Female Entrepreneurship Index: South Asia
This is a collection of articles archived for the excellence of their content.
2014: Gender-GEDI Index
No country for women entrepreneurs
Dec 21 2014, Lubna Kably
Female entrepreneurship index ranking 30 countries puts India in bottom five Vijayalakshmi launched Design-Dreams, a web design venture an year ago, using her own funds.Being a BITS Pilani post-graduate may have successfully made the leap to an entrepreneur, but expects the climb ahead to be steep. According to Vijayalakshmi, when one walks into a networking seminar, one can count the number of women on fingers. She is also working on developing a few tech products. Lack of collateral makes it tougher for women to get bank loans. For many women entrepreneurs like Vijayalakshmi, access to external funds and business networking remain major challenges to growth. Their adverse circumstances are reflected in the Gender-GEDI Index for 2014, compiled by Washington-based Global Entrepreneurship and Development Institute (GEDI). India ranks in the bottom five of 30 countries surveyed for conditions that foster `high potential' women entrepreneurship (see box). `High potential' women entrepreneurs are those who through job creation and widening of markets can boost economic growth.
The facts on the ground reveal the same truth. Even as the number of self-employed women (working in lowskilled jobs from home or as street vendors) has doubled to a crore over a 10-year period (2000-10), women entrepreneurs (job creators as distinct from self-employed) remain a rarity . The highest participa tion of women entrepreneurs (1.88 lakh) was in the service sector but the percentage has remained stagnant at 6%, states the Organisation for Economic Co-operation and Development in its recent India economic survey .
MARGINALIZED IN MACHO SECTORS
As entrepreneurs, women tend to stick to comfort zones like apparel and hospitality . In the more profitable sectors of science, engineering and technology , women are marginalized by the macho culture, excluded from `buddy networks' and lack female role models, cites GEDI's report. In India, the gender bias in the workplace (percentage of women managers is a mere 14%) continues to play out in the field entrepreneurship.
“Access to a broad range of business sectors will fully unleash female entrepreneurship.By expanding women's abilities to start businesses in maledominated sectors which are more profitable, you also in crease the ability of that business to succeed and grow,“ says Ruta Aidis, who led the GenderGEDI Index 2014 project.
A few have tackled this bias. Geetha Devi, a chemical engineer and now CEO of Gradus Engineers, recalls that as an intern in the late 1980s she wasn't allowed inside the plant of a petrochemical company . To break such barriers, she set up her own company in January 2011.
CAN'T BANK ON VCS
Based on anecdotal evidence, GEDI's report states that women have more limited access to bank loans and the gap is even wider when it comes to venture capital (VC) funding. In India, as per a report released by International Finance Corporation earlier this year, the total supply of formal finance to women-owned micro, small and medium enterprises (MSMEs) was around Rs. 2.31 lakh crore during 2012 -resulting in a finance gap of Rs 6.37 lakh crore or 73% of the total demand.
A Karnataka-centric 2014 report titled `Strengthening Her Enterprise' states over 90% women entrepreneurs have to rely on personal funding. Nearly 68% women entrepreneurs surveyed felt they had to put in more efforts to get bank loans. Lack of collateral is the main challenge in accessing bank loans (the reach of the Credit Guarantee Fund Scheme that offers collateral-free loans to MSMEs in general is limited) as preference is given to married women whose husbands can guarantee repayment.
VCs denied discriminating on gender grounds, women entrepreneurs feel otherwise.A young and single Chennaibased tech entrepreneur feels her unmarried status deters VCs from investing in her.
Uma Reddy , MD of Hitech Magnetics and Electronics, an engineer with 30 years of entrepreneurial experience, offers a different perspective.“Women start small and VCs aren't interested in a small deal size. Further, women have a lower risk-taking appetite and are hesitant to pitch to a VC with huge future projections,“ she says.
India lacks women-centric banks or VCs though Karnataka made a small beginning late last year, when the state government launched an angel fund for women.
Several networking groups are providing women entrepreneurs a helping hand. WEConnect International, which set up its India operations in 2012, connects women-centric enterprises it certifies to multinational corporate members like IBM or Accenture. Sucharita Shome Eashwar, India head, explains, “To be eligible for certification, women must hold a majority stake in the enterprise (51% or more) and be decision-makers in the enterprise (hold post of CEO or MD). We also prefer enterprises that have completed at least one year of operation.“
“In 2013, IBM spent over Rs 300 crore with diverse suppliers across India, of which more than Rs 100 crore was spent with women-owned suppliers. We expect year-toyear growth,“ says Suhaib Sajid, who leads IBM's supplier diversity program in Asia-Pacific. Srikant Rao, MD-Procurement Asia-Pacific at Accenture, believes having a diverse supplier chain which includes women entrepreneurs is also a good commercial decision.
GEDI's report points out that women entrepreneurs aren't making optimal use of social networking platforms.To counter that, Ruche Mittal's `Her Entrepreneurial Network' (HEN) ensures the 3,000-plus members interact actively via Facebook, seeking inputs from each other and even working on joint projects.
However such avenues do not fill the yawning gap. The OECD survey points out that by narrowing the gender gap -including in entrepreneurial space -India can grow its GDP by two percentage points each year. But longterm, all-encompassing solutions are required to enable women to succeed.
The Times of India, Jun 25 2015
India ranks 70 among 77 nations covered globally in 2015 Female Entrepreneurship Index
India ranks a low 70 among 77 countries covered in the 2015-Female Entrepreneurship Index. The main reasons that the study identifies for the country's poor score are lack of labour force parity and access to first-tier finance (women entrepreneurs find even initial debt funding, required for day-to-day operations, difficult to raise). India's neighbours have fared worse, with Bangladesh at 75 and Pakistan occupying the lowest rank at 77. The US, Australia and the UK are the top three with high-potential female entrepreneurs. (i.e., women who own and operate businesses that are innovative, market expanding, and export oriented). Of the 77 nations surveyed, 47 (including India) scored less than 50 points out of a top score of 100 (see graphic inside) on various parameters. This indicates that significant changes are required to reduce barriers for female entrepreneurs.
Last year, this index which is brought out by the Washington-based Global Entrepreneurship and Development Institute (GEDI) had covered only 30 countries and India at rank 26 was placed in the bottom five.
However, the socio-economic scenario in India is gradually changing for the better and a comparison with last year's gender rating substantiates this point. Ainsley Lloyd, researcher at GEDI and co-author of the 2015 research report, said India had actually improved by 4 ranks. “We calculated this improve ment using only those coun ries that appeared in both ast year's and this year's in dex so that the ranks are truly comparable,“ explained Lloyd.
According to her, the biggest improvements had been an increase in the percentage of women entrepreneurs who were using new technol ogy and introducing innova ive products. “In addition here has been an increase in he percentage of women en repreneurs who are `growth oriented', that is those who plan to add more than 10 new employees and achieve 50% growth in five years,“ added Lloyd. But the country needs o do much more to improve he ecosystem for its women entrepreneurs. According to Lloyd, increasing access to bank accounts, financial raining programs and im proving gender diversity across sectors were key areas of improvement.
In the initial business stages, most women are orced to rely on personal unding, including for meet ng working capital require ments. A report released by nternational Finance Corporation in 2014 said there was a finance gap of Rs 6.37 lakh crore (Rs 6.37 trillion) when it came to meeting requirements of women entrepreneurs in the MSME (micro, small and medium enterprise) sector. Lack of collateral and a misogynist mindset are the main stumbling blocks women face in accessing loans The country lacks also large-scale women-oriented venture capital funds or institutions, like Wells Fargo in the US which provides customized offerings to women entrepreneurs such as collateral-free loans of up to $100,000 (Rs 63 lakh). Golden Seeds, a US-based VC Fund, invests exclusively in women-led enterprises.
Financial training and mentoring programs help women entrepreneurs get that edge when it comes to writing business plans and seeking funds from banks and VCs but small steps have been taken in that direction.“IIM Bangalore and IIM Udaipur have programs to promote entrepreneurship among women. IIM Indore has also held such workshops,“ says Anjana Vivek, a visiting faculty and founding director of VentureBeaný Consulting.
Organizations such as WEConnect International, which help connect certified women entrepreneurs with multinational corporate (MNC) members is also expanding its coverage in India.At present, it has 16 MNC members including Accenture, Cisco, Dell, IBM, Intel, Microsoft, Marriott, and Hilton Hotels. Women entrepreneurs from the tech and nontech sector including a premium chocolate venture -have benefitted by obtaining orders from these MNCs.