The Small and Medium Enterprises (SME) sector iswidely regarded as the driving force in economic growth and job creation inboth developed and developing countries (Sunter 2000). The importantcontribution of SMEs to employment generation, improvement on income per capitaand provision of a source of livelihoods to a larger number of people is widelyrecognized around the world and their particular role in the Kenyan Economycannot be overemphasized.
The Sessional Paper No. 1 of 1986 on Renewed EconomicGrowth for Sustainable Development, and the Report of the PresidentialCommittee on Employment (1991) emphasize the importance and potential of themicro and small-scale enterprise development sector for future job creationopportunities and for raising incomes. Next to agriculture, this sector givesthe majority of women an opportunity to be engaged in cottage industries thatentail making handicrafts, dressmaking and baking, among others. Women in thissector also engage in retail trade, petty trading and hawking of farm produce,household utensils, and second-hand clothes (GoK, 2001; 2002). Womenare the backbone of the economic development in many developing countries. Therecent Global entrepreneurship monitor (GEM) for 2013 found that, around 224million women were impacting the global economy by either starting or runningbusinesses. This survey only counted 67 of the 188 countries recognized by theWorld Bank.
This shows that women play a vital role in the world of business.In many of these countries the rate of growth of women creating new business is greater than the rate of growth for men entrepreneurs(Reynolds,et al 2002).Women are becoming increasingly important in the socialeconomic development of both developed and developing economies as they accountfor significant percentage of contributors of the SME operators (Kjelden andNielson ,2000). The ratio of women to men in SMEs still remainsbelow world standards. The survival rate of SMEs is also relatively low.
Lessthan half of newly established businesses survive beyond five years. This isnot only true for countries in Africa, but also a common phenomenon in the restof the world (Brink, Cant and Ligthelm,2003). Mundu (2001) survey of small enterprises in Kenya found that 65%of the businesses studied were less than 5 years old mainly due to high failurerates. The failures are in most cases a reflection of poor performance of bothmale and female owned enterprises.
Women’s entrepreneurship needs to be studiedseparately for two main reasons. The first reason is that women’sentrepreneurship has been recognized during the last decade as an importantuntapped source of economic growth. Women entrepreneurs create new jobs forthemselves and others and by being different also provide society withdifferent solutions to management, organization and business problems as wellas to the exploitation of entrepreneurial opportunities (Delmar and Holmquist,2004). However they still represent a minority of all entrepreneurs.
Thus thereexists a market failure discriminating against women’s possibility to becomesuccessful entrepreneurs. This market failure needs to be addressed by policymakers so that the economic potential of this group can be fully utilized,especially in line with Vision 2030, the Kenya’s new economic blue print thatrecognizes and anchors entrepreneurship within the economic pillar. The second reason is that the topic of women inentrepreneurship has been largely neglected both in society in general and inthe social sciences (Brush and Hisrich, 1999; Holmquist and Sundin, 2002). Notonly do women lower participation rate in entrepreneurship than men, but theyalso generally choose to start and manage firms in different industries thanmen tend to do (Duchénaut, 2001; Franco and Winqvist, 2002; Reynolds and White,2003).
The industries, primarily retail, education and other service industrieschosen by women are often or have until recently been perceived as being lessimportant to economic development and growth than high-technology andmanufacturing. Furthermore, mainstream research, policies and programmes tendto be “men streamed” and too often do not take into account the specific needsof women entrepreneurs and would-be women entrepreneurs. As a consequence,equal opportunity between men and women from the perspective ofentrepreneurship is still not a reality. InSouth Africa, SMEs owned by women have better chances of being profitable thanthose manned by their male counterparts. The latest survey was sponsored by theSmall Enterprise Development Agency (SEDA).
The survey noted that companiesowned by couples or a mix of genders are substantially less likely to beprofitable than those operated by either male or female- owners. While thisresult may seem like a big win for women, it comes with an immediate qualifier:the level of female ownership is exceptionally low. To provide perspective onprofitability and gender differences, the overall picture of South Africansmall business shows that they are doing reasonably well. Although only a smallproportion, less than one in five is thriving: 17% of SMEs surveyed are’strongly profitable’ while 45% are ‘just profitable’. However, this does leavea significant percentage under some distress, 38% are not making a profit.
Againstthe overall result, it emerges that the male owned SMEs, 20% are stronglyprofitable, 49% are just profitable while of the jointly-owned SMEs, 16% arestrongly profitable, and 37% are just profitable. Regarding the female-ownedSMEs; the survey indicates that 15% are strongly profitable while 63% are justprofitable. On a general note, the survey discloses thatof overall business ownership, men dominate with 48% while the jointly ownedbusinesses account dominates for about 44%. Just 8% of South African SMEs arefemale-owned businesses. Women entrepreneurs and company owners doing it ontheir own therefore explains the small minority in the SMEs environment. Thereis a massive gender imbalance in entrepreneurship. This tells us that women arenot given enough encouragement or support to become entrepreneurs.
We have seenin the past that best training for entrepreneurship and business ownership ison-the-job experience. There is a further implication that not many women getopportunities in the workplace to start with,” (Goldstuck 2013). Women continue to be marginalized as far assmall business ownership is concerned. The problem appears systemic; ittherefore has to be addressed at a systemic level, starting at school andextending through the workforce to give women not only the skills but theconfidence to start their own businesses. (Lusapho Njenge 2013). To facilitatethis progress, more work needs to be done in order to better understand the function of women’s entrepreneurship in society and foreconomic development.
From the backdrop, it is known that womenentrepreneurs play a non-trivial role in the economy, that they face challengesand obstacles different from those faced by men and that they will actdifferently. The larger the difference is between men and women in a society,the larger the difference between men and women entrepreneurs and the moredifferent their relative contribution to economic development to be.