Unlocking financing for Africa’s women entrepreneurs

The African Development Bank has set an ambitious goal to mobilize $5 billion in financing for African women-led businesses by 2026. This initiative aims to bridge the significant financial gap faced by women entrepreneurs in Africa, which has been estimated at $42 billion. Nishdeep Sethi, Group Director of Structured Finance at the African Guarantee Fund, shed light on the challenges and strategies to unlock financing opportunities for women entrepreneurs on CNBC Africa. The discussion revolved around the financial exclusion scenarios in Africa, interventions such as the Affirmative Finance Action for Women in Africa (AFAWA) program, and the importance of partnerships and policy support to empower women in business. Sethi highlighted the critical role of financial institutions in increasing lending to women SMEs. The perception of women entrepreneurs as risky investments needs to be debunked, as studies have shown that women have a high rate of loan repayment and reinvest a significant portion of their income back into their communities. To support this, partial credit guarantees are utilized to share the risk with financial institutions and encourage them to lend more to women-owned businesses. Capacity development and technical assistance are also provided to ensure that women entrepreneurs can effectively deploy the credit and scale their ventures. The AFAWA program, led by the African Development Bank with the African Guarantee Fund as a key partner, focuses on partnerships with financial institutions, incubators, accelerators, and governments. These collaborations are essential to creating a conducive environment for women entrepreneurs to thrive and contribute to economic growth. Recognizing the importance of including women in the economic system, Sethi emphasized the need for governments and stakeholders to work together to address the gaps in financial inclusion and policy support for women in business. As the conversation underscored the significance of empowering women for sustainable development, Sethi encouraged women entrepreneurs to be resilient, seek out opportunities like the AFAWA program, and leverage the support available to them. Incentives and programs tailored for women entrepreneurs are expected to increase, with a focus on monitoring progress and scaling up support for women-led businesses. The commitment to closing the financial gap and promoting inclusive development across the continent remains at the forefront of efforts to empower Africa's women entrepreneurs. In conclusion, the path to financial inclusion for women entrepreneurs in Africa requires collaborative efforts, policy reforms, and continued support from key stakeholders. By investing in women, not only as a social good but as an economic imperative, the continent can unlock the full potential of its women-led businesses and drive sustainable growth and prosperity.