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INSIGHTS: Accelerating access to finance for women businesses (WSMEs): leveraging data and technology

Despite forming the largest percentage of women entrepreneurs in the world, women small and medium enterprises (WSMEs) in Africa face an estimated USD 42 billion financing gap across business value chains, including USD 15.6 billion in agriculture alone. Key challenges to strengthening and growing these enterprises are the cultural, societal and gender norms that further inhibit their access to finance.

“In the light of persistent and emerging issues such as economic, health and climate shocks, as well as social and gender exclusion, digital financial solutions are now critical for the economic empowerment and resilience of women-owned small businesses who have been disproportionately affected. This programme, which is complementary to the Affirmative Finance Action for Women in Africa (AFAWA) initiative, will be used not only to broaden access to finance for women small and medium businesses, but also to provide an avenue for them to strengthen and grow.”

Sheila Okiro, ADFI Coordinator

"Digital financial services are the key to expanding access to finance for women-owned small businesses in both urban and rural areas within the continent. Digital finance lowers mobility and bias barriers to opening accounts and accessing loans thus increasing women small businesses’ engagement in the formal economy. It can also significantly increase women’s resilience to financial, economic and health shocks. As AFAWA looks to close the $42 billion access to finance gap for women small and medium size business on the continent our complementarity with ADFI can only accelerate our capacity to close the gap."

Esther Dassanou, AFAWA Coordinator

In 2022, AFAWA published a survey of Africa’s leading women entrepreneurs which demonstrated the importance of digital transformation to Africa’s businesswomen in the time of COVID-19. Up to 91% of the respondents regarded digital transformation to be important to their company and only 1% regarded it as inconsequential[1]. In addition, with the majority of transactions in Africa conducted in cash, many women have turned to alternative mechanisms for saving their money, outside the formal financial sector, limiting their options to access further credit which is affordable and appropriate.

Digital savings, credit, and payments services can provide African women with a critical link to the formal economy and are a gateway to greater economic security and personal empowerment. In Kenya, women-headed households adopted mobile money accounts and this resulted in a drop in poverty, increase in savings, and 185,000 women left informal jobs for more reliable, higher paying positions in business or retail.[2]

With funding of USD 15 million from the Women Entrepreneurs Finance Initiative (We-Fi), ADFI will lead this programme to intervene across the five regions of the continent, supporting women-owned small businesses to improve their operational efficiency and access to finance, particularly in light of the impact of COVID-19.

Working in Cameroon, Egypt, Kenya, Mozambique and Nigeria, this programme seeks to contribute to the acceleration of access to finance for women businesses (WSMEs) through leveraging data and technology, helping an estimated 8,000 WSMEs improve their operational efficiency and increase their access to finance. The programme is supported with technical assistance and funding from both We-Fi and ADFI, with additional access to credit for women-owned small businesses to be mobilised from the private sector.

[1] Source: AFDB and New York University (2022) Lionesses Business Confidence Report; Assessing the Business Confidence Levels of Africa’s Leading Women Entrepreneurs, Including Their Confidence in Obtaining Growth Finance

[2] Source: Bill and Melinda Gates Foundation. July 2019. Women’s Digital Financial Inclusion in Africa. 

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