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As India moves towards realising its dream of being a $5 trillion dollar economy by 2024, it needs to create the right environment for women’s entrepreneurship to take off and claim its rightful place in the economic growth story.
The Indian entrepreneurship ecosystem is a study in contrasts. In cities like Bengaluru and Hyderabad, entrepreneurs have found an ideal launchpad for their innovations, with easy access to incubation support, mentoring, specialised business services, and talent. However, when it comes to inclusion of women in the entrepreneurship growth story, it is still a slow work in progress. The numbers make for grim reading. According to one survey, for every 100 entrepreneurs in India, only 7 are women. The corresponding number in the UK is one in three.
In recent years, we have seen conversations in this space grow louder. Gender lens is now transitioning from a good-to-have to a non-negotiable in investment mandates and incubation programmes.
As per the 6th economic census, conducted by the Government of India, women owned 8.05 million micro, small and medium enterprises (MSMEs), which accounts for only 13.76 per cent of all MSMEs in the country. Efforts to correct this gender gap are afoot but the COVID-19 pandemic has further slowed down the progress.
It’s easy to think of this as a persistent problem that needs to be dealt with. But the more I speak with practitioners, donors, and government officials, I see a growing belief that this is an opportunity that needs to be unlocked. Much has been talked about the demographic goldmine India is sitting on but the opportunity arising from women-led entrepreneurship is just as significant. In recent years, we have seen conversations in this space grow louder. Gender lens is now transitioning from a good-to-have to a non-negotiable in investment mandates and incubation programmes. Away from the world of start-ups, there is a growing number of projects commissioned to promote women-led businesses. Leading international donors and institutions, such as UNDP, World Bank, FCDO, and GIZ, among others, have made this a priority.
Any effective approach or solution starts with an acknowledgement that women are held back by system lacunae as well as psychosocial challenges.
It is easy to think of this as an economic problem. However, any effective approach or solution starts with an acknowledgement that women are held back by system lacunae as well as psychosocial challenges. A couple of years ago, my team and I kicked off a programme to support women entrepreneurs in the western Indian state of Rajasthan. The launch featured a rousing speech by an accomplished business leader who laid out crisply, some of the challenges she faced as a woman and how she went about negotiating those.
After a well-deserved applause, a woman in the audience asked, “I would love to be you, but I choose to stay small so I don’t have to live with the guilt of spending a lot of time away from my children”. That’s just one of the many conflicts women entrepreneurs I have worked with have had to deal with.
The key to unlocking the potential of women-led entrepreneurship is moving beyond the big cities and mature start-up hubs of Bengaluru or Gurgaon. Programmes are now moving deeper into small-town India. In doing so, they are borrowing the rigour and structure of start-up incubation and acceleration practices and porting them into local contexts.
Engagement with financial institutions is an urgent need as access to finance remains the undoing of many well-intentioned initiatives.
A woman entrepreneur who works with artisans to create handmade crafts in Rajasthan or one who sells unique blends of locally-sourced tea in Assam now have access to business mentoring and learning avenues to build business competencies.
Much work still needs to be done in strengthening these support structures. Engagement with financial institutions is an urgent need as access to finance remains the undoing of many well-intentioned initiatives. Approaching a bank for credit remains an unpleasant experience for women even in this age. A study commissioned by GIZ found a few critical demand-side issues –
- Inability to provide adequate loan guarantees and collateral, which is also an indicator of lack of asset-ownership among women
- Compliance gaps and lack of business records that make it difficult for banks to ascertain credit-worthiness
- Negative biases against women applicants
On the supply side, factors such as a lack of gender-inclusive mandates and absence of formal credit history impede access to finance.[1] It’s crucial for support programmes to engage with financial institutions and address biases among its workforce. In recent years, alternate credit scoring approaches have seen some momentum. This has potential to plug a big gap in access to credit.
Similar efforts are needed to connect entrepreneurs to markets. With the COVID-19 pandemic crippling offline markets, many women entrepreneurs had to urgently adopt digital channels. Global e-commerce giants have been increasingly collaborating with donors and government bodies to upskill and onboard small-town entrepreneurs. This provides entrepreneurs with the right set of skills and a platform to scale their businesses. Established brands in textiles, food processing, and crafts have shown intent to co-design support programmes, which assures women microentrepreneurs of a revenue stream.
I was once part of a heated conversation between an entrepreneur, a mentor and an incubation manager. The entrepreneur was at pains to explain the challenges of scaling her solution among small farmers and summed it up quite pithily, “at every hundred kilometres, I come across a different language, culture, and a different sort of political environment.” These challenges are not unique to her. When organisations design programmes, it’s imperative they decentralise it to cater to the unique local needs. This includes translating the curriculum to local languages, finding relatable role models – believe me when I say this, a picture of Steve Jobs does little to inspire a woman in Satara to take up entrepreneurship.
A lot of well-meaning support programmes are challenged by constraints of scale and post-project sustainability. Either they remain confined to a small geographic area of implementation or their work, no matter how effective, ceases once the project duration ends. Continuity should be made priority number one for every donor-led initiative. One way to do this is to work closely with the government. Projects have benefited from embedding their curriculum in government-backed institutions and using project learnings to draft policy measures. Bringing in government bodies as partners also enables projects to tie up critical elements such as scouting, availing of support schemes, certifications, and activating networks. Another way to attain continuity is to invest in building women-entrepreneurship communities. Having a community allows for sustained advocacy, engagement with policy makers, service providers, and financial institutions. Additionally, it also builds a sense of solidarity that goes a long way towards helping women entrepreneurs succeed.
As India moves towards realising its dream of being a $5 trillion dollar economy by 2024, it needs to create the right environment for women’s entrepreneurship to take off and claim its rightful place in the economic growth story. I am optimistic that with collective intent of and action from all stakeholders, a new, improved reality will be soon upon us.
Ullas Marar is the interim Head - Women's Economic Empowerment Project at GIZ India.*The views expressed herein constitute the sole prerogative of the author.