Economic recovery and women’s small businesses: Women’s strategies for overcoming the crisis

As the health difficulties caused by COVID-19 have been overcome and vaccination campaigns are progressing in the countries, the focus is on measures to mitigate the economic and social impacts caused by the pandemic.

Photo: Fundación Capital

In terms of gender equity, the pandemic has generated setbacks: a large number of women who were in the labor market not only lost their jobs by being in sectors that were strongly affected such as hotel services and restaurants, but also their workload within the household increased not only due to the greater number of domestic and care work, but also because they had to take care of their children’s education. “Since the pandemic began, 56% of women and 51% of men have increased the time they spend on unpaid work. But despite men’s increased contribution, women continue to carry the heaviest burden: 33% of women, compared to 26% of men, increased time spent on at least three activities related to unpaid care work.” (UN Women, 2020). Confinement and stress have had an impact on the increase of violence against women, for example Mexico experienced a 53% increase in emergency calls related to it.

What has been the effect of the pandemic on women and their small businesses? What have been women’s coping strategies? What should be done to support women to recover from the economic and social impact?

Women’s businesses and the “homo economicus”

The first thing to consider is that a significant number of women’s small businesses are actually people with a Single Tax Registration at best, as most of these businesses are informal and do not even have a tax registration. The central point is that beyond the businesses, we must focus on the women, their needs, dreams and their “business logic”. We must avoid analyzing their businesses under an entirely economistic and 100% rational logic of a “homo economicus”. Women’s well-being is the result of a broad constellation of variables, of which income or entrepreneurship is only one part. Although the pandemic brought with it impacts that were immediately apparent in these variables, there are less tangible aspects that must be taken into account in order to comprehensively address women’s well-being. Aspects such as the time available reduced by extra workloads inside the home, in conditions of confinement, or the quality of family relationships, are fundamental.

Most women, when they start their paid productive activities, arrive with a previous workload: the work of the care and household economy, which has increased considerably due to teleworking and virtual study, so that most household members remain together in the same place. For this reason many women seek economic activities that are compatible with their heavy workload (paid and unpaid), therefore they enter easily accessible economic sectors such as the informal or service sector, which are generally low yielding and low income.

Within frameworks of analysis focused only on aspects of entrepreneurship and income generation, the priority of the business is to grow, but in women’s business the priority may be to stabilize their business, generate additional income, and make their personal and family life compatible with their productive activity. Therefore, women’s microbusinesses should not only be evaluated on the basis of an income indicator, but also on the basis of well-being, and well-being goes beyond money.

Photo: Fundación Capital

Women microbusiness owners’ strategies for coping with the pandemic and the barriers they face

Like the rest of the world, women have had to be innovative, adapt and create new ways of running their businesses. Some have invented new businesses. For example, if they used to have a small street food stall, they now take food to their customers and do home deliveries. Other women have sought to diversify and invent other businesses to reduce risk.

In most cases, reinvention implies digitalization: starting to get closer and more familiar with the world of digital marketing and digital means of payment. One of the consequences of Covid-19 has been the acceleration of the digitalization process, and women are open to learning and using technology. However, we have found that they face gender-specific barriers. Globally, women are 10% less likely to own a mobile phone than men and 23% less likely to use mobile internet, according to the GSMA’s gender gap report. Similarly, as children are 100% home schooled or alternate schooling, studying some days at home, and other days at school, the children of low-income women do not have their own devices, but use their mother’s or primary caregiver’s device. In other words, with the same device the children study and it is also used for small business. An additional barrier is related to the capacity of the cell phone, i.e. most of these are low-end and with little memory, so the use is limited to social networks, limiting the potential for internet access.

Additionally, the high cost of internet services within the family basket of a low-income person means that, in general, they buy packages with a few minutes on the air, which do not have the connectivity features (for example, permanent and unlimited internet) ideal for running a business.

Another major barrier that women encounter are gender norms, since paid and unpaid work must be done by all the adults in a household, and caring for household members and housework must be everyone’s job, since women generally suffer from time constraints.

Having worked for more than a decade on women’s economic empowerment, we have come to the conclusion that in order to generate systemic changes and achieve real empowerment, it is necessary to influence changes in social norms and habits. A good example is the Argentinean campaign “Don’t help me”, a message that states that women do not need “help” in household chores, but that it should be a shared responsibility.

Our Response

Fundación Capital celebrates International Women’s Day by supporting to close gender gaps and accompanying the economic recovery of women’s small businesses through strategies designed by the women themselves. Among others, we are carrying out a number of initiatives.

In Colombia, as part of a new initiative called @Conectadas, and with funding from the Internet Society Foundation, we are training 500 women with small businesses in the use of tools that facilitate digital commerce such as Facebook and Whatsapp, as well as simple digital payment mechanisms within their reach.

In Peru, Colombia and Mexico, within the framework of DigitAll, a program financed by MasterCard’s Center for Inclusive Growth, we are designing differentiated digitalization strategies for men and women, with which we will serve 50,000 business units. Among other relevant alliances, we have formalized a partnership with Plaza Noahui in Mexico, a digital market-place with a gender focus that offers a wide range of products (business financing, services to digitalize entrepreneurial processes, capacity building, etc.), and whose objective is to close the gender gap in access to these types of services.

In Paraguay, within the framework of the Abrazo, Tenonderá and Tekoporá programs, we support more than 40,000 women microentrepreneurs in strengthening their financial health and productive capacities. We also seek to influence social norms that prevent women from prospering in their personal and professional lives, while strengthening spaces created by and for women, such as savings groups.

“I am thinking of a good business that I am going to start from scratch [ ] is to sell clothes, the sale would be done through my neighbors and friends and a little bit of advertising from Facebook and Instagram and WhatsApp.” Participant of the Abrazo Program. Caacupé, Paraguay

Also in Paraguay, we developed the Target Gender Equality program of the United Nations, with the Global Compact Paraguay and UN Women. This initiative seeks to strengthen and increase women’s leadership within companies, through the establishment of objectives and concrete measures at various levels of the organization. Thirty-two representatives from 16 companies that are part of the local Global Compact network are participating in this program.

In this way, Fundación Capital hopes to celebrate and commemorate International Women’s Day by supporting women microentrepreneurs to move forward and recover their economic and social wellbeing, and by contributing to the change of habits and social norms.

This article was originally published by Fundación Capital.