Think be­yond mi­cro­fi­nance when talk­ing about busi­ness­women

Fi­nanc­ing for women in africa has re­mained stub­bornly “mi­cro”

Africa Renewal - - CONTENTS - By Ndidi Anyaeg­bunam and Ecoma Alaga

As the Third In­ter­na­tional Fi­nanc­ing for De­vel­op­ment con­fer­ence kicks off in Ad­dis Ababa, Ethiopia, Africa is set to be­gin im­ple­ment­ing its am­bi­tious 50-year de­vel­op­ment blue­print, Agenda 2063, bring­ing into fo­cus the is­sue of how to fi­nance de­vel­op­ment plans.

Agenda 2063 will re­quire sig­nif­i­cant fi­nanc­ing from a wide range of sources to fund in­fra­struc­ture de­vel­op­ment, in­dus­tri­al­iza­tion, pri­vate sec­tor growth, tech­nol­ogy and hu­man cap­i­tal de­vel­op­ment if the con­ti­nent is to achieve the so­cioe­co­nomic trans­for­ma­tion that it is en­vi­sion­ing. True, fi­nanc­ing in gen­eral is a chal­lenge for Africa, but no group faces more bar­ri­ers to ac­cess­ing fi­nance than the women of Africa.

Africa’s eco­nomic growth over the past decade has been pos­i­tive, but the im­pres­sive num­bers do not tell the whole story. While women own about 48% of all en­ter­prises in Africa, the African De­vel­op­ment Bank es­ti­mates that they ac­count for only 20% of the con­ti­nent’s banked pop­u­la­tion. Roughly four in ev­ery five women on the con­ti­nent lack ac­cess to a bank ac­count at a for­mal fi­nan­cial in­sti­tu­tion, com­pared to about one in ev­ery four men. The dis­par­ity is par­tic­u­larly glar­ing in agri­cul­ture. Although more than 70% of farm­ers in Africa are women, they ben­e­fit from only one-tenth of the credit given to small-scale farm­ers and less than 1% of to­tal credit to agri­cul­ture.

The chal­lenges African women face in ac­cess­ing fi­nance in­clude women’s lack of col­lat­eral, le­gal and cul­tural bar­ri­ers to land and prop­erty own­er­ship, dis­crim­i­na­tory reg­u­la­tions, lim­ited em­ploy­ment in the for­mal sec­tor, lack of avail­abil­ity of fi­nan­cial prod­ucts tar­geted to their needs and the fact that banks do not fully un­der­stand fe­male-run busi­nesses or the mar­ket niches they oc­cupy. These bar­ri­ers have hin­dered the ca­pac­ity of women to grow and de­velop busi­nesses, which as a re­sult, has held back eco­nomic growth on the con­ti­nent.

The widen­ing dis­par­ity in ac­cess to fi­nance has led to the ris­ing pop­u­lar­ity of mi­cro­fi­nance for women. In the past decade, mi­cro­fi­nance in­sti­tu­tions, which in­clude non-profit groups, sav­ings and credit co­op­er­a­tives, reg­u­lated spe­cial­ized providers and oth­ers, have reached many women who were pre­vi­ously ex­cluded from for­mal fi­nanc­ing, through smallscale loans and credit to small en­ter­prises and poor house­holds.

Yet while the dis­cus­sion about fi­nanc­ing for de­vel­op­ment has widened in scope, the dis­cus­sion about fi­nanc­ing for women has re­mained stub­bornly locked on one scale—mi­cro. Speak­ing early this year in Ad­dis Ababa at a con­fer­ence of African fi­nance min­is­ters, Nkosazana Dlamini-Zuma, the chair­per­son of the African Union Com­mis­sion, im­plored par­tic­i­pants to think be­yond “mi­cro” when dis­cussing fi­nance for projects run by women in Africa.

“We hear mi­cro this, mi­cro that… there is noth­ing mi­cro about women!” Ms. Dlamini-Zuma told par­tic­i­pants.

Sim­i­larly, El­iz­a­beth Rasekoala, the co-founder of SET4Women, the South­ern African Ref­er­ence Group on Gen­der, Science and Tech­nol­ogy, urged par­tic­i­pants at a con­fer­ence on the role of women in im­ple­ment­ing Agenda 2063 to “start think­ing big and stop pref­ac­ing ev­ery­thing to do with women with ‘small’ or ‘mi­cro’ but to en­gage them as en­trepreneurs.”

Gen­der ad­vo­cates say that as key driv­ers in im­ple­ment­ing Africa’s post2015 de­vel­op­ment agenda and Agenda 2063, fe­male busi­ness own­ers must be em­pow­ered to go be­yond small- and mi­cro-en­ter­prises and get ac­cess to the fi­nance needed to cre­ate medium- and large-scale busi­nesses. Ac­cess to fi­nance on such a scale would be trans­for­ma­tive, and em­power women to en­ter pro­duc­tive

value chains, ex­pand hir­ing and em­ploy­ment op­por­tu­ni­ties, uti­lize ef­fi­cient tech­nolo­gies and ex­pand the reach of their busi­nesses be­yond their borders.

An­a­lysts agree that for this goal to be reached, banks have to open their doors and en­sure fi­nan­cial in­clu­sion and in­creased ac­cess for women. This would re­quire for­mal fi­nan­cial in­sti­tu­tions to con­sider new and in­no­va­tive ap­proaches to con­duct­ing busi­ness in or­der to meet women’s needs. A small but grow­ing num­ber of African banks have de­vel­oped prod­ucts that tar­get women, and oth­ers have adopted women-friendly bank­ing pro­ce­dures, in­clud­ing elim­i­nat­ing min­i­mum bal­ances, widen­ing the scope of el­e­ments con­sid­ered in credit eval­u­a­tions, re­duc­ing col­lat­eral re­quire­ments and al­low­ing al­ter­nate forms of col­lat­eral. Such prac­tices, which have shown pos­i­tive re­sults and con­trib­uted to­wards re­duc­ing gen­der­based bar­ri­ers, should be im­ple­mented and ex­panded by more banks on the con­ti­nent.

Ac­cord­ing to gen­der ad­vo­cates, em­pow­er­ing African busi­ness­women is crit­i­cal; it de­mys­ti­fies credit ap­pli­ca­tion pro­cesses, ad­dresses risk aver­sion and ul­ti­mately strength­ens women’s ac­cess to fi­nanc­ing. Other ar­eas that might need to be strength­ened in­clude ed­u­ca­tion and ca­pac­ity build­ing in fi­nan­cial lit­er­acy and busi­ness skills.

What can be done

In or­der to cre­ate an en­abling en­vi­ron­ment, gov­ern­ments will need to mod­ify and ad­just their le­gal, reg­u­la­tory and su­per­vi­sory frame­works to re­move bar­ri­ers to fi­nance for women, such as dis­crim­i­na­tory le­gal pro­vi­sions that con­fine women to the le­gal sta­tus of mi­nors and laws that pro­hibit women from own­ing prop­erty. Af­ter such laws and poli­cies are changed, women and de­ci­sion mak­ers should be in­formed of these changes.

Gov­ern­ments and de­vel­op­ment or­ga­ni­za­tions, es­pe­cially in­ter­na­tional fi­nan­cial in­sti­tu­tions, also have im­por­tant roles to play in pro­mot­ing equal op­por­tu­ni­ties for women and men. They should en­cour­age banks and other for­mal in­sti­tu­tions to in­crease credit ac­cess for African women, and pro­vide tech­ni­cal as­sis­tance and train­ing to in­sti­tu­tions that are un­fa­mil­iar with lend­ing to women. They should also pro­vide guar­an­tees to raise the con­fi­dence of lend­ing in­sti­tu­tions so that they in­vest greater cap­i­tal in women-owned busi­nesses.

Fi­nally, gov­ern­ments will need to bridge the gap be­tween the for­mal and in­for­mal sec­tors by sim­pli­fy­ing busi­ness reg­is­tra­tion pro­ce­dures and en­cour­ag­ing women-owned busi­nesses in the in­for­mal sec­tor to register with gov­ern­ments and tax author­i­ties, as this will also fa­cil­i­tate their ac­cess to fi­nan­cial mar­kets. Ndidi Anyaeg­bunam and Ecoma Alaga are pro­gramme of­fi­cers in the UN Of­fice of the Spe­cial Ad­viser on Africa.

Panos/ An­drew Esiebo

De­signer Kiki Car­dow ad­just­ing a dis­play at her bou­tique in La­gos, Nige­ria.

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