experience discrimination and have fewer opportunities than other demographic groups, including Indians and Whites. This applies to a range of women including migrants, refugees, women with disabilities and women in rural areas. These women are increasingly disenfranchised and unable to access financial services or business support opportunities. In principle, the Bill compels “designated bodies” – including big businesses and corporate entities – to extend broad and equal participation of women in the economic mainstream (e.g. 50% of board level or decision-making positions are to be held by women). The “designated bodies” were also tasked with (a) “increasing access to financing, procurement, land rights, skills development, especially entrepreneurial skills and capacity building of women; and (b) facilitate employment opportunities and access to the markets for women.
WEGE has provoked fierce and almost universal criticism from women’s rights organisations. Most considered the legislation to be vague and lacking details about the forms and methods that the “designated bodies” must take for the implementation of the bill, the selection process for “designated bodies,” or the capacity of the relevant departments within the ministry to undertake such a broad scale project. The Bill was passed in February 2014 after several amendments that addressed some of these criticisms.
Policy issue: Access to finance
In 2006, the government initiated the Broad-Based Black Economic Empowerment Act (BBBEE) with the mandate to increase “the extent to which Black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure, and skills training” (DTI, 2006). The Act seeks to address historical exclusion of Black people from the mainstream economy and to promote social cohesion across communities. The Act stipulates that: “in order to comply with the equality provision of the constitution, a code of good practice and targets therein specified may distinguish between black men and black women” (Para 9.4.). Notwithstanding the provisions in the BBBEE Act, the Financial Sector Charter (2003) specifies gender targets in staffing which are extremely low. Gender equality in enterprise development or procurement of finance are not addressed.
The Codes of Good Practice was introduced in 2005. These state that preferential public procurement and enterprise development cannot distinguish between Black men and Black women, despite provisions made in the BBBEE Act that underpin the requirement for compliance with the equality provision of the constitution. As a result, most financial institutions assume that women are automatic beneficiaries of the BBBEE strategy and do not require further assistance. Consequently, the marginalisation of Black women will continue until interventions are implemented to correct this situation. Clarifications notes were issued in the Government Gazette 3899 in 2015, yet the gap between reality and intention remains in terms of transformation. The Preferential Procurement Code was included to promote economic empowerment and create a platform to encourage participation and narrow the gaps inherent in the previous guidelines. Particularly, regulations were designed to reduce “fronting” by large organisations that include Black people (men and women) for the sole purpose of achieving the empowerment status requirement. However, the code emphasised “Black” thus, women, youth and the disabled were summed up as a subset of race. Consequently, gender has been lost in the predominantly male (regardless of race) business environment, thereby undermining the intended “meaningful participation” of women touted in the BBBEE Act. Until now, the codes do not align with the original BEE Act in terms of distinguishing between Black men and women (Para 9.4, stated earlier).
Complementary barriers to women entrepreneurs in South African policy include a lack of entrepreneurship training and small business supports. Notwithstanding a 1995 White paper1 (1995:33) that emphasised the need for women-focused small business training, public business development services do not adequately integrate initiatives to increase women’s access to finance. This is important given that many women entrepreneurs lack collateral, particularly Black women entrepreneurs. To mitigate risk and improve the likelihood of accessing and repaying loans, women entrepreneurs need business supports in the form of training, advice and mentoring.
Conclusions and recommendations
While the policy framework in South Africa is progressive, there are no targets for women in business set out in the codes. Charged with the implementation of the government’s national strategy to support women entrepreneurs, The South African Department of Trade and Industry (DTI) has created the Centre for Small Business Promotion (CSBP). The purpose of the CSBP is to implement the 1995 White Paper recommendations. The focus is to provide a platform for all levels of government (national, provincial and local) to align policies and support measures for the growth and development of SMMEs, especially businesses owned by women or Previously Disadvantaged Individuals (PIDs). Due to legislative ambiguities, the mandate of the BBBEE Act – which seeks to address issues such as facilitating access to capital for women entrepreneurs – has not been achieved. Based on the experiences of women entrepreneurs in South Africa, the following recommendations are offered.
Recommendations for South Africa
Review the BBBEE Act Codes and Industry Charters to distinguish Black men and Black women with respect to targets for women-owned business in terms of the Preferential Procurement Codes.
Monitor and evaluate mechanisms to ensure that the Codes and Industry Charters significantly impact women’s empowerment and remove barriers in business and financial environments, such as the cash guarantees required by vendors against non-performance. These negatively impact women in Preferential Procurement scenarios.
The Department of Trade and Industry could publish a directory of financiers, including contact details, products and qualifying criteria, that is updated a regular basis and made widely available for use by women entrepreneurs.
Encourage collaborations between financial institutions and procurement authorities to create an integrated system that emphasises skills transfer for both parties.
References
DTI - Department of Trade and Industry (1995), “White Paper on National Strategy for the Development and Promotion of Small Business in South Africa”, Pretoria: Government Printer.
DTI - Department of Trade and Industry (1995), B-BBEE Charter, http://www.dti.gov.za/economic_empowerment/bee.jsp (accessed on 26 March 2019).
Gender Stats SA (2011), “Gender Statistics in South Africa”, http://www.statssa.gov.za/publications/Report-03-10-05/Report-03-10-052011.pdf (accessed on 26 March 2019).
Olivia Bliss (2014), “The Women Empowerment and Gender Equality Bill: Can It Live Up to Its Name?” (Oxford Human Rights Hub Blog), http://humanrights.dev3.oneltd.eu/?p=4677 (accessed on 24 June 2020).