Why Investing In African Women Is Profitable
So, investing in African women is potentially very profitable?
Yes – and today I will explain some widely overlooked business perspectives in this regard.
Let’s see what you can take away in this regard for your very own Africa business venture.
When we talk about investing in African women the issue of equality and social inclusion often takes centre stage. The problem with this approach is however that African government and other economic stakeholders at large are less concerned with such social variables – they are more interested in balance sheets.
This is why the issue of women economic empowerment in Africa has been largely left to charities and development institutions. In my view, women have lost out for far too long as a result of that.
Now, with the new Africa rising narrative at the forefront, the economic potential of women is much more visibly discussed and recognized.
Did you know that – according to the African Development Bank (2014) – on average, women-owned African enterprises make up as little as 10% of all business?
Although the participation in power houses Kenya, South, Africa, and Nigeria are much higher – in Nigeria for example, around 50% of all start-ups are now run by women – the bottom line is this: Not involving women in Africa’s journey towards economic growth does not only mean leaving half of Africa behind, it also means that Africa’s march towards prosperity will be slowed down considerably. Simple.
My post today is about the potential, effectiveness, productivity, and profitability of African women.
If you are doing business in Africa I want you to understand two things:
1) African women can become your specific target market – a market that is widely overlooked yet very profitable.
2) African women can become strategic partners in your venture and deliver! This is good for you, the community, and Africa!
Let’s have a look at some compelling statistical facts and business scenarios you can build around women, without the notation of merely ‘helping the underprivileged’.
On Finance: Women are the better borrowers – target them !
Financial inclusion is key, but from a business perspective targeting women is also profitable: Small-scale farmers and especially women need to have equal access to financial services – demand is high and supply low. This means that financial service ventures, for example in form of community banks or micro-credit banks, can be very profitable in the medium to long-term if implemented with the right structure and in a favourable environment.
And there is one crucial factor you should be aware of when you are seeking to increase your success potential with such a venture: According to panel experts at the World Economic Forum on Africa agricultural sector rural women are better managers of their resources. Payback of loans stands at about 96% for women, but only around 60-70% for men. Here you go, you will not only be able to make profits with your financial services targeting women, but also minimize management cost and risk. Do you have $50,000 to invest – get started! Targeting already successful women traders outside of the big cities or women who manage high-value crops may be your best bet.
Agricultural Cooperatives: Step into the effectiveness of rural women
According to experts at the World Economic Forum on Africa, women are responsible for 80% of farming activity, yet they own only 2% of the land! And they receive far fewer resources. The figures released by the African Development Bank look a little less dramatic: women make up 40% of labour force and 2-20% own land.
This is obviously a Pan-African statistic, and it can vary, but the figure really hits home. It should hurt all of us as Africans. You truly have to confess that what we call ‘culture’ or ‘tradition’ would be called something completely different if we scrutinized it for what it is.
According to the African Development Bank, just by empowering women farmers with the same access to land, new technologies and capital as men, we can increase crop yields by as much as 30% and feed an additional 150 million people!
When it comes to agricultural productivity women know their stuff, they are hard and honest workers, and know how to re-invest their money smartly. If you are looking into investing in agricultural ventures, one smart way is to build local women cooperatives for products that are highly attractive for export: Coffee, cocoa, flowers, fruits, spices to name a few. Build women cooperatives around them and include some on-farm processing where possible, so you have direct access to bulk and you can help overlooking production, management, and standards.
In Retail: Women are still a widely overlooked target market!
Africa’s rapid rising middle class and consumer trends have turned fast-moving consumer goods (FMCGs) into one of the fastest growing and most lucrative sectors on the continent. Still widely overlooked however are women as a unique target market for products around beauty, hygiene, & cosmetics, fashion, accessories, health, and products related to pregnancy, baby, and children. Several women entrepreneurs (and even some men) who have been featured in the media over the last few years have amazing success stories to tell by tapping into women focused niches – and in many cases they were able to build hugely profitable businesses for themselves by producing high-quality affordable brands from scratch that competed well with expensive imported products.
And there is more – it’s smart!
The issue of women inclusion and economic empowerment receives now more attention in both the public and the private sector. So much so, that you can receive access to additional funding sources, spark more media interest, and get the attention of high-profile policy makers (genuine or not) when you promote your business as one that is successfully run by African women, when it employs only women, or empowers explicitly women. So think about it: putting women at the heart of your venture can potentially also be a powerful growth and promotional strategy for your business. You will be quickly seen as a leader or a role model.
As you can see, investing in women is profitable and significantly contributes to Africa’s development. But there is one very interesting conclusion delivered by Ernst & Young, which is perfectly in line with what I discussed so far. I had to share this with you…..
When you look at annual, global, consumer spending, women control USD 20 trillion. And this is expect to rise to USD 28 trillion in the next five years. Looking at annual global earnings, women earn USD 30 trillion. This is expected to rise to USD 80 trillion in five years. A study from Ernst & Young showed that when we think of the third emerging global market, that will be the women’s market. Over the next decade, the impact of women on the global economy – as producers, entrepreneurs, employees and consumers – will be as significant as that of China’s and India’s respective one-billion-plus populations.
Here you go: We speak of Africa as the last emerging market frontier. Yet there is one more to come that will be as pleasant to witness: The rise of the women.
I look definitely forward to that one
The article was published on Africa Business Jump Start and the author of the article is Dr. Harnet
Dr. Harnet Bokrezion is the Founder of africajumpstart.com and co-author of the book ‘101 Ways to Make Money in Africa’. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets faster and more confidently. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: firstname.lastname@example.org