Despite the progress that has been made in recent years, there is a need to increase targeted programmes and improve access to finance for women in business in South Africa.

The success rate of the traditional approaches to financing and existing programmes for women entrepreneurs needs to be re-examined, says Mazra Solutions director Dineo Ramokgopa.

While various approaches have been adopted by financial institutions to fund women entrepreneurs, more innovative and forward-thinking financing models are required to fill the funding gaps faced by women in different sectors and at different stages of development, she tells Engineering News.

There remains a significant disconnect between the type of funding required or requested by businesswomen and what is being made available in the market, with many women finding the existing funding models unsuitable for their small, medium-sized and microenterprise (SMME) needs and the environment not conducive to a thriving business.

“There are problems with financial inclusion to start with, and there are problems that are gender specific. The two combined make it quite a challenge for women in finance,” she points out.

Improvements have been made by development finance institutions and banks in terms of structuring funds targeted at entrepreneurs; however, some of the programmes are developed without targeted consultations and interaction between the funders and those that require funding, and some miss the mark entirely.

The recently released ‘FinFind South African SMME Access to Finance Report’ shows that banks struggle to serve SMMEs as they apply traditional lending methods that use collateral and traditional financing scorecards as a one-size-fits-all approach.

While most banks see the SMME environment as a large market with good prospects, many still use traditional credit scoring models and distribution channels, which ultimately results in market failures, the report reveals.

The survey shows that SMMEs are not accessing formal funding owing to high search costs; a lack of a credit history; a bad credit history; inadequate collateral; a lack of skills and the knowledge to produce financial statements; poor domain expertise; poor business models; an inability to produce high-quality business plans; and a lack of access to markets.

The survey found that most startups use their own savings, pension funds and money borrowed from family and friends during the setup and early phase of business, as 87% of the SMMEs surveyed are self-funded; 8% rely on funds from family; 2% source funds through angel funding; 2% from bank loans; and 1% from development finance institutions.

“We need more platforms for dialogue,” Ramokgopa says.

Mazra Solutions CEO Muzi Maziya adds that, much like the Black Industrialists Programme, support for women should be more “developmental” and comprehensive, delivering “the whole package” with the provision of access to market, suitable skills training, improved monitoring and evaluation and postfunding support.

“There are particular gaps that need to be addressed,” he says, adding that bridging the rural-urban divide in access to information and opportunities for women entrepreneurs, and purposeful programmes that involve women in the economy through improved access to finance, are critical.

“Smart financiers should know that funding women entrepreneurial businesses is tapping into a great resource for future growth and prosperity,” says Maziya.

Mazra Solutions is doing much work on financial inclusion and is undertaking a Financial Inclusion Seminar Series 2018 covering women and finance; SMME development and finance; cooperative banks; and reflections on the financial sector charter.

“We are also taking a seminar series during August to provincial and local levels to advance women,” says Ramokgopa.