The internet can foster a gender revolution in business
4 min read . Updated: 07 Mar 2023, 11:39 PM IST
PremiumAs per the Periodic Labour Force Survey 2021, 59% of India’s women workforce is engaged in self-employment, of which 38% run enterprises on their own without any hired help and are likely to be subsistence entrepreneurs
The potential that women-led entrepreneurship holds for India has increasingly been spoken about. The future of women entrepreneurs also looks promising, with several initiatives and trends indicating a rise in the number and success of women-owned businesses. According to a report by Bain & Company, the number of women-led enterprises in India is expected to grow to 150-170 million by 2030.
When one considers an enterprise, we often think of a business set-up with inventory, workflows and organization. But data reveals that the proportion of women-owned enterprises that hire three or more workers is 2.7%, while it’s 6.3% for men, a wide gender disparity. A large number of women take up entrepreneurship as a last resort. As per the Periodic Labour Force Survey 2021, 59% of India’s women workforce is engaged in self-employment, of which 38% run enterprises on their own without any hired help and are likely to be subsistence entrepreneurs. Such business units are a means of survival rather than a sign of ambition, and are driven by the need to supplement family income. These are likely to be informal, single-person enterprises (with a worker or two) and a response to economic hardship and limited formal employment opportunities, given the discrimination and social barriers that women face. Regardless of motivation, however, entrepreneurship is a way for women to generate value for themselves, their families and their communities; enabling them has positive ripple effects throughout the economy.
There is a high-concentration of women entrepreneurs in industries that can be managed single-handedly or with minimal help, such as household products, handicrafts, textiles, food-vending, agriculture and allied products. There is also an increasing trend of homemakers turning into entrepreneurs who run businesses online or out of homes. As such, the fields they are more likely to operate are those amenable to online sales.
Among hurdles, scalability and sustainability are difficult to achieve for women entrepreneurs. Though the pandemic catalysed digital adoption, the digital gap is wide. Women entrepreneurs in smaller cities tend to have lower awareness of how to optimally leverage the digital resources at their disposal. For instance, they could be using WhatsApp to receive and fulfil orders, and Amazon has programmes in support of local and rural artisans and entrepreneurs, but they remain too faintly aware of the global reach these platforms can directly offer them if they enhance the quality of their product packaging and branding for a wider market.
Access to affordable credit is essential to scale up and sustain businesses, but women entrepreneurs are either unable to access formal finance or unaware of it. Even though data indicates that women have better credit profiles and even seen higher loan ticket sizes, a survey by IWWAGE in July 2020 reported that 88% of women-led MSMEs used personal savings to meet their working capital needs. Digital lending can be a salve for many pain points, granting women entrepreneurs the ability to borrow from the comfort of their homes.
In smaller cities, there are more women likely to be tied down; they do not or cannot leave their homes as often, as household duties may disallow it, security may be a concern, or it may require permission. Traditional lenders demand collateral that women often lack due to inequitable inheritances. Digital loans can help them avoid loan sharks and break debt cycles. Such engagement can also give rural women entrepreneurs first-hand financial literacy training, including how to access bank services, repay loans responsibly and plan investments. Digital lenders support home-preneurs with registered businesses.
Policy interventions and private innovations can do more. There is growing evidence that the ambitions of women entrepreneurs are gaining traction. Insights from CIBIL indicate that the number of women seeking business loans has more than tripled in the last five years (2017-2022). Based on over 65,000 disbursals, Indifi’s data shows that women-led businesses borrowed 20% of these loans, and out of these, 40% of the disbursals were made to women entrepreneurs aged 40 and above. This indicates a growing trend of women seeking to transform their socio-economic status. But this can’t be done by women entrepreneurs alone, even though they are evidently skilled at managing scarce resources and adapting to changing market conditions.
Nudges through private innovation and policy interventions could prove crucial. Financial literacy programmes from the bottom-up would help women entrepreneurs fully leverage the benefits of digital finance. This way, women entrepreneurs will not have to educate themselves about the concept of loan only when they require it, but will be equipped with knowledge for future reference. Moreover, digital lending platforms can also provide information in vernacular languages, so their potential reach is vast.
To tackle information asymmetries, we recommend a dedicated helpline for women entrepreneurs through which women in business can find their way out of challenges. Certifying ‘women-led’ businesses will also prove useful; official recognition could be used to expedite funding and extend special programmes dedicated to them. An immediate benefit could be that women entrepreneurship will not just be seen as something done out of necessity, but in pursuit of truly ambitious goals, thus fanning the entrepreneurial spirit of future generations.