How African Women Entrepreneurs Power Through in an Economic Downturn
Inflation has become a central concern in recent times, as its repercussions reverberate through economies worldwide. African female entrepreneurs, already grappling with an unpredictable business environment due to political instability and the pandemic, must now confront a new challenge — the escalating costs of goods and services amid inflationary pressure.
As we explored potential solutions for how we could add to our business training curriculum to support these women and their businesses in such dire circumstances, we encountered difficulty finding sufficient data that catered specifically to their needs. Therefore, we have compiled this whitepaper report to provide valuable insights and information to the entire ecosystem.
The three primary objectives were to:
- Provide an analysis of the impact of inflation on African women entrepreneurs, highlighting the challenges they encounter amid economic downturns
- Investigate how African women entrepreneurs are adapting to economic downturns and explore potential solutions for Women-led Small and Medium-sized Enterprises (WSMEs) to mitigate risks during periods of economic contraction in African markets
- Present a detailed implementation plan that WSMEs can adopt to leverage these solutions effectively to support their businesses during turbulent times
Methodology
For this research, we followed a mixed-method approach. We conducted both quantitative and qualitative survey research to gain a comprehensive understanding of the challenges faced by African women entrepreneurs.
The survey comprised four open-ended questions targeting the AWEC Alumnae Network (AAN) community of female founders. Participants were asked to fill out a research form containing general questions about their business, the impact of inflation on their business operations, and strategies they implement to navigate the current economic climate.
We distributed the survey via Google Forms and received 140 responses, all of which were included in our analysis. Before the analysis, the team checked for missing data and cleaned the dataset. We followed a data-led analysis approach, identified insights, and grouped the data into common themes before synthesizing the information.
In addition, we conducted ten semi-structured case study interviews to better understand the challenges faced by these entrepreneurs, the strategies that have helped them sustain their businesses during this downturn, as well as viewpoints of public and private sector experts on prospective solutions for mitigating any risks and responding to the crisis.
By combining quantitative and qualitative research methods, we aim to provide a holistic view of the experiences and strategies of African women entrepreneurs in the face of inflation and economic downturn.
Key Findings
140 businesses from 20+ countries representing 33+ industries responded to the survey.
Top Insights
- The impact of inflation and recession on WSMEs:
- High cost of goods, raw materials, and overheads
- Reduced purchasing power
- Staffing challenges (high cost of living, demand for salary increases)
- Other (decline in sales, decreased revenue, business property rental increases, difficulty paying staff, debtors extending payment terms, customers defaulting on payments, banks/investors withholding lending)
2. How risk is assessed and mitigated during economic downturns:
- Measurement and Evaluation (M&E): Leveraging frameworks like SWOT analysis, Boston Matrix, and PESTLE analysis to analyze data from different business areas and, e.g., cashflow, projected forecasts, evaluating product/service performance/offering
- AWEC curriculum delivered on topics such as advisory boards and partnerships, which have contributed to strategies like taking out business insurance, savings and investments, and exporting
3. Strategies employed to combat the current economic climate:
- Diversification
- Collaborations & Partnerships
- Customer Retention
- Marketing (digital)
Other Findings
In addition to the survey findings, our face-to-face conversations with respondents highlighted an ongoing inner battle where emotions and humanistic instincts can derail business decisions.
Some of these women struggle with determining appropriate pricing for their services or making difficult staffing decisions, e.g., letting staff go to reduce overhead costs. As a result, some entrepreneurs may default to offering pro-bono services in hopes of supporting or retaining clients, which raises the question:
Where does one draw the line?
Another challenge that emerged is the pressure for women entrepreneurs to appear strong and capable, leading many to suffer in silence for fear of being seen as inadequate or a failure. Society often perpetuates the notion that women must be able to “hold it together” and be superwomen, even when they are struggling. This can lead to feelings of isolation and a lack of support.
However, we found that many women entrepreneurs face similar challenges, highlighting the importance of community and support systems in navigating through these difficult times.
3 Key Opportunity Gaps
- Respondents noted the need to become better business owners and leaders, e.g., they emphasized the need to improve how they strategize, evaluate, innovate, and think critically.
- The current economic climate challenges them to rebrand/remarket/reposition their products and services as painkillers rather than vitamins, e.g., an apparel company switching from manufacturing fashion items to work and school uniforms.
- Very few respondents had practical steps for how to assess and mitigate risk.
For more information, please see the full report for free: https://www.weareawec.org/white-paper-report-navigating-economic-downturns-a-roadmap-for-african-women-entrepreneurs
