Enhancing the financial health of women-owned microenterprises (WMEs) in South Africa

Posted on by The Helix Institute at MSC

A tale of grit and growth

Zanele, a 25-year-old woman from Soweto, exemplifies the resilience of many women entrepreneurs in Gauteng. She runs a small spaza shop that supports her four younger siblings and contributes to the local community. Zanele inherited the shop two years ago after her mother passed away, and used up all her modest savings to sustain the business. In common with 43% of WMEs in South Africa, Zanele relies on informal loans with high interest rates, eroding her already thin profit margins. For her, survival means keeping the shop open to feed her family, often at the expense of potential business growth.

Thandiwe, a 34-year-old beauty salon owner in Mamelodi, turned her dream into reality four years ago after completing beauty school. Though her business is formalized, she faces challenges managing cash flow and separating personal and business finances.

At 45, Gugu represents the aspirations of a growth-oriented entrepreneur. She runs a successful catering business and recently diversified into construction. Unlike Zanele and Thandiwe, Gugu maintains disciplined financial management, separates personal and business finances, and leverages formal bank loans to drive growth. Her approach demonstrates how strategic financial practices can unlock opportunities for reinvestment and expansion.

These women’s stories reflect broader trends among WMEs in South Africa. Despite their diverse circumstances, they all navigate significant barriers to financial health and business growth while contributing meaningfully to their communities.

Women entrepreneurs: Driving South Africa’s economy forward

South Africa has 2.6 million micro, small, and medium enterprises (MSMEs) that contribute 40% to its GDP. Women-owned microenterprises (WMEs) comprise 46% of these MSMEs. Yet, they stare at a staggering USD 6-billion gap in finance due to limited access to formal financial services, gender biases, informal operations, and the COVID-19 pandemic’s lingering effects.

MSC interviewed 600 WMEs in four districts of Gauteng—Johannesburg, Pretoria, East Rand, and West Rand—to uncover the determinants of their financial health. This blog sheds light on our research findings, explores the diverse financial realities of women entrepreneurs, and highlights ways to enhance their financial resilience.

Understanding WMEs’ journeys

Our findings revealed that 87% of WMEs in the trading sector are not registered, which limits their scalability. Informal operations restrict access to critical government support and hinder growth due to difficulty securing clients and partnerships.

Financial management issues worsen these challenges. Nearly half the WMEs surveyed do not separate personal and business finances. While 55% of them find it easier to manage cash flow this way, 48% want to avoid the costs of separate accounts. These practices hinder cash flow management, financial planning, and thus sustainable business growth. Additionally, savings and investments are the most widely used financial tools, especially in manufacturing, where WMEs achieve higher revenues and profits.

Our research uncovered the following three WME segments based on their businesses’ financial health:

  • Determined survivalists: Zanele, a 25-year-old woman from Soweto, personifies this segment. She runs a small spaza (informal shop) to support her four younger siblings. She inherited the business from her mother and used her savings to sustain it. Like 43% of WMEs in South Africa, she too depends on high-interest informal loans, which erode her profit margins. Zanele seeks household stability. Her focus is on survival rather than growth. Entrepreneurs in this segment prioritize simplicity and often mix personal and business finances. This group has the lowest earnings.
  • Strategic optimizers: Thandiwe, a 34-year-old beauty salon owner in Mamelodi, represents this segment. She formalized her business after she completed beauty school. Despite this, she struggles to manage cash flow and separate her personal and business finances. Entrepreneurs in this segment seek operational efficiency and moderate growth. They manage finances well and use available resources, such as state funds, digital tools, and skilled human capital.
  • Growth seekers: People in this segment pursue ambitious expansion. At 45, Gugu exemplifies a growth-oriented entrepreneur. She runs a successful catering business and has diversified into construction. Unlike Zanele and Thandiwe, she follows disciplined financial management, separates business and personal finances, and secures formal bank loans for expansion. Her approach showcases the benefits of structured financial practices. Entrepreneurs in this segment have the highest earnings and assets.

The table below gives a detailed insight into the financial behavior of these three segments.

Key challenges WMEs face

These personas face diverse challenges and opportunities, which emphasize the need for tailored support to meet their needs.

  • Competition: In the service sector, more than 50% of WMEs report declining profits due to market saturation. In contrast, the manufacturing sector uses higher revenue streams, asset bases, and customer diversification to withstand competition. These findings suggest the need for sector-specific interventions to enhance resilience and profitability.

  • Financial access: Access to affordable, timely credit remains a tall hurdle. Many WMEs rely on personal funds or informal networks for working capital and prefer banks for formal borrowing. Despite the growing availability of digital financial solutions, adoption is low as people lack awareness, struggle to navigate digital platforms, and distrust formal institutions.

  • Financial management and resilience: MSC’s research found that more than 64% of WMEs in the trading sector lack financial safety nets, which makes them vulnerable to economic shocks. In contrast, 36% of manufacturing WMEs maintain separate business emergency funds, which reflects stronger financial management.

Across all three sectors surveyed, only 11% to 24% of WMEs set aside personal emergency funds. While savings remain a primary funding source, emergency funds become more prevalent as WMEs progress from determined survivalists to strategic optimizers and growth seekers.

  • Business management: Strong business acumen determes WMEs’ success. For instance,           Gugu’s catering business flourished due to her ability to manage cash flow, reinvest profits, and secure long-term contracts. However, many WMEs across sectors struggle with cash flow and financial management.

Our research highlights varying recordkeeping practices. Better recordkeeping can enhance financial planning, facilitate access to credit, and support overall sustainability. Yet, while 99% of WMEs in manufacturing keep written records, only 72% of WMEs in trading follow the same practices. This gap underscores the opportunity to improve administrative practices, particularly in sectors with lower recordkeeping rates.

The infographic below summarizes challenges WMEs face at different stages of their lifecycle:

The road ahead for inclusive growth

Financial education and entrepreneurial training are critical to equip WMEs with the business skills to ensure better credit management and business sustainability. Course content should cater to diverse learner personas. It should start with foundational concepts and then increase in complexity. The course can also use gamification to enhance engagement. A centralized course-tracking platform can reduce duplication of course content and help financial service providers underwrite credit facilities by disbursing facilities to borrowers with an understanding of the facility.

MSC’s research on the financial health of WMEs indicates the importance of culturally relevant financial education. Partnerships with local NGOs and the private sector can improve dissemination and ensure that training materials reflect the social and economic realities of WMEs and address biases related to race and class. Blended delivery methods, which include digital and in-person sessions, are vital. The use of local language, local case studies, and local tutors can improve the relatability of the materials delivered. These programs should also have periodic monitoring and evaluation to assess learning outcomes. Moreover, these programs should include group sessions to reinforce positive behaviors and mentorship to address the mental blocks WMEs face.

The journey of South Africa’s women-led microenterprises is not just a story of struggle—it is one of resilience, ambition, and transformation. From Zanele’s determined fight to keep her family afloat to Thandiwe’s drive for efficiency and Gugu’s bold expansion into new industries, each entrepreneur embodies the untapped potential waiting to be unleashed.

But potential alone is not enough—these women need bridges. They need financial tools that understand their realities, training that speaks their language, and policies that empower—not exclude. The question is no longer whether we should invest in these women—it is how quickly we can act to ensure that their businesses do more than just survive. They must thrive.

Her Digital Gateway: How women in India access and use smartphones

Posted on by Deepesh Singh

Digital financial services (DFS) have grown significantly in India over the past decade due to increased mobile phone adoption, affordable data rates, and comfort in smartphone-based technology. However, the gender gap in mobile phone ownership and Internet use limits the equitable realization of benefits.

A study of 3,300 female users across five Indian states reveals that gender-disaggregated data can help design gender-intentional financial products. It can contextualize factors that influence women’s DFS adoption, such as access to shared smartphones, financial management practices, and gaps in current financial services. Read the report to learn more.

The report was first published on the RBIH website.

Enabling digital inclusion: Lessons learned from a field experiment to encourage women entrepreneurs to adopt digital tools

Posted on by Saumya Dixit

Women entrepreneurs in Bangladesh often struggle to adopt digital financial tools even though they have adequate access. MSC intended to bridge this gap and organized a structured intervention through which we delivered hands-on training in MFS, agent banking, and e-commerce. While service adoption increased modestly, confidence in independent use surged as 79% of previous MFS non-users embraced the service. However, rural entrepreneurs and those with lower education levels lagged. The expansion of personalized training and improved access to banking agents could further accelerate digital inclusion and business growth.

Offering support whereit matters most: Insights from assessing ecosystem needs and their impact on women entrepreneurs

Posted on by Saumya Dixit

This report highlights the gaps in ecosystem support for women entrepreneurs in Bangladesh. Awareness of available programs remains low, especially for finance, mentoring, and market linkages. Even when accessed, effectiveness varies. Only 20% of business owners meet at least three key needs, while half remain unsupported. Gender disparities persist, particularly in financial access and legal support. Policymakers must enhance gender-inclusive initiatives, improve outreach, and create unified support frameworks to bridge these gaps and promote sustainable business growth.

In small businesses, male and female business owners are more alike than we think

Posted on by Saumya Dixit

Women-owned businesses are inferior to those owned by men—both in terms of their owners’ confidence and business practices. This unfortunate sexist notion found prominence among people we interviewed in our research globally and, more recently, in Bangladesh. Data from the Women Business Diaries project in Bangladesh suggests a persistent perception that female business owners lack the aspiration, structure, or success of their male counterparts. Such misconceptions limit the potential of women-led enterprises and stifle their ability to scale, innovate, and contribute significantly to the economy.

Despite policy interventions, financial service providers often make credit decisions for women-led businesses based on the influence of male family members, especially for collateral-based or larger loans. This was a key finding that our previous blog covered in MSC’s Bangladesh study. Moreover, many banking professionals tend to trust women’s financial and business management skills less than men. Bureaucratic hurdles and gender bias raise barriers for women when they seek trade licenses, which restricts their access to affordable loans and opportunities for business growth.

The analysis of the Women Business Diaries project led us to select businesses with similar characteristics and focused on a diarist’s monthly income, expense, and profit. We removed outliers using the Interquartile Range (IQR) method to reduce the influence of extreme values and ensure a more homogenous sample. Next, we used an Euclidean distance algorithm to match each male diarist with a similar female diarist. This approach resulted in a refined dataset of 52 male and 75 female comparable diarists.

From the analysis, we found that women entrepreneurs are just as capable and ambitious as their male peers. Female business owners adopt similar practices, show equal confidence in key business areas, and share comparable aspirations for growth. The findings challenge stereotypes about women being less driven or effective in business.

Female business owners follow business practices akin to their male counterparts

Both women and men prioritize essential business metrics—financial management, growth, and operational consistency—and exhibit strikingly comparable approaches.

  • Record-keeping: How women and men maintain their business records differ slightly, although the overall approach of both genders is almost identical.
  • Supply chain management: Both male and female business owners favor direct supplier interactions and often place orders in person. Any differences in order frequency and supplier network size are negligible.
  • Customer management and demand patterns: Both genders source from local markets. Both male and female business owners experience high demand during peak periods, such as Eid. Both deal with increased customer visits to their stores to place and collect orders.
  • Money management behavior: Business owners of both genders actively plan for future expenses by setting aside funds. Cash management practices show similarity, with both groups maintaining similar cash reserves. Savings behavior also parallels, with 37% of male and 36% of female business owners saving in banks over a six-month period (Oct 2023 – Feb 2024). The median deposit amount is nearly identical, at BDT 1,300 (USD 11) for women and BDT 1,250 (USD 10) for men.

The figures below give a snapshot of our detailed findings across these four practices.

The gender-based difference in confidence levels in key business areas is almost zero

Confidence levels across essential business functions are nearly identical between male and female business owners. These functions include supply chain management, customer relations, record-keeping, and interactions with financial service providers. Notably, women entrepreneurs display a strong, consistent level of self-assurance when they negotiate with suppliers, manage customer expectations, or handle finances, which challenges the stereotype that they may lack confidence in business management.

Male- and female-owned businesses have similar aspirations and approaches to business growth

Both male and female business owners share similar investment priorities and focus on upgrades, such as shop infrastructure improvements and inventory expansion. This indicates that growth strategies are aligned across genders. Both male and female entrepreneurs prioritize reinvestment in their businesses to enhance operations and meet increasing demand. Close to six in 10 female and male business owners invested in growth activities between April 2023 and April 2024.

Additionally, the percentage of businesses that experienced significant revenue growth is comparable between genders.

We analyzed the significant growth or decline using revenue data gathered through daily diaries and evaluated using the Mann Kendal trend test. These findings show that female entrepreneurs thrive at par with their male counterparts under comparable structural systems, such as markets and support mechanisms.

The key takeaway for stakeholders—donors, policymakers, and practitioners—is the urgent need to strengthen or establish structural systems that are inclusive and effective for both women and men.

We must find ways to address this critical gap to build equitable and sustainable entrepreneurial ecosystems. For example, nearly 50% of diarists reported that none of their critical entrepreneurship needs were met, and only 1% had all their critical needs fulfilled. These needs span six key ecosystem areas: Entrepreneurship promotion, access to finance, business and technical skills, mentoring and networking, market linkages, and legal support. Addressing these gaps is essential for women entrepreneurs to reach their full potential.

In the next part of this blog, we will dive deeper into the needs of these female entrepreneurs.

From surviving to thriving: How stakeholders can meet the unmet needs of Bangladesh’s women entrepreneurs

Posted on by Saumya Dixit

In the first part of this blog series, we highlighted how female entrepreneurs exhibit the same confidence, capability, and drive as their male counterparts to challenge stereotypes and demonstrate their potential. This blog highlights that systemic barriers that emerge from poor support programs impede their progress, such as limited financial access, lack of mentorship, and insufficient market linkages.

Women entrepreneurs in Bangladesh and elsewhere worldwide grapple with persistent gender-based challenges in their daily lives. Yet they exhibit strong confidence, business management skills, and determination through which they can drive growth, provided they receive the right support. As discussed in the earlier blog in this series, both genders share similar confidence levels, business practices, and aspirations. However, women face systemic barriers that hinder their ability to compete on equal terms and hold back their potential to thrive.

We conducted a study in Bangladesh to understand how these challenges are being addressed at the ecosystem level. Through the study, we assessed how policymakers and other stakeholders meet the critical support needs of women entrepreneurs. We used MSC’s Ecosystem Needs Framework and insights from the Women Business Diaries project to explore six key areas of the entrepreneurial ecosystem:

  1. Entrepreneurship promotion
  2. Access to finance
  3. Business and technical skills
  4. Mentoring and networking
  5. Market linkages
  6. Legal support

We further evaluated each of these ecosystem components based on three key parameters:

Awareness: Is the business owner aware of any initiatives related to these ecosystem needs?

Usage: If the business owner is aware, did they use the service or benefit from the initiative?

Effectiveness: If the business owner used the service or availed of the initiative, how effective did they find it?

The table below summarizes our findings. It illustrates the proportion of women entrepreneurs whose needs are being met across these six ecosystem components based on the three parameters.

Additionally, the research also highlighted that

  • Business owners whose ecosystem needs are met are more likely to engage in growth-oriented actions, while those with unmet needs report lower levels of such activity.
  • Business owners with more ecosystem needs fulfilled experience higher sales and profits.
  • However, only 1% of female business owners have all six needs fully met.

The findings are not encouraging. For almost all ecosystem needs, less than 50% of business owners had access to any government or private sector program. These numbers are even lower on effectiveness, which indicates that the programs’ design does not match the gaps. Our discussions reveal that many women rely on informal networks,  for funds, such as family and friends, who may lack the expertise to help navigate business challenges.

A major barrier for women entrepreneurs in Bangladesh is a lack of awareness of available support programs. Despite various government and NGO-led initiatives, many women remain in the dark about the resources that could help them access finance, mentorship, and market linkages—all essential for growth. For example, the Women Entrepreneurship Development Unit (WEDU) at the Bangladesh Bank seeks to enhance access to finance through specialized financial products, training, and mentorship for women entrepreneurs. Yet, only a handful of the respondents knew of the programs that lead banks offered through the WEDU.

Similarly, despite the existence of market linkage programs, such as Women and E-commerce, and NGOs, such as the SME Foundation and Joyeeta, only two in 10 respondents knew about any market linkage programs. Their low awareness levels limit the use of such initiatives. However, the trends indicate that most women who are aware of such programs use them.

More worrisome is the fact that less than 20% of respondents find most programs effective, which underscores significant challenges in program design. Findings from qualitative discussions revealed that these initiatives often fail to accommodate the needs of women, which makes it difficult for them to attend the sessions or benefit from them.

Key barriers include inconvenient scheduling, irrelevant or overly generic content, limited opportunities for participant feedback, and a lack of sensitivity from trainers. Such shortcomings reveal a critical gap: Many programs are not developed through a gender-sensitive lens. This oversight limits their ability to address systemic inequities or empower women effectively.

Many would expect “Ease of access to finance” to be viewed more positively than the other enablers. Yet, our discussions highlighted how women faced under-financing; delays in disbursement; difficult and exclusionary terms and conditions; minimal options for tenure, grace period, and other key terms; and high interest rates—particularly from microfinance institutions. All these challenges were amplified by women’s self-reported poor financial management skills, which meant they struggled to deploy the proceeds effectively even when they could access funds.

Stakeholders, including donors, policymakers, and practitioners, can drive meaningful impact by designing programs that meet the ecosystem’s needs. They can address these needs of women to significantly enhance their business potential—whether through improved access to finance, mentorship, or tailored policies. If stakeholders focus on creating programs and systems that fill such gaps, they would unlock substantial positive outcomes and create a pathway to achieve lasting, scalable impact and promote inclusive development.

As a result, these programs can empower more women-led businesses to expand their ventures, generate economic growth in local communities, and contribute to the broader national economy. Through such tailored support, Bangladesh’s women entrepreneurs can give flight to their dreams and, in the process, enrich their families, communities, and the nation.