A Review of the Impact of Covid-19 Pandemic on Women Entrepreneurs

Abstract

This chapter provides an overview of the positive and negative impacts the Covid-19 pandemic has on women entrepreneurs in South Africa. The chapter recognises the role that women entrepreneurs play in the economy and society. The research objectives for this study were to first identify the importance of female entrepreneurs. Secondly, to determine the positive and negative impacts that Covid-19 has had on South African women entrepreneurs, and lastly, to identify the assistance provided to women entrepreneurs by the government. The methodology used to conduct research was desktop research. Information was collected from online databases in the form of articles, journals and textbooks. Only information relevant to the research objective was selected for this study. The findings revealed that female entrepreneurs play a vital role in the South African economy by creating employment opportunities, decreasing poverty and contributing to the gross domestic product (GDP). The findings revealed that lockdown restrictions implemented by the government due to Covid-19 led to many women-owned businesses not being able to operate, a decrease in sales, a drastic drop in revenue, lack of digital knowledge among women, increase in anxiety experienced by women and women entrepreneurs. The findings also suggest a lack of digital knowledge among women entrepreneurs and a lack of financial assistance provided by the government. Regulators and policymakers are challenged to invest in efforts that create an environment where female entrepreneurs are capacitated and provided with information to withstand the challenges brought by the pandemic.

1. Introduction

Coronavirus, also known as Covid-19 originated in Wuhan, China in December 2019 [1]. The virus has rapidly spread among humans worldwide, claiming the lives of the young and old. People who contract the virus experience flu-like symptoms. In worst cases, it can affect the lungs and ultimately lead to death. There are currently over 49 million cases reported globally and over 1 million deaths that have occurred due to the virus [1]. On 11 March 2020, the World Health Organisation (WHO) declared the Covid-19 virus a global pandemic.This required many countries to implement actions that would help control the spread of the virus.

A necessary action taken by most countries was the implementation of a nationwide lockdown. Leading to regulation that restricts the movement of citizens and for the infected to quarantine in their homes for a specified period. Only essential services and workers were permitted to operate during the lockdown period. Some governments, like in South Africa, restricted trade and travelling between countries during the lockdown. The rapid spread of the virus and government restrictions, Covid-19 caused a drastic impact on business operations, the economy and people’s livelihoods. Due to the restrictions imposed by the government and the harsh lockdown, many businesses could not survive and had to close down.

Covid-19 also impacted entrepreneurs across the world, including South Africa. Most businesses owned by women fall under the SME. This means women are likelier to own businesses in the service industry than in the technological or manufacturing industry [2]. Women entrepreneurs own various businesses ranging from child care services, to salons and law firms. The productivity levels of women entrepreneurs are often impacted due to their responsibilities at home, such as taking care of kids to household responsibilities [2]. However, female entrepreneurs are still emerging in numbers [3].

In South Africa women entrepreneurs make up 52% of the population, with the largest ethnic group of self-employed women being classified as black women [4]. Women entrepreneurs are often self-employed and employ other individuals or solo entrepreneurs who have no other employees who work for them [2]. In South Africa, women entrepreneurs are producers of employment opportunities, suppliers of jobs, and contributors to a decrease in poverty, thus contributing to the development of the economy [4]. Women entrepreneurs form part of the sectors in the economy that were drastically impacted by Covid-19 and experienced a major decline in consumer demand. Therefore, Covid-19 created a risk of the possible closure of many women-owned businesses and an increase in job losses [5].

Due to the coronavirus, women entrepreneurs now face challenges such as financial, and mental health stability, a decrease in consumer demands, disruptions in the supply chain network, and worker support [6]. However, many researchers have failed to conduct research on how women entrepreneurs have been affected by Covid-19 [5].

This study will analyse the positive and negative impacts created by Covid-19 on women entrepreneurs in South Africa and contribute to research conducted in the space of female entrepreneurship. It will also be helpful to female entrepreneurs and potential female entrepreneurs to clearly understand the impact of a global pandemic and how to secure their businesses against unforeseen circumstances in the future.

2. Literature review

An entrepreneur thinks of an innovative business idea, and is willing to take a risk and advantage of an opportunity [7]. A woman entrepreneur can be defined as an individual who is looking for an opportunity, with a unique vision, has remarkable perseverance and, above all, a female who is willing to take chances with the uncertain because of the upbeat attitude she holds [8]. For many years women have worked jobs such as child care, cleaning their homes and taking care of the sick family without any pay [9]. These roles have gradually changed over the years due to an increase in women wanting to gain independence and professional life [10]. Women have acknowledged their power and ability to do exactly what men can do in business.

Many countries worldwide have acknowledged the vital role that female entrepreneurs play in contributing to economic growth [11]. According to Agarwal & Lenka [8], without women entrepreneurs, the economy will be unbalanced. Researchers have stated that countries that have economies which can survive an unexpected financial crisis have a high number of women entrepreneurs [12]. In South Africa, female entrepreneurs are not only considered contributors to economic growth, but they are also responsible for helping decrease the unemployment and poverty rate, as well as contributing to the differentiation of entrepreneurship in the economy [10]. They also operate in the informal sector, for example, spaza shops [3].

In 2017 women entrepreneurship increased to 17% globally and continued to rise yearly [13]. In South Africa, 34.3% of women are able to start up their own business. According to [14], the South African population consists 51.1% of females and 40% of South African homes are run by females who are the sole breadwinners. Women entrepreneurs in South Africa take part in the retail and personal sectors (bakers, cooks, salon owners etc.) [10]. The number of women wanting to start up their business venture varies according to women who want to start a business due to monetary gains (54%), women wanting to be their own bosses and set their own terms or rules (50%), and lastly, those females who aim to transform their passion into a business and career path (40%). According to a survey carried out by SME South Africa, nearly 47% of South African SMEs are owned by females, which is a 6% increase when compared to the 2019 findings [15].

In 2018 Facebook research regarding female entrepreneurs was conducted. The findings stated that women entrepreneurs could boost the South African economy by R175bn by the year 2022 [16].

2.1 The positive and negative impacts of covid-19 on women entrepreneurs

The Covid-19 pandemic has impacted women entrepreneurs both negatively and positively. Due to the lockdown regulations, many female-owned businesses were impacted for a longer period as compared to male-owned businesses [17]. The lockdown regulations in South Africa permitted the operation of many businesses (restaurants, salons, spas etc.) during specific levels. This meant that most businesses owned by women entrepreneurs had to be closed during this period. According to Kipnis [6], 90% of women-owned small and medium enterprises in South Africa experienced a decrease in sales due to the lockdown. The lockdown regulations also severely impacted the cash flows of women-owned businesses [17]. As a result of the lockdown regulations, many female-owned businesses were not able to survive due to having no sales and ultimately had to close down [6]. Women entrepreneurs whose businesses had to be shut down due to Covid-19 stated they could no longer afford to pay staff salaries or even sustain their personal home expenses [17].

Many women experienced mental health issues such as anxiety and depression due to Covid-19 [18]. Research has stated that nearly 34% of women-owned small and medium enterprises experienced stress and a lack of productivity during the lockdown [6]. The number of females and female entrepreneurs who experienced anxiety increased due to women not being able to cope with added stress from their businesses, families and work [19]. According to [6], 27% of women-owned small and medium enterprises experienced an increase in care demands which required them to home-school kids and take care of their elderly and family. As each level of the lockdown was gradually lifted, certain businesses were allowed to operate. Many women could not return to their businesses because childcare services (schools, daycare) were still not permitted to open [19]. This led to women neglecting their business needs and not being able to receive an income because there was no one else to look after their kids [17].

The disruptions in global and local supply chains harmed female entrepreneurs. Many businesses could not get their goods and raw materials delivered to them due to transportation/shipping restrictions and delays [6]. Some women owned businesses were not able to acquire raw materials needed to carry out their business operations as a result of the South African government placing strict restrictions on the movement and trade of goods. Due to this many woman owned businesses could not operate leading to possible closure or loss of sales [6].

While many businesses were able to make sales during the lockdown period, women entrepreneurs who had no formal knowledge of technology, social media, or a business website experienced difficulty making sales during the lockdown period [20]. The majority of businesses owned by women do not participate in e-commerce activity [17]. For example, women in townships running spaza shops or small takeaway shops do not offer their services online and have therefore suffered detrimentally due to Covid-19. Some women have failed to transform their businesses to digital platforms because they need to gain digital knowledge [21]. This places great importance on women entrepreneurs gaining digital knowledge such as website, e-commerce and marketplace knowledge [6].

According to Ukala [17], many women entrepreneurs also lacked basic information regarding what steps to follow to sustain their businesses through the pandemic. They also needed to gain knowledge on how to apply for financial loans for their SME or SMME during Covid-19. It is essential to educate females in finance so they can acquire credit for their businesses easily. This lack of basic information is crucial for the survival of women entrepreneurs [13]. Women entrepreneurs also found it challenging to acquire loans during the pandemic [21]. This affected the survival of their business.

Covid-19 has also had some positive impacts on South African women entrepreneurs. Many women entrepreneurs were able to sell their products or services online by the use of e-commerce, business websites, online sales (Gumtree) and Facebook marketplace [20]. This allowed them to still make sales from the comfort of their homes.

During the lockdown, some female entrepreneurs have been able to adapt their business operations and products to meet the needs of consumers more effectively and efficiently [22]. For example, women who own restaurants have been offering delivery services. This has allowed them to differentiate their business from competitors.

Many women entrepreneurs expanded their businesses by identifying business opportunities in the market due to Covid-19. For example, dressmakers who could not operate started making face masks and selling.

2.2 Assistance provided by the government

The South African government has allocated a R500 million-rand relief fund to be allocated among SMEs, especially women-owned enterprises that will be given first preference when applying for this funding [23]. However, all applicants’ especially female entrepreneurs, will have to go through an application process before getting approved.

An initiative called the Ecosystem Development for Small Enterprises in South Africa (EDSE) has been providing funding to small and medium enterprises. An amount of R467 million has been paid to small businesses, with 45% funded to women owned businesses such as spaza shops and hairdressers [21]. This will help women entrepreneurs sustain their businesses through the pandemic reducing the financial pressure felt by female owners.

The South African Innovation Summit (SAIS) launched a Fem-In-Tech, which aims at educating South African female entrepreneurs on the technology they would need when starting up businesses or growing their already established businesses. This is aimed at helping women entrepreneurs transform their businesses to digital platforms. To operate effectively and efficiently in a modern economy, technological development in a business is vital [24]. This is also aimed to assist with closing the digital gap between male and female entrepreneurs, allowing female SMEs and SMMEs to take part in the e-commerce market and adapt their business practises to an economy after Covid-19 [17]. Numerous initiatives are being launched to help women entrepreneurs gain digital knowledge. According to [21] by educating women entrepreneurs on how to use technology, women become more independent and are able to keep themselves better informed.

The government helped women entrepreneurs by providing grace periods for loans taken by women-owned businesses [17]. Both these measures can help sustain women-owned businesses, thus saving jobs and livelihoods.

The Inter-American Development Bank (IDB) received an amount of $14.71 million from the American government for its initiative to provide women entrepreneurs with support, finance and training to help sustain their businesses [25]. It will also help women entrepreneurs withstand global economic downturns.

African governments have vowed to be more acknowledging of the current challenges women entrepreneurs are now facing due to Covid-19. They plan to release more funding to women-owned businesses and placed great urgency on launching digital knowledge and support programs for these women [26].

The European Bank for Reconstruction and Development plans to help women-owned small and medium enterprises in Egypt, Morocco and Mongolia by providing them with digital knowledge, financial support and more access to different supply chain markets and suppliers [25].

The World Bank has created a programme to provide skills development and support to female entrepreneurs. It also plans to close the finance gap that women entrepreneurs have been experiencing [25].

Women entrepreneurs play a vital role in the economy. They create employment opportunities, decrease poverty and contribute to the gross domestic product (GDP) of a country. The recent pandemic (Covid-19) has made many negative impacts on female entrepreneurs and, in some cases, led to the closure of women-owned businesses. However, Covid-19 also positively impacted women entrepreneurs.

2.3 Entrepreneurial activities post Covid-19

Covid-19 has evolved how entrepreneurs conduct business by highlighting the importance of innovation and digitalisation as vital factors of business survival post-covid-19. According to [27], entrepreneurial sustainability and continuance rely heavily on innovation.

Businesses need to have the ability to create new products as this improves a business’s endurance in the face of economic uncertainty [28]. It also creates opportunities of diversification and relevance in the economy [29].

Great emphasis is placed on the utilisation of technology in the form of a business website or a business social media account which are critical components for a business. Technology mitigates the risks associated with future unforeseen circumstances, such as a pandemic or restrictions on physical remoteness [28]. According to Liguori & Pitts [29], technology also provides search engines which help entrepreneurs to build and maintain relationships with their consumers as well as stay relevant. It also helps entrepreneurs sell their products to customers [30].

Entrepreneurs have acknowledged that having a sustainable team plays a vital role in the survival of a business post Covid-19. A sustainable team is one that displays efficiency, effectiveness, strong motivation, and capabilities. These employees also help a business get through unforeseen circumstances [30].

Government policies relating to financial support for entrepreneurs have also played an important role in the survival of entrepreneurs. Many governments have also adopted new policies that make it easier for entrepreneurs to gain access to financial aid when faced with unforeseen circumstances [31].

3. Methodology

To provide a review of the impact that Covid-19 had on women entrepreneurs in South Africa a desktop research study.

Data was collected from online databases in the form of academic journals, online articles and textbooks. Desktop research is simply seeking applicable, already accessible knowledge on the subject at hand. Secondary data is collected through desktop research. Information that is publicly accessible and relevant to women entrepreneurs in South Africa was used for this study. Numerous sources are utilised for secondary data collection. A researcher will analyse which source to use depending on the research conducted.

The search began on the 5th of November using academic databases such as Google Scholar, EbscoHost, Scopus and textbooks. The search for information was limited to 5 years old. This meant that only articles, journals and textbooks published between 2015 and 2020 could be used for this study.

When researching academic databases, the terms “women entrepreneurs”, “South Africa women entrepreneurs”, Covid-19 impact on female businesses”. By using these search terms, the majority of the data found was in the form of articles and research papers. The initial search resulted in over 30 results which had to be narrowed down.

The following themes were identified during the literature review. They were used as search words to locate research papers suitable to interrogate the research question: “women entrepreneurs”, “women entrepreneurs in South Africa” and “Covid-19 impact on female businesses” To classify the positive or negative impact of Covid-19 on female entrepreneurs the findings of each research paper was viewed.. The search conducted revealed that majority of the information was in the form of articles. Since the study focused on women entrepreneurs impacted by Covid-19, only those articles and journals that were relevant were selected. A total of 20 articles were selected. The articles were sources from the following databases; EbscoHost (Five articles), Scopus (three Articles), and Google Scholar (11 articles).

The lead researcher identified and categorised the required information and article that relates to the aim of the study. The data collection method that guided the analysis of data is known as the content data analysis method. All data were read and analysed to understand how the relevant research could add valuable information to the current study.

4. Findings and discussion

The main aim of this chapter is to document the positive and negative impact Covid-19 has had on women entrepreneurs in South Africa. This study also provided an understanding of the essential roles that female entrepreneurs played in the economy and compared the actions taken to help female entrepreneurs by the South African government and other governments.

4.1 The importance of female entrepreneurs

Although the number of female entrepreneurs in the country are far less than male entrepreneurs, female entrepreneurs play a vital role in contributing to the economic well-being of a nation. These businesses contribute to the GDP of the economy. This means that women entrepreneurs also form part of the backbone of the country’s economy. Many women who own their businesses are also the breadwinners in their homes and therefore rely on the revenue their business earns. Since many women entrepreneurs fall under the SME and SMME, these sectors were the most vulnerable and largely impacted by Covid-19.

The findings demonstrate that female entrepreneurs create jobs, decrease poverty, motivate other females and contribute to the overall well-being of the economy. According to [3], nine out of a hundred females participate in early entrepreneurial activity. The findings in this study further revealed the lack of importance placed on female entrepreneurs in South African countries and the lack of research conducted on female entrepreneurs in South Africa. Women entrepreneurs also play an essential role in society by empowering one another and providing jobs to locals.

4.2 The positive and negative impacts that Covid-19 has had on south African women entrepreneurs

This study further revealed that Covid-19 than positively impacted more negatively impacted women entrepreneurs in South Africa. The implementation of a harsh lockdown by the South African government left many women entrepreneurs financially unstable. Many of these women had to borrow money from family and friends in order to provide for their homes or to help them get back into the business once the government permitted them to operate again. It also affected their mental and social well-being. Many female-owned companies suffered more during the lockdown than male-owned businesses due to operating restrictions.

The findings suggested that women entrepreneurs suffered financially from the lockdown implemented by the government. According to Kipns [6], many women-owned businesses had to cut their business costs and decrease the number of workers. Some women entrepreneurs who own businesses located in hotspot areas (high number of Covid-19 cases) suffered more financially than other female businesses. This is due to consumers’ fears of going to such stores or locations. This led to a reduction in worker morale and emphasised the importance of financial support provided by the government to assist with paying workers’ salaries.

The findings of the study also revealed that numerous female entrepreneurs lack the necessary tools and funding needed to sustain their businesses through the global pandemic. A large number of South African entrepreneurs needed to gain digital knowledge. Covid-19 has placed great importance on digital expertise and a business’s ability to transform into a digital platform. This required many businesses, especially SMEs to change from an offline enterprise status to an online enterprise status. This needed to be done to ensure the business’s survival ([32, 33] p.4). This knowledge gap has led to many women-owned businesses closing and individuals losing their jobs. Many women had no access to technological devices such as laptops, computers or cellular phones that allowed web browsing. In some cases, women entrepreneurs owned at least one of the three technological devices but had no access to the internet due to them being located in rural areas or not having enough money to purchase data to access the internet.

Further findings suggested that women entrepreneurs faced extra responsibility during the lockdown. Some found this added responsibility to be stressful, leading to difficulty managing their businesses. Women entrepreneurs in South Africa also lacked access to information and knowledge of how to apply for the necessary funding provided by the government for SMEs. Too much paperwork, long waiting periods and not being well-informed led to many women entrepreneurs not using on time or not applying at all for funding by the government. Disruptions in global and national supply chains led to a shortage of stock and many businesses being unable to operate without any stock. This negatively impacted the revenue of women-owned businesses.

The findings revealed the positive impacts that Covid-19 has had on women entrepreneurs. This includes the importance for women entrepreneurs to adapt to market changes and bring about innovative changes to their business operations to ensure their business remains relevant. Some female entrepreneurs could extend the range of products or services they offer. While others were able to take this time during the lockdown to better understand how to meet consumer needs. This creates a better relationship with consumers and helps women entrepreneurs be more attentive to their consumers.

The findings also suggest that more research needs to be conducted on how the virus impacted women entrepreneurs. More research is needed to address the impacts of covid-19 on female entrepreneurs in the formal and informal sectors in the economy.

4.3 The assistance provided to women entrepreneurs by the government

More funding needs to be allocated to sole female entrepreneurs (spaza shops etc.) and female entrepreneurs who are located in rural areas. The government should also provide sole and rural women entrepreneurs with programs that will better educate them on how to manage their businesses. This funding will help them grow their businesses.

These findings revealed that the South African government acknowledged that more significant steps needed to be taken on their part to assist women entrepreneurs. A primary form of action taken by the South African government is financial assistance, which prioritises women entrepreneurs. Governments across the world provide financial assistance to women entrepreneurs.

The findings also revealed that the South African government had acknowledged the importance of providing female entrepreneurs with funding to help them through the pandemic. They have also encouraged large corporate firms to create programs that will help educate women entrepreneurs on how to transform their businesses into a digital platforms.

Further findings show that governments worldwide have acknowledged the importance of digital education among women entrepreneurs. Most governments state that female-owned businesses are closed due to women lacking digital knowledge [3]. The South African government and other governments agree that women need more financial support, and more government discussions should focus on female entrepreneurs.

5. Limitations

The study is a systematic review using desktop research. It is possible that certain information relating to the impact of the COVID-19 pandemic on women entrepreneurs in South Africa still needs to be collected. The research findings of this study are based on secondary data that was already published. This is a limitation as empirical research was not conducted.

6. Recommendations

Women entrepreneurs within the same area should form support structures for one another. This can be done by creating female entrepreneur support groups within each region. This way they can provide support, exchange business knowledge and motivate one another through difficult times. Women supporting one another creates an unbreakable chain of strong women.

Large South African firms should provide funding to female entrepreneurs only when needed. These firms could acquire the money from either shareholder or deduct a percentage of their annual revenue that would be used to help fund female entrepreneurs. The financial support provided by these companies will help female entrepreneurs sustain their businesses through difficult times.

The government should provide more financial support to female entrepreneurs and prioritise women-owned businesses in economic discussions. The government can provide financial support in the form of financial support programmes. These programmes can equip female entrepreneurs with the knowledge and skills they need to operate their daily businesses, even during unforeseen circumstances.

The government should also change financial policies so women entrepreneurs can gain financial loans much easier from banks and financial assistance from the government. Such changes to financial policies will help save many women-owned businesses.

Technological companies should provide female entrepreneurs in the formal and informal sectors with digital training to help them start their e-commerce business ventures. This will help many females diversify their business and reach a larger target market.

Besides digital and financial advice, female entrepreneurs need training, more information on how to best manage a business and mentoring. If equipped with such knowledge, they can better manage their businesses and know what steps to follow when an economic crisis occurs.

The public and private sectors can provide incentives to people who invest in women-owned enterprises [13]. These sectors can provide incentives such as funding and partnership.

Women entrepreneurs should have more than one supplier. Having more than one supplier will help in ensuring that their business never runs out of stock in future when a global pandemic occurs.

Government should provide more initiatives to support women’s mental health.

Entrepreneurs need to build and maintain relationships with consumers on social platforms.

Entrepreneurs should also be innovative in their practices and skills to overcome unforeseen circumstances.

7. Conclusion

Coronavirus unexpectedly occurred, causing disruptions in businesses, travel, supply chains, people’s lives and the world economy. No one could prepare for such a destructive pandemic that changed the way of life for everyone. This pandemic spared no human, business or country. Covid-19 has negatively and positively impacted South African women entrepreneurs.

This study shows that women entrepreneurs in South Africa lacked digital knowledge to sustain their businesses. Many women entrepreneurs needed to learn how to utilise social media platforms to engage with consumers, while some needed access to digital devices. It drastically impacted the financial status of women-owned businesses. Disruptions in supply chains affected various women-owned businesses. Mental health issues increased among female entrepreneurs due to added financial stress and the possibility of a business failure. However, this study also found some positive impacts of covid-19 that led to some women-owned businesses serving consumers more efficiently by better understanding their needs, expanding business operations by providing delivery services and selling goods through e-commerce during the harsh lockdown.

Government should allocate more funding and initiatives to help sustain women-owned businesses in the future. Women’s entrepreneurship should be more prioritised during government discussions.

Future research should be conducted on women entrepreneurs in rural areas impacted by Covid-19 as there needs to be more data on this topic. Future research is needed on how women entrepreneurs can sustain their businesses for a more extended period during a pandemic. Future studies comparing women entrepreneurs in first-world countries and third-world countries should also be conducted. This will help better understand how different countries value and provide assistance to women entrepreneurs in need. Future studies should also be conducted on women entrepreneurs who are disabled, as few studies have been conducted in this area.