If you hear the backstory of nearly every successful woman entrepreneur in Africa, you will be amazed by the kind of odds they had to overcome to get to where they are. Ibukunoluwa Abiodun Awosikam, the chair of Nigeria’s First Bank Limited, for example, started her Chair Centre Limited with almost no capital and zero experience, but through a strategic approach, discipline, and patience, has over 27 years grown it to generate annual revenues of over $12 million.
It is the same story for Julian Adyeri Omala, who built Uganda’s largest juice processing factory, Delight Ltd, which now has over five million customers. Others are Zimbabwe’s techpreneur Melissa Mwale, Kenya’s media magnate Gina Din-Kariuki, and Malian agricultural seeds producer Maimouna Coulibaly.
Yet these are not isolated stories; there are many others across Africa, where women have started and grown small businesses to build large enterprises that employ many Africans. This is in a continent where women make up 60 percent of the self-employed workforce.
And while one would think that women entrepreneurs, as the biggest job creators on the continent, would receive utmost support, it becomes worrisome to realize that they face the biggest hurdles in business growth, starting with limited financing options. Indeed, the African Development Bank notes that women entrepreneurs suffer an estimated $42 billion financing gap, partly brought about by the misconception that women are riskier clients, and a limited capacity by financial institutions to understand and respond appropriately to the needs of women entrepreneurs.
Equally, the policy and regulatory environment in the region fails to recognize that women require extra business support because they typically invest 90% of their income in the education, health, and nutrition of their family and community – compared to 40% for men. These skewed demands have been especially evident during the ongoing Covid pandemic, where women are suffering the greatest economic and social difficulties arising from increased caregiving, business loss, furloughs, and increased domestic abuse. Structural problems from the gendered expectations, explain why women have taken on more of the extra caregiving during this unprecedented period.
But we are now at a change-point, where we realize that, as a continent, the next step of our economic transformation requires the deliberate participation of women, particularly those in entrepreneurship. On this path, it is critical to develop financing mechanisms that help women-owned and women-led businesses fast track their growth in markets. This may include the relaxation of collateral requirements by banks to take into account the societal limitations that block women from accessing the often-requested land title deeds, car logbooks, and bank statements. Emerging technology can be used to circumvent such challenges, because, already, mobile money defines the everyday transactions of small women entrepreneurs and the data generated therefrom should suffice to inform the ability of loan repayment. I propose this as a strategy having already seen it work exceptionally at Payhippo, where we leverage data analysis to offer SME loans to women-owned businesses in Nigeria within 3-4 hours, with a repayment rate of 97 percent. We do this through KYC checks to verify the business’s cash flow data, business owner data, and industry data – all within a few minutes.
Meanwhile, it is also critical that women entrepreneurs are educated on the need to keep financial records, which they can now easily generate with popular mobile ledger applications, as well as through transactions on popular mobile wallets. Such training could be achieved as part of the programmatic activities by the numerous women-focused charitable organizations, and as part of companies’ corporate social responsibility activities. Even more, progress can be made by emphasizing financial literacy training to girls in school, an impressionable demographic that can grow to entirely transform their communities.
But perhaps the greatest impact would be achieved through policy interventions, where national regulatory and supervisory agencies directly support financial inclusion through a raft of measures aimed at strengthening the access to finance by women-SMEs. This, as proposed in the 2015 Addis Ababa Action Agenda, could include the use of development banks and innovative instruments that acknowledge the importance of a robust risk-based regulatory framework for all financial intermediations.
It is a tough journey to financial inclusion, but it is one that we must make because its outcomes will define our future.
-ENDS-
The writer is the Co-founder and Chief Operating Officer at Payhippo, an SME lending company based in Nigeria
