Why women-led businesses need more than compliance to succeed

IOL News

2 days ago

A purchase order from a big buyer like Coca-Cola might sound like a dream, but how do you buy R1.5 million in raw materials without working capital?
Image: Supplied.
There is no arguing the fact that trade finance does not necessarily sound sexy. But for the women we work with, it is the difference between a good idea and a growing business.
At Aions, we have seen first-hand what happens when you back a woman with a viable business and a plan.
Whether she is selling vetkoek in Soweto or supplying glass bottles to ABI, she has already proven she can hustle. What she needs now is not another grant, but a fair shot at real growth.
Most corporate enterprise and supplier development (ESD) models start with the right intentions. Telkom's Future Makers programme, for example, offers early-stage capital to emerging black-owned businesses (EMEs) in the ICT sector.
This is enterprise development in action. You give a startup the money to build, hire, and operate. However, that is just step one. Developing the supply chain
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Where it starts to break down is supplier development once a business is ready to scale.
That is where you expect corporates to bring these small businesses into their actual supply chain. The result?
You have given someone tools to operate, but no customers. And no customers means no cash flow.
Even when businesses do break into procurement platforms like SCNet, CSD, or internal enterprise systems like Absa's, they are often met with a new roadblock: liquidity.
A purchase order from a big buyer like Coca-Cola might sound like a dream, but how do you buy R1.5 million in raw materials without working capital?
That is where non-traditional finance providers are supposed to step in.
But many, including some well-known fintechs, are charging exorbitant rates that cripple small suppliers before they can scale.
We have seen loan offers with interest so high, the business is still paying back debt long after the order's been fulfilled. Acting on opportunity
So, we built something different.
Our product, USKO, is designed to close this gap by entering into a short-term partnership with the business.
We do not charge interest. Instead, we take a fair percentage of the margin once the deal is done. No paperwork shuffling or hidden fees. It is automated, transparent, and designed to build (not bleed) a business.
This model has been particularly important for women. In South Africa, more than 42% of households are female-headed.
And when women earn, they reinvest up to 90% of their income back into their families and communities, compared to the 30 to 40% for men.
These are the women renting back rooms and running tuck shops, selling chilli sauce, sewing uniforms, or trading fresh produce to major retailers.
Some are making R30,000 a week or more.
But most are invisible to formal supply chains because they are not tax compliant, do not have a BEE certificate, or do not know they need one.
Others do not bank their money, which keeps them locked out of traceable financial systems.
Getting into the system
Compliance among informal and micro-businesses in South Africa remains critically low due to lack of awareness, complexity, and administrative burden.
Of course, this does not mean that we must kill the magic of the informal economy. Instead, we need to formalise it just enough so that these women can trade, grow, and build wealth.
And frankly, corporates and DFIs need to step up.
Some are doing good work in this space, but there is still too much red tape and not enough risk appetite.
We continue to treat a startup looking for basic working capital the same way we treat a listed company applying for growth finance. It does not make sense.
South Africa's small business pipeline is leaking. The gap between EMEs, QSEs, and corporates is massive, and women are falling through.
On the JSE, the Top 40 shares account for roughly 80% of total market capitalisation, despite there being around 400 listed companies.
That should scare us.
An open system
Women are good at business but are risk-averse.
That is not the problem.
The problem remains with rigid systems.
Women need products that are fair, platforms that are open, and a financial ecosystem that grows with us.
Because the truth is, the next big business is not necessarily sitting in Sandton. She is in a back room in Diepsloot, running on grit and potential, just waiting for the system to see her.
Kerryn Campion, COO at Aions Ventures.
Kerryn Campion, COO at Aions Ventures.
Image: Supplied.