By Julia Karst
Ease of Doing Business for MSMEs: During the pandemic, Thoudam Premila Devi, Proprietor of Premila’s Poultry Farm, started her poultry farm business in Manipur. The business picked up well, and she saw scope for expansion. However, she did not have the funds to execute her idea, and that’s when she ran into a wall. Traditional lenders were not keen to lend to an unproven micro entrepreneur, especially a woman.
Studies show that 70 per cent of the total finance requirements of women entrepreneurs in India are unmet. Even while earning similar annual profits, twice as many women have their loan applications rejected as men. While there are government schemes to support them, only 1 per cent of women entrepreneurs have availed them — simply because they either don’t know about the schemes or can’t navigate the complexity.
However, it’s not just access to finance which hinders women to start and grow their own businesses. Unequal education, unconscious gender bias, cultural expectations for home and childcare, and even issues with safety and mobility hamper women entrepreneurs in India. The influence of these systemic and traditional social norms is seen in the current entrepreneurship ecosystem that is heavily skewed towards supporting male entrepreneurs. For example, banks prefer lending to male entrepreneurs.
Formal business and industry associations are heavily dominated by men and male entrepreneurs are also overrepresented in incubation programmes. In addition, most women-led small businesses are seen only as social enterprises. This is unfortunate, considering that women entrepreneurs are key to India’s economic growth. According to Niti Ayog, India needs women entrepreneurs to achieve high growth rates of 9-10 per cent year-on-year. To realise the potential of women’s entrepreneurship in India, there is an urgent need to develop a strong ecosystem tailored to their needs that can help them thrive.
Laying Foundation of a Thriving Ecosystem
Premila finally found access to alternate sources of financing at a lower cost of credit for women entrepreneurs. She secured an amount of Rs 1 lakh, enabling her to buy 350 more chickens and expand her operations. This loan did not just fund her business, it will go a long way in helping her establish creditworthiness and become a part of mainstream funding. This is the key element of the ecosystem approach – not just solving immediate problems but creating a sustainable framework that can support the needs of women entrepreneurs for years to come.
An entrepreneurial ecosystem consists of the business environment and investment climate, actors from different spheres who each support entrepreneurs and interact with one another, and entrepreneurial culture and attitude. Gender bias affects each of these three elements.
Of the three, the business environment comes under the purview of the government. But, the investment climate and the stakeholders involved can be impacted by building a sustainable, strong gender-sensitive ecosystem.
This means that the involved actors from spheres such as policy, finance, markets, business support organisations, educational institutes, and media, are made aware of gender biases and are in a position to take active measures to counter these biases.
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Here are a few measures suggested:
- Banks and financial institutions should raise awareness of their own staff and have special products that suit women entrepreneurs in place (that is, collateral free; or establishing credit worthiness through alternative means).
- Incubators should offer women-centric programmes; networking events and opportunities should be structured such that women can attend them (that is during the daytime due to family care and safe mobility concerns).
- Media should showcase successful women entrepreneurs as role models and educational institutions should teach about entrepreneurship and make sure to address their female students in that. MSME and startup support policies and schemes should have special assistance for women entrepreneurs, etc.
Such measures can only be possible with all the players coming together to impact changes in various domains and in different layers across the ecosystem.
Along with this, the question of political representation and the voice of women entrepreneurs need to be answered. This can be achieved through representative associations and bodies where women are part of the leadership, creating a strong gender-sensitive ecosystem.
Partnering for Change
The way forward is to map and build entrepreneurial ecosystems across various states in India. To begin with, the situation in a region — the opportunities, challenges, and existing support systems — needs to be studied. Then the ecosystem partners must be identified, who will work with these ecosystems to spread awareness, overcome bias, and change their mindset about women entrepreneurs. Once the mindset shift occurs, the women in the network can be connected to these ecosystem partners for them to reap the benefits.
A few ways in which this can be achieved are:
- Build connections between stakeholders in the ecosystem for more effective collaboration and support to women entrepreneurs, i.e., incubators tying up with financial institutions for access to funding
- Train incubators and other service providers on gender-sensitive incubation practices
- Strengthen the voice of women entrepreneurs by helping them organise and aggregate in organisations
- Create an entrepreneurial culture by speaking about and showcasing women entrepreneurs as role models
- Build coalitions in government that support women entrepreneurship for change at a policy level
The journey to bring about sustainable change for women entrepreneurs has already begun in India. Now, there are new and vibrant communities of women entrepreneurs who are changing the way things are done and shaping the ecosystem around them.
Many business support organisations have also woken up and want to work with them, but don’t yet know how to. Therefore, it becomes about capacity building. The question, however, is when will women entrepreneurs get treated seriously at a policy level by the government? This is what needs to change eventually. For that, it is important to strengthen women entrepreneurs’ voices through formalised networks and organisations with a much wider reach and impact.
Julia Karst is Head of Project — Her&Now at GIZ – an economic development agency of the German Federal Ministry for Economic Cooperation and Development. Views expressed are the author’s own.