The Financial Express

Defining woman entrepreneurship

| Updated: September 23, 2020 21:45:53

Defining woman entrepreneurship

Since it's difficult to clearly define women entrepreneurs in view of diverse criteria in different countries and even within a country, there is an imperative to find a single, universal definition in order to collect and compare data of women entrepreneurs. In absence of a well-codified definition, also in Bangladesh, we often face difficulties in recognising the female entrepreneurs or giving them access to official facilities.

However, there are political and technical sensitivities in having a global definition of women entrepreneurs or women-owned businesses. In securing certification by the regulatory bodies, a women-led business has a definitive role to play.

In some countries, there are confusions for males also work in a woman-led organisation. Specific contribution of women to business and the economy cannot be determined due to absence of such definition. Also, if the government announces a policy for special facilities for women, genuine entrepreneurs may not be able to enjoy such facilities without categorisation and certification proper.

So, there is a need for a global definition, to be made through an international consultative process that may be initiated by the International Trade Centre (ITC), the Swedish Institute of Standards (SIS), and the International Standardisation Organisation (ISO). That may lead to development of an International Workshop Agreement (IWA) on the definition(s) of a 'Woman-Owned Business'.  The IWA process will seek inputs from stakeholders.

Meanwhile, the nature of entrepreneurship has also been changing and women entrepreneurs have preferences to business that is suitable to them. Also because of the Covid-19, we've seen a huge influx of internet-based business or e-commerce. With the advent of gig economy, a new type of workers and entrepreneurship has emerged. Some 100,000 new entrepreneurs have entered e-commerce business, where a significant number is women. Cooking entrepreneurs, health entrepreneurs, and YouTube-based entrepreneurs are also new additions to the economy.

In most countries, there is a definition which says that a company owned by 51 per cent female shareholders can be termed women-owned enterprise. However, such definition can be restrictive for several reasons. There might be cultural, and social issues as well as market-and-finance-related issues.

In some countries, culturally and for tax reasons, husbands and wives may like to split their business ownership into 50-50 shares. The husband may not want to leave the controlling share to be termed it as a women-led business. Similar thing might have happened in case of family-owned business; a woman can inherit properties but for cultural reasons she may not have the controlling share.

In several countries, there may be policies for gender equality but that may not be followed in practice. In most countries, there is a patriarchal system. In Africa, and also Asia, property laws are discriminatory to women.

In Bangladesh, there is a definition as per Industrial Policy 2016, which says if a woman owns a business as proprietor or in case of a partnership organisation, a company registered with the office of the Registrar of Joint Stock Companies (RJSC) where she owns at least 51 per cent, she could be called as women entrepreneur. Such definition is a standard but how it is being used is not clear, because most of the women in Bangladesh have their business as proprietors having small scale business. Her name is used as a woman but she receives all related certificates and licences the way a man does, For example, for securing trade licence, she does not require to be termed as women entrepreneur.

The International Finance Corporation (IFC) has developed a definition for its Banking on Women programme that defines a women-owned enterprise as a firm with higher than 51.0 per cent ownership/stake by a woman/women.

The government of India (1984) defined woman entrepreneur as "an enterprise owned and controlled by a woman having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of employment generated in the enterprise to women".

There is a suggestion from some countries that 'women-led businesses' should be used as an alternative to the definition of 51 per cent ownership requirement when it comes to corporate procurement, international trade and sometimes public procurement. If at least 30 per cent shares are owned, managed, and controlled by one or more women, it would be described as a woman-led business.

A series of dialogue may help attain a single definition or at least an agreement that there are different types of entrepreneurship led by women. Obviously, there is an urgent need for standardised definitions for women-owned and women-led businesses in order to more accurately measure women's contributions to the economy, develop comparative data across countries, and create statistical harmonisation.

It is required for analysing both bank loans and equity investments in women-owned and women-led firms in facilitating better access to markets and catalysing job creation and economic growth, especially in the post-Covid-19 environment.

In Bangladesh, women entrepreneurs are mostly registered as proprietors and have their other licences like those secured by male entrepreneurs. They have their taxpayers' identification number (TIN), VAT (value added tax) licence and trade licence after the name of their company. Very few women entrepreneurs have their registration with the RJSC as partnership organisation. In most cases, a business, run by someone's wife, after the death of her husband, is called women entrepreneur. Legally, it is unclear if she runs the enterprise as women entrepreneur or as a heir.

In future when new types of entrepreneurs will emerge, such as STEM entrepreneurs, gig entrepreneurs, and technology entrepreneurs, there will be new requirement of definition.

If we want to give awards in women entrepreneurship category, it is difficult how we would judge the firm as women-owned business. While the government is planning to extend some additional benefits for the access of women entrepreneurs to public procurement, a difficult task is to ascertain how we will term women ownership to actually deliver the benefits to women entrepreneurs.

So, there is a need to initiate a debate on the need for a global definition of women entrepreneurs where the context of Bangladesh would need to be considered and accommodated so that women entrepreneurs are not left behind.

Ferdaus Ara Begum is the CEO at the BUILD, a public-private dialogue

platform supported by the private sector.

[email protected]

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