Sub-Saharan Africa has the highest rate of female entrepreneurship globally with an estimated 21.8% of women owning businesses; in Nigeria, female entrepreneurs are an estimated 40% of the total population. Most of these businesses are necessity-driven – started as a means to earn an income such as agriculture, textile, retail etc. Nigeria’s informal economy makes up 86.1% of its entire workforce, includes 41.5 million micro, small and medium enterprises (MSMEs) and accounts for approximately 65% of Gross Domestic Product (GDP). However, as a result of the pandemic and collapsing global oil prices, the Nigerian economy is projected to contract by 3.2% with a total of 9.2 million female workers being affected either by a reduction in income or rendered unemployed.
Female-led retail businesses in Nigeria face several challenges – gender discrimination, limited stock due to insufficient working capital, highly fragmented distribution systems, expensive middlemen and low profit margins, as well as limited access to credit facilities leading to a reduction in profit. These have been further exacerbated by a reduction in disposable income as a result of the lockdown and restriction of movement. To make matters worse, research shows that the pandemic has adversely affected women as so many operate in the service sectors.
As borders slowly open and movement creeps back to pre-pandemic levels, there is much work to be done to help Nigeria’s already fragile economy to not just recover but thrive. The millions of women at the helm of the informal economy know exactly what needs to be done to get the engine of the economy buzzing again, and there are a number of ways to support them to do this.
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Better access to credit and stock management
First, our female small business owners must be provided with greater economic power to grow their businesses through better access to credit. This will give them the economic resources to move beyond subsistence trade in order to actually grow their operations. This requires training and upskilling on how to evolve the business from small stall to medium enterprise, with the ability to supply its customers with a range of goods.
Help with financial and digital literacy are two key ways to support small entrepreneurs to grow; and Nigeria has a range of innovative digital platforms that can help businesses manage their operations more efficiently. With limited resources, a mobile enabled solution that allows retailers to track their stock and take payment from customers solves a substantial pain point, not least the time it takes to physically go out and procure stock. A lot of these small businesses also lack space to hold stock and can lack the business know-how to efficiently manage stock levels. With the help of technology, informal retail businesses can improve their processes, reduce stock waste and ultimately improve turnover.
Opening doors to global markets and mentorship
It is also paramount that the ecommerce platforms being used by small retailers offer more than the best deals on merchandise from the comfort of their shops. Opportunities to link with domestic and global markets is essential to their continued growth, particularly with a non-existent budget for marketing. Mentorship programs also open doors for some of the most underserved business owners to be part of a network that connects them to business mentors to support their growth ambitions.
As the world slowly returns to ‘normal’ and we begin to think about how we can mitigate the economic damage of the pandemic, the informal retail sector and the women that underpin it can play a major part. The informal retail sector has so much untapped potential. Many of these women have achieved significant success with minimal support for so long. If we finally give them the support they need, we will not only be helping the entrepreneurs but also helping their families and communities which will ultimately benefit society as a whole.
Karen Adie is the Director of Merchant Services at TradeDepot. She started off her career at Goldman Sachs as a Technology Analyst and has worked in various capacities at several tech startups in Nigeria. She has a Bachelor’s degree in Computer Science from the University of Nottingham and a Master’s degree in Management from Cranfield University, both in the UK.
