African Businesswomen need support

By Gregory Simpkins

In my time in and out of the U.S. government, I have seen and heard much about the value of women entrepreneurs. Years ago, when I managed a grant to the League of Kenyan Women Voters, they had a poster in their headquarters in Nairobi of a woman with multiple arms, denoting the many roles that women play across the continent – and indeed throughout the world – in business. In fact, I have been told by African expatriate colleagues that they acquired their business acumen not from their fathers but from their mothers.

It is well-known that African women are the backbone of communities and offer the continent’s greatest potential to unlocking economic growth since they provide the majority of labor and invest the majority of their income into their families and communities, but unfortunately, most women experience unnecessary barriers that limit their ability to fully participate in the economy. Reductions in the gender gap in education, health, political participation and economic inclusion would result in an increase in the continent’s economic competitiveness, but some African societies still have not accepted to achieve those goals.

The African Women’s Entrepreneurship Program (AWEP) was initiated in 2009 as an outreach, education and engagement initiative targeting African women entrepreneurs to promote business growth, increase trade both regionally and to U.S. markets through the African Growth and Opportunity Act (AGOA), create better business environments and empower African women entrepreneurs to become voices of change in their communities. Globally, women comprise 50 percent of the global population and 40 percent of the global workforce, yet only own about 1 percent of the world’s wealth.

I was fortunate enough to have been one of the earlier Americans to interact with these AWEP businesswomen. It seemed at the time and has been confirmed to me since, that all too many U.S. government officials underestimated the impact of AWEP early on. There were numerous voices in government that doubted the viability of an organization focusing on African women entrepreneurs. However, they quickly found out that they had a tiger by the tail, so to speak.

The image in many minds in the U.S. government was that the typical African businesswoman operated a stall in a market. Consequently, many U.S. policies to help African women focused on microloans for the very small women businesspeople and overlooked the robust businesses run by African women. In fact, it took the backing of then-Secretary of State Hillary Clinton to force State Department officials to support the full participation of AWEP at the AGOA Forum in Lusaka, Zambia, in 2011.

Actually, the right help to African businesswomen has been shown to be mutually beneficial. It was explained to me years ago that the reason Coca-Cola outcompeted Pepsi in South Africa was that Coca-Cola relied on a broad chain of market women to sell their products while Pepsi looked for quick mass sales through black South African companies that promised more than they could deliver. Coca-Cola developed a process whereby the market women were nurtured and helped to grow. These women tended to be traders – selling what they could but not planning for competition and finding their niche in markets they understood well.

These women adapted and flourished with the tools that companies such as Coca-Cola provided and once AGOA was fully explained to them by me and others. In fact, I helped to negotiate a trade agreement between AWEP East Africa and the African Merchants Association, an organization of East Coast Diaspora importers of African goods. The reason this did not succeed is not due to the failure of AWEP women to step up to provide products to purchase.

I also was involved in AGOA training for the Nigerian Association of Women Entrepreneurs (NAWE). There were successful women involved in that organization, but there were those who did not fully understand business principles. I recall one instructive interaction I witnessed during a training session in Abuja. One participant asked where she could purchase additional sewing machines to make more clothing at the factory she had acquired. One of the more experienced entrepreneurs asked her how many shifts she operated in a 24-hour period. The first woman hadn’t considered that you can operate three 8-hour work sessions a day rather than hire more people using more equipment likely in an expanded factory area in one combined shift – all factors together adding costs and cutting into profits.

African women-headed businesses proliferate

Since the development and acceptance of AWEP, it has become ever clearer that African women businesspeople can and have succeeded. According to the African Development Bank (AfDB), 25.9 percent of women are in the process of starting or managing a business in sub-Saharan Africa. This makes Africa the continent with the highest percentage of women entrepreneurs in the world, the research report by OECD mentions, according to a 13 April article in the India Times.

In Europe, by contrast, the rate of entrepreneurial activity among women is just 5.7 percent, according to figures from the European Investment Bank, a Reuters report stated. As far as India and the United States are concerned, the proportion of women entrepreneurs is measurably less than in Africa. A Bain & Company’s report this spring stated that women entrepreneurship in India is about 20 percent, whereas another report by the National Women’s Business Council last year said that women entrepreneurship in the US is 20.9 percent.

Yet, despite those high levels of entrepreneurial activity, African women are short of funding. It is, of course, a global problem for women in business. In the United States, the Carta Equity Report found that women represented 14 percent of solo start-up founders in 2021 but received just 2 percent of venture capital (VC) funding (as per Pitchbook data). The picture is even worse in Europe, where women also account for 14 percent of start-up founders but received just under 1 percent of total VC funding, the report said.

While VC investment is only part of the picture, it’s indicative that women founders receive less than 7 percent of all such funding in Africa (even though, as a survey by startup-focused publisher Disrupt Africa found, they comprise about 20 percent of founders). India Times questions why a sector that’s supposed to be future-oriented and at the forefront of innovation struggles to invest in women at anything near the same rates that they are starting businesses.

African women entrepreneurs have demonstrated their capacity to operate successfully at all levels and grow their businesses if they have sufficient resources to do so. They have consistently been underestimated by African governments and the international community.

The AfDB has initiated the African Women In Business Initiative (AWIB) responding to the Bank’s Private Sector Development Strategy emphasis on the role of women in business as well as to calls to empower women entrepreneurs, in particular small and medium enterprises, through better access to finance. Certainly, existing AfDB programs, as well as those at other Development Finance Institutions (DFIs), could already help to bridge the finance gap for women in business, but clearly this has not happened to the extent that it should.

The AfDB initiative has three goals:

Those are laudable goals, but such sentiments are not new, yet the necessary finance to grow African women-headed businesses still has not been forthcoming.

The US-Africa Business Bridge trade association has been developed by some of the American and African founders of AWEP. It is based on the principle of advancing women’s equality to add an estimated US$12 trillion to global growth. Full economic equality for women, The Bridge posits, could achieve this increase by 2025. In sub-Saharan Africa, the gain of full parity would be 12 percent or US$300 billion, an amount critical to the continent’s development. (Note: I am an advisor to The Bridge.)

The African members of The Bridge are successful female business leaders who have been trained by the government or private sector in the United States, received degrees in American schools or worked in this country. They are well-versed in American financial and commercial requirements and thus ideally suited to partner with American companies in their home countries. The Bridge offers connection with successful African women-headed businesses as partners, suppliers, buyers, distributors or liaisons for newcomers to the business environments in their countries, e.g., helping new companies through the business registration process or locating vendors such as attorneys, real estate agents or architects for facility construction.

African women entrepreneurs have demonstrated their capacity to operate successfully at all levels and grow their businesses if they have sufficient resources to do so. They have consistently been underestimated by the U.S. government, African governments and the international community as a whole. The time has come to dispel the myths that have limited their ability to succeed. Everyone loses out when African women are not enabled to reach their full potential. It is high time that successful African women businesspeople and those struggling to follow in their footsteps be accorded the respect and support they surely have earned over time.

Gregory Simpkins, a longtime specialist in African policy development, is the Principal of 21st Century Solutions. He consults with organizations on African policy issues generally, especially in relating to the U.S. Government. He also serves as Managing Director for the Morganthau Stirling consulting firm, where he oversees program development and implementation. He further acts as a consultant to the African Merchants Association, where he advises the Association in its efforts to stimulate an increase in trade between several hundred African Diaspora small and medium enterprises and their African partners.