BuaNews (Tshwane)

29 March 2007

South Africa: Women Entrepreneurs Urged to Pay Back Loans

Johannesburg — Women entrepreneurs who acquire loans from financial institutions should be loyal and pay back the money as per agreement so that the funds could be used to the benefit of others.

Head of Gender Entrepreneurship Markets in the International Finance Corporation, Amanda Ellis, said Thursday that loyalty should form the basis of good relations between financial institutions and small businesses.

"You have to be loyal to those financial institutions that show loyalty by helping you through funding and loans," she said.

She was addressing delegates at the national conference on women's access to finance, which is hosted by the Department of Trade and Industry (dti).

Ms Ellis described women as the economic powerhouse in waiting, which will take the markets by storm should their enterprises be given an opportunity to enter into mainstream business.

"Women are the economic powerhouse in waiting. They are driving the economy through their high influence on consumer purchases but it is still harder for small firms owned by women to triumph," she said.

Women businesses that are registered represent between 25 and 35 percent of all businesses worldwide, she explained.

The issue of access to funding by small enterprises owned by women, youth and the previously disadvantaged is a widespread challenge in South Africa.

With government having set targets to halve unemployment and poverty by 2014, financial institutions have been urged to help small businesses overcome the challenge of lack of capital for them to contribute towards these objectives.

Ms Ellis said financial institutions needed to explore innovative ways to ease the stringent requirements that made it difficult for small businesses to acquire loans.

The Head of Gender and Women Empowerment Unit in the dti, Ms Mmabatho Matiwane also said women who venture into the business world should be ready to honour agreements with financial institutions, even those that are state-owned.

"We must do away with the attitude that we can't pay back because this is a state-owned financial institution and therefore it's the tax payers' money. You must pay back so that the money can multiply and help other women," she said.

South Africa has started the process of finding ways of establishing a Women's Fund.

The team leader for the Women's Fund Project, Mr Rindai Jaravaza said the dominant need facing women enterprises in the country was access to savings and credit.

"Without savings one has no means to start own business or collateral to raise a loan. Far too many enterprises lack the means to take off or grow to the next level," he said.

He further added that improved access to funding would help reduce the poverty levels, ensure vibrant economic growth and shared prosperity.

Mr Jaravaza said financial institutions should eliminate some conditions for loans, which serve as obstacles for entrepreneurs to get funds.

He said they should provide financial services that are affordable, usable and responsive.

"The services must be usable in that they enable you to start and complete a business transaction and responsive in a way that they are flexible to account for the changing needs and circumstances in the business sector," he said.

The Deputy Director-General in the dti, Mr Lionel October said the current rate of economic growth is creating a gap for new enterprises to come in.

"People are spending more than the economy is producing, which is an opportunity for women enterprises to come into the mainstream economy and bridge that gap," he said.

Deputy Trade and Industry Minister Elizabeth Thabethe acknowledged that the issue of access to funding was an international challenge facing many developed and developing countries.

She further cautioned women against opportunists who would use them for fronting in major business transactions.

"Let us not be used as tokens for fronting.

"You must be willing to learn in order to succeed in your businesses, don't say I know better because I'm a chartered accountant or an economist.

"We are in this together and we can learn from each other," said Ms Thabethe.

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