Data collected in ten African countries show that averagely, male-owned enterprises have six times more capital as compared to those owned by their female counterparts.
Numerous reports have indicated that there is adverse discrimination in the lending process with women more disadvantaged.
Even though both male and female entrepreneurs face various hurdles including lack of capital, women face more challenges major ones being discrimination and the lack of collateral hindering them from accessing loans.
The lack of access to finances prevents women-owned businesses from surviving beyond the growth stage.
According to a 2014 report by Ernst & Young, male-run businesses are 3.5 times more likely to exceed USD 1 Mn in sales than their female-run counterparts and only 2 per cent of women-owned companies ever break the million-dollar mark.
Despite the limited access to funds, women-owned businesses are among the fastest-growing. These businesses are increasingly becoming the economic backbone of families and communities. Having more women entrepreneurs thus offers a chance for more successful businesses.
The World Bank notes that “addressing this financing gap and investing in women-owned enterprises is one of the highest-return opportunities available in emerging markets” (2015).
In a bid to ease access to finances, AfDB has launched the Affirmative Finance Action for Women in Africa called AFAWA.
The bank announced that through AFAWA, it is establishing a USD 300 Mn re-shelling facility to deliver lending for women by all financial institutions in Africa.
“AFAWA has just received USD 16 Bn from the initiative of US government and also from the World Bank and I am also delighted to inform you that at the G7 meeting in France President (Emmanuel) Macron joined African Heads of State to raise for AFAWA USD 251 Mn. AFAWA will provide technical assistance to women businesses, to prepare bankable business plans, and also assist financial institutions to make their systems friendly for women and their businesses, “AfDB president Dr Akinwumi Adesina on the sidelines of the 74th Ordinary Session of the United Nations General Assembly (UNGA).
He added that AFAWA will be a systematic way to remodel how financial institutions deal with women.
In a move aimed at keeping track on African banks lending to women, the AfDB boss said his bank will set up the AFAWA index which will rate and rank all African financial institutions based on their volume of lending to women, interests rates they charge and their impact on women.
While unveiling the facility, Adesina noted that the financial system in Africa is biased against women and children.
While addressing a conference of the Organisation of African First Ladies for Development (OAFLAD), Dr Adesina acknowledged that women always have a hard time finding funding for their businesses despite evidence confirming that they are more reliable when it comes to repayment of debts.
“Let’s be clear, women-run Africa and if you want to notice it simply go to the farm and you will notice that over 75 per cent of workers are women. Go to any market, the majority of traders are women yet they are marginalised when it comes to financing to grow their businesses. There is the existence of a financial gap of USD 42 Bn between males and females.”
Featured Image Courtesy: The Guardian Nigeria
Found the article interesting ? Follow us on Twitter to see what others are saying about it.
9500+ subscribers are getting our free newsletter on African technology, startups and innovators bi-weekly.
Made with ❤ in Africa