KIGALI, Rwanda – On paper, Rwanda looks like Africa’s poster child for women’s economic equality. In recent years, the government has launched a range of initiatives designed to help women join the workforce and gain control over their money.
The strategy seems to be working. Statistics show that women are participating in the workforce at a higher rate than men, while more land is owned individually by women than by men. Rwandan women’s rate of financial inclusion – the level of access they have to banks and other financial services – has almost doubled since 2012.
But many women entrepreneurs say the statistics only tell half the story. There may be a growing number of women getting the chance to make, save and borrow money, but those trying to run their own businesses often struggle. Many can’t benefit from government initiatives because the process is too laborious or expensive. And those who can are being held back by policies and regulations that favor big companies over the smaller ventures women usually run.
Marie Aime Umugeni is managing director of Umutima sewing cooperative, which was formed in 2013 as a training center for women who had to drop out of school. Despite gaining more members every year – there are now 55 – Umutima is barely staying afloat, relying on membership fees and donor funds.
“Our business is still growing, but we haven’t been able to break even,” Umugeni says. “We can’t make sufficient gains as most of our income is taken away through taxes.”
The cooperative has to pay the same flat 30 percent corporate tax and 18 percent value added tax as major companies, which has been hampering any sustainable growth. And her business doesn’t benefit from the tax holidays that some big companies are eligible for.
All of Umutima’s profits go into taxes, which means the cooperative can’t afford to bring in more members – and without new members, it can’t turn a profit. “We have had many applications from fellow women willing to join, but we can’t afford to accommodate them,” Umugeni says.
For many of Rwanda’s budding female entrepreneurs, the tax rate is so high, they simply give up trying to form companies officially and instead settle for unregistered and or informal businesses.
Umugeni would like to see the government give cooperatives like hers more tax exemptions “because our business is more social than corporate.”
Some Help, but Not Enough
Over the past decade, Rwanda has pushed a number of initiatives and policies to help women transition from low- or no-income work – such as smallholder farming – towards more lucrative livelihoods.
The Rwanda Development Board was launched in 2009 to provide market information to potential entrepreneurs and help them through the steps of taking their products or businesses to market. The idea is to address the difficulty of gaining access to local and international markets, which is one of the biggest obstacles for women trying to start their own businesses.
In 2011, the government created the Business Development Fund specifically to guarantee funding for women entrepreneurs, who often have trouble getting bank loans. And there are programs aimed at helping feed impoverished families – such as Girinka, which provides a free cow to every eligible family – that also serve to ease the burden of household responsibility on women and give them the opportunity to find decent work.
But many women say the existing initiatives are almost useless to them. The number of forms applicants need to fill in, along with the pile of documents they need to produce, makes the process too time-consuming and costly, especially for women with low literacy levels. And the initiatives are strictly regulated, expecting small businesses to have the same access to resources, adequate working conditions and economic capacity building as larger companies.
Along with the high tax rate that is stalling or even killing off smaller businesses, women say lack of professional training, lack of access to wider markets, and the high costs of resources, equipment and materials are other factors that are holding back women’s entrepreneurship in the country.
The women of Coplaki, a fishing cooperative at Lake Kivu, can’t access the funding they need to buy cold storage units so they can grow beyond direct sales to customers. (Rodrigue Rwirahira)
Jeanine Kamaraba, a member of the Coplaki fishing cooperative in the western part of Rwanda, says women are finally making headway in the male-dominated fishing industry, but many can’t make a living due to lack of skills and modern equipment.
“Initially, men were the only fishers in the lake [Lake Kivu], but eventually women started to develop a passion for fishing,” Kamaraba says. “Soon after we launched [the cooperative], we started to realize challenges in fishing businesses.” Without enough money to buy cold-storage units or vans, many women fishers can only sell directly to customers from the banks, limiting their access to the market.
“Plus, many of us do this because we need a living – we would love to have some advanced training and do it professionally,” she says.
For Germaine Gatesi, a trader in women’s clothes and handbags in Kigali, the issue is that regulations that are so strict, they are strangling her stock supply.
“We struggle very hard to raise capital, but even when we are up and running, we are hit by a string of tight regulations that do not allow us to import products at an affordable price,” Gatesi says. On top of that, “Transportation costs are unbearable, and coupled with taxes, it is worse.”
A Change of Mind-Set
When asked about the challenges facing women entrepreneurs in Rwanda, Nadine Gatsinzi Umutoni, permanent secretary at the Ministry of Gender and Family Promotion, says the incentives are working.
She notes that the latest statistics from the National Gender Policy in Rwanda indicate that women make up 56.4 percent of participation in income-generating activities, while men’s participation is 43.6 percent. And a growing number of women are gaining access and rights to land that they can use as collateral for bank loans. Currently, Umutoni says, 24 percent of the land is owned by women individually, while 13 percent is owned by men and 62 percent is co-owned by both.
There has also been a significant rise in the number of women opening and using bank accounts. “In 2012, we had 36 percent of women financially included, but the last report by the National Statistics of Rwanda showed that 62 percent of women are financially included,” Umutoni says.
But Umutoni acknowledges that many women still can’t get the support they need to start and run their own businesses. “It needs time and a change of mind-set,” she says. “But there has been some progress.”