Motivational factors affecting informal women entrepreneurs

A shop owned by this Ethiopian national in Springs. The Southern African Institute of Learning said it would be providing free small, medium and micro-enterprises (SMME) development training. Picture: Bongiwe Mchunu

The emergence of a growing community of women entrepreneurs has been a significant economic and social development across the globe. In South Africa, government has prioritised entrepreneurship and the advancement of small, medium and micro-sized Enterprises (SMMEs) as the catalyst to achieving economic growth and development.

According to a report by SEDA 80% of women entrepreneurs are involved in the informal sector compared to 65 per cent of their male counterparts.  Although this represents a significant percentage, there is limited literature available on female entrepreneurs in the informal sector in South Africa.

In rural settings, where there is a strongly pronounced patriarchal African society, a woman is not expected to make economic decisions such as starting a business and requesting resources and goods to make it work but to rather tend to home responsibilities. Within this social structure, the achievement, motivation and self-assurance of female entrepreneurs can be negatively affected.

To understand the motivational factors that drive women entrepreneurs in rural settings, a study was conducted in 2017 aimed at women entrepreneurs in the Mahikeng area in the North-West province. The study sought to understand what drives these women in starting up informal enterprises, the barriers they experience and their developmental business needs.

The North-West Province where Mahikeng is situated, recorded the largest annual decrease in the official unemployment rate amongst the nine provinces in South Africa, from 26.8% to 25.2% according to a Stats SA report. Despite this fact, the province has a labour force participation rate of 2.3%.  The majority of households are headed by women as men are mostly migrant labourers on mines. They live with fewer resources, fewer rights and fewer opportunities because of factors such as domestic violence, the lack of education and gender discrimination.

Research has indicated that there is a significant intersection between being a woman, working in the informal sector and being poor. A higher percentage of people in the informal sector relative to the formal sector are poor. Informal economic activities are unrecorded but are estimated at a value of 28% of South Africa’s total gross domestic product (GDP). That is R160 billion, which makes its value 2.5 times as large as the contribution of the entire agricultural sector, or 70% of the contribution of the mining sector to GDP.

The study on Mahikeng’s informal women entrepreneurs discovered that there were three key underlying motivational factors that drove them to becoming entrepreneurs. These were destitute conditions, an entrepreneurial spirit and a passion for their products.

A key driver cited by 83% of respondents for starting an informal business was to move away from ‘destitute conditions’.  Destitute conditions are associated with factors such as having an insufficient family income and the difficulties in finding a job.  These factors can be defined as ‘push’ factors and extrinsically motivated as women aspire to escape and move away from their unfortunate circumstances such as poverty and dependence on their male partners.

However, the need to transcend impoverished conditions and the need for self-determination were almost equally strong amongst the participants. Self-determination can be linked to the entrepreneurial spirit which is described in terms of self-fulfilment, the need for independence and the need for a challenge.  These are ‘pull’ factors as women aspire towards certain ambitions, which are intrinsically motivated. As high as 78% of the Mahikeng women entrepreneur respondents shared a passion for business and a high entrepreneurial flair.

The research pointed strongly to the fact that an entrepreneurial spirit mixed with the right amount of skills training could enhance the performance of informal female entrepreneurs. If fully developed, it could lead these women entrepreneurs to move out of survival mode into profit maximisation.

Mahikeng’s women entrepreneurs displayed a keen sense of confidence in their product, or the eagerness to develop a sideline interest into a profit-making venture.  This factor is also perceived as a ‘pull’ factor which is intrinsically motivated, and 43% of respondents listed this factor as the third most important reason for starting a business.

Women within the informal sector are less educated and have fewer marketable skills with most of the respondents not having a secondary qualification.  Although the South African government has established many pro-women support structures over the last two decades to provide a variety of support to emerging entrepreneurs, the need for gender-specific and informal sector–specific training and development still exists. In terms of their training and development needs, 91% of the women interviewed indicated that they had never been exposed to any training programmes by government or a private organisation.

Lack of business and financial skills was ranked as the biggest obstacle to a successful business followed by the lack of a business network, which is necessary in maintaining and expanding an informal enterprise.

It is important that both the public and the private sectors acknowledge the importance of the informal business sector in South Africa. With a labour force participation rate of 2.3% the rural villages in the Mahikeng district in North-West do not paint a picture of growth and prosperity.

Informal women entrepreneurs are firstly propelled by the need to survive; in other words, the women do business to escape poverty. As an extrinsic motivation, it pushes them towards creating security for their family and not towards profit maximisation. They are driven to entrepreneurship out of necessity or destitution. Their entrepreneurial activities are viewed as a safety net that provides employment and income-earning opportunities for those excluded from formal sector employment. Many women engaged in the informal sector would in its absence be unemployed and unable to access alternate forms of income.

Competence is a necessary skill and an enabler of a self-efficacy; that is, the belief that one are the master of one’s own destiny. Building on strengths is more effective than trying to improve weaknesses.  However, self-efficacy behaviour without the necessary support will take informal women entrepreneurs only so far.  Access to basic infrastructure, training, funding and business networks will enable self-efficacy behaviour of women entrepreneurs in the Mahikeng district to move themselves and their communities from poverty to prosperity.

Professor Sanchen Henning is Associate Professor within the Leadership and Organisational Behaviour Academic Area at Unisa’s Graduate School of Business Leadership (SBL), Professor Sanchen Henning in partnership with MBL student,Kariba Akoob, discuss the motivational factors that affect women entrepreneurs in rural areas of the North-West Province.