Women entrepreneurs worst hit during Covid: Study

Women-led micro businesses were more stressed than those spearheaded by men in the early phase of the Covid-19 lockdown in 2020, according to a report released on Thursday by the Global Alliance for Mass Entrepreneurship (GAME), a coalition that aims to create one crore local entrepreneurs in India by 2030.

About 55 per cent of the employees laid off during the 2021 pandemic phase were women, the report said, adding that women-led businesses witnessed more layoffs.

Women’s businesses are “generally smaller and less productive”, often due to their role in the household as caregivers, said GAME founder Ravi Venkatesan, who has co-chaired tech giant Infosys and helped Microsoft build its India presence in his previous stints. “This would make them more quickly opt to either close temporarily or keep business to a minimum until they can resume their enterprises.”

However, about 80 per cent of workers in women-led microbusinesses were women, while only 14 per cent of those employed in male-led microbusinesses were women, stated the report. A dearth of information about finance and barriers to accessing credit hit microbusinesses during the Covid-19 pandemic lockdowns, revealed the study.

Nearly 40 per cent of the microbusinesses were denied loans due to lack of sufficient collateral and/or unfavourable credit history, showed the study, which surveyed 1,955 such enterprises.

There is a need to “devise alternative credit scores that would allow financial institutions to assess their creditworthiness better,” said Venkatesan. He added that financial institutions need to be trained to understand how these enterprises function and build suitable financial products for them.

One of the surprising trends from the report was that enterprises took very few formal loans despite the credit crunch, citing the uncertainty of the duration of the pandemic. “They wanted to avoid seeking a loan to get tied down with repayment,” Venkatesan said.