Women Leaders at the Centre of Economic Growth

Julia joined GIZ in India in 2018 where she leads Project “Her&Now”, which supports aspiring and existing women entrepreneurs in India in partnership with the Ministry of Skill Development and Entrepreneurship (MSDE), Government of India, and on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

She holds degrees in Development Studies from the London School of Economics and Political Science (MSc), in Public Policy and Management from the University of Konstanz in Germany (BA) as well as in Business Administration from the Frankfurt School of Management in Germany.

It is a fact that women-led businesses aid the economic and social growth of the country. What do you think drives women in India to become entrepreneurs?
Entrepreneurship is a key to economic development across the globe. Globally, around 1 in 3 enterprises is owned by women. In India, women constitute around 20% of the total entrepreneurship, i.e., 13.5-15.7 million enterprises, according to the latest report released by Google and Bain & Company (2019). Yet, according to the same report, catalysing women entrepreneurship holds great economic potential for India: by 2030, women-led business could create up to 150-170 million jobs in India. In the last few years, the need to better support women entrepreneurs has been recognised at multiple levels and the discourse around women’s contribution to the economy as entrepreneurs is changing. There are several reasons why women want to become entrepreneurs in India. The motivations (and constraints) of women to start their own businesses differ hugely across the spectrum of women entrepreneurship, ranging from rural to urban geographies, from necessity-driven to opportunity-driven entrepreneurs, and from group to individual enterprises. Looking at urban small business owners or solopreneurs, motivations are:

1. Opportunity
Entrepreneurship is slowly becoming aspirational. Starting their own business presents an opportunity for women to engage in a sector or field of their interest, sometimes building on domain expertise and experience gathered in previous corporate jobs or through private interests or family history of engagement in the sector. Other factors include the desire to work in a unique field, to create a brand and work independently.

2. Financial Incentives
Starting their own enterprise enables women to generate their own income. This enables women entrepreneurs to reduce financial dependency on their families, thus also hugely contributing to their empowerment.

3. Flexibility
Many women value the flexibility that owning your own enterprise brings, as opposed to a corporate job with fixed hours. This flexibility makes it easier to combine their professional life with care work and home duties. However, building up your own enterprise quickly becomes a full-time job and means that women entrepreneurs have to re-negotiate their responsibilities and time spent at home and for the family.

Women entrepreneurs face various constraints while starting their businesses. Are there any government initiatives that are bridging these gaps?
There are numerous government initiatives both at national and state level to support women entrepreneurship. Popular schemes and initiatives at national level include the Udyam Sakhi launched by the Ministry of Micro, Small & Medium, which is a network for nurturing social entrepreneurship. Niti Aayog has established the Women Entrepreneurship Platform, which brings together and links women entrepreneurs to service providers and support opportunities. There are also various financial support schemes offered by the Government.

While there are existing government policies, schemes and initiatives to support women entrepreneurs, they are often not well connected nor comprehensive enough to really catalyse women entrepreneurship. In addition, the majority of women entrepreneurs do not know about these support opportunities. A more concerted effort would be needed to inform women entrepreneurs of these schemes and initiatives and to handhold them to successfully apply for them.

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is implementing the project ‘Economic Empowerment of Women Entrepreneurs and Start-ups by Women’ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and in partnership with the Ministry of Skill Development and Entrepreneurship (MSDE), Government of India, to support aspiring and existing women entrepreneurs in India.

Since its inception in 2018, the project has been creating an enabling environment for women-led enterprises in India. It is working on it through the following touchpoints:
- Incubation and Acceleration support programmes for women entrepreneurs in tier II and tier III cities in the North Eastern Region, Rajasthan, Telangana, Uttar Pradesh, and Maharashtra. So far, these programmes have supported over 800 women entrepreneurs. In the North East and Rajasthan, the project has facilitated women entrepreneur-led networks like WE Manipur and AWARE in Rajasthan.
- WINcubate, a gender-sensitive entrepreneurship support training, (developed in collaboration with Dhriiti- The Courage Within) equips incubators to adopt women-centric incubation practices. 10 Atal Innovation Mission incubators and 12 Govt. of Gujarat incubators in the country have undertaken this training so far.
- The Film-and Media Campaign celebrates women entrepreneurs and their contribution to society and the economy. In order to stir a positive mindset change, the project has produced 4 award-winning short films to be screened in over 40 cities of India.

Of 103 unicorns in India, only 15% are women-led. Why do you think that is? In your opinion, what are the obstacles that women entrepreneurs in India face with respect to access to finance, and how could it be solved?
Data from IFC from 2019 reveals that only 10% of women entrepreneurs avail finance from formal financial institutions. Similar findings emerge from a survey among women entrepreneurs carried out by the Edelgive Foundation in 2020, where only 9% of women entrepreneurs had availed of any business loans. The reasons why it is so difficult for women to seek funding from formal financial institutions are complex. First, most women-owned enterprises are informal, barring them from accessing formal financial institutions. Those women entrepreneurs whose enterprises are technically eligible for financing are afraid of defaulting on loan repayments. The lack of confidence in themselves or their enterprises stops women from taking any loans. Moreover, among those applying for finance from formal financial institutions, many women entrepreneurs could not provide the necessary collateral (representing about 13.5% of women entrepreneurs in a study by IFC from 2019). And among those women entrepreneurs, who sought external finance from formal financial institutions, the average loan amount sanctioned was only about 68% of the required amount (IFC 2019). Hence, women entrepreneurs’ financing needs in India are severely underserved. Over 70% of the total finance requirement by women entrepreneurs in India is unmet.

This issue needs to be tackled from various angles:
1. Awareness raising among financial institutions on the gender-specific barriers faced by women entrepreneurs as well the potential of their businesses needs to be significantly increased.
2. financial institutions and private investors should introduce products that are suitable for women entrepreneurs, given their unique constraints around collateral
3. Partnerships between incubators and financial institutions can go a long way in directly connecting women entrepreneurs to suitable financing opportunities and to handhold both sides through the application process.
4. Financial literacy and investment readiness should be key areas of support to women entrepreneurs given by incubators and other entrepreneurship support organisations.

In terms of 21st-century skills, what skill-set do you think women entrepreneurs bring to the workplace as leaders?
Female founders are often advised that they’ll have to adopt the same qualities as their male counterparts to make it in the ‘cut-throat’ world of business. It is high time that this discourse must switch to looking at the qualities women bring to the table to build businesses of value. Some of the qualities/skills that drive the journey of a women entrepreneur are:

1. Building profitable businesses
Research shows that companies managed by women outperform those led by male founders or teams in delivering higher returns.

2. Building sustainable businesses
Women more often found businesses that tackle social or ecological goals Hence, investing in women-led businesses can yield strong returns on social and ecological sustainability, next to making business sense. Women-led businesses also tend to employ more women, hence leading to female empowerment and social transformation.

3. Appetite for long-term growth
Women entrepreneurs have shown a greater appetite for both domestic and international growth. The only difference is in how they view their firm’s development. Women strive for steady and sustainable growth trajectories and the success of this strategy shows in the higher revenues generated by women-led businesses over time.