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AFRICA NEWS AGENCY

AFRICA NEWSAFRICA NEWS AGENCYAGENCY ACCESS TO FUNDING: THE ULTIMATE STRUGGLE FOR WOMEN

IN sub-Saharan Africa, 45 percent of women lack official identification, and 37 percent have a bank account (compared with 48 percent of men). Similarly, women very often have little capital to start their business and are less likely to benefit from private investment capital. Banks require collateral that women often do not have.

In addition, women are typically risk-averse, financially illiterate, and fearful of failure, which very often prevents them from applying for loans. They also face a lack of family support as well as a lack of training to develop the skills needed to effectively run a business.

« When women have access to finance and markets, they contribute significantly to the well-being of their families. »

Personal constraints (family projects, spouse’s professional projects, family responsibilities) and the poor integration of women into business networks are other obstacles. The banks’ lack of understanding of women’s businesses or the market niches they occupy also explains their difficult access to financing.

All of these challenges have a negative impact on African women entrepreneurs’ access to finance. Especially amid the current global health crisis of COVID-19, women entrepreneurs are finding it difficult to mobilize funds to maintain their activities, as investors have limited funding in light of the general slowdown in activity.

Yet, when women entrepreneurs are able to access financing and markets, they make a significant contribution to the well-being of their families. This is because they prioritize their children’s education by mobilizing savings. They also participate in the economic development of their countries through the creation of businesses, and therefore jobs and wealth.

Initiatives to boost access to finance for Women

To promote women’s access to financing, actions must be undertaken. Governments should put in place policies and regulations on financial inclusion that are favorable to them. In this regard, several initiatives have emerged in some countries on the continent, such as the Affirmative Finance Action for Women in Africa (AFAWA) program.

AFAWA is an initiative of the African Development Bank (AfDB) that aims to fill the estimated $42

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billion financing gap affecting women in Africa. The initiative is in early discussions with financial institutions in West Africa. It also made an anchor investment of $12.5 million in Alitheia IDF Managers (AIM), the first-of-its-kind private equity fund managed by experienced female fund managers that invests in high-growth women-owned and -led SMEs in Africa.

In 2018, AFAWA provided technical assistance to various banks andpartnered with Entreprenarium Foundation to train 1,000 women entrepreneurs across the continent in business model development and financial planning.

This was done to provide them with the resources needed to easily access financing.

« Financial institutions should consider creating banking procedures that are favorable to women, such as canceling minimum balances. »

Investment funds dedicated to women, such as Janngo (a women-led venture capital fund that invests 50% of its revenues in start-ups founded, co-founded or benefiting women), will multiply. In Côte d’Ivoire, the government, in 2017, set up a fund for the promotion of SMEs and women’s entrepreneurship with a budget of 5 billion FCFA. This fund aims to facilitate access to bank credit for women entrepreneurs, including start-ups, in all sectors of activity. The initiative helps stimulate financing for women, which will advance financial inclusion.

Financial institutions should not remain on the sidelines of these initiatives, considering the creation of banking procedures that are favorable to women, such as the cancellation of minimum balances and the inclusion of other forms of collateral that are more accessible to women.

In addition, financial institutions would benefit from developing products and services entirely for women that take their needs into account and should consider important aspects such as product simplicity or reliability in their designs.

To that end, the design of financial services should be accompanied by financial education programs that enable women entrepreneurs to develop appropriate financial skills.

In short, the goal will be to improve understanding of financial services while raising awareness of the risks involved in order to promote autonomous and responsible financial decision-making. It is with this in mind that the Digital Finance Hub was created to provide everyone with tools adapted to the development of their business.

This change also involves studying women’s customer experience and designing tailor-made financial product offers. This could have a double benefit, transforming women’s lives and offering commercial value to financial institutions. Because a customer base of more than one billion women, not yet connected to financial services and largely underserved, is concerned.

Kate Assi-Okoué and Ariane Kouassi, MicroSave consulting (MSC)

MSC is an international boutique consulting firm specializing in financial, economic and social inclusion, with 11 offices in Africa and Asia.