It Is Crucial We Tackle The Funding Gap For Women Entrepreneurs

Author: David Mparutsa, Head Enterprise and Supplier Development ex SA

At the moment, an estimated $42bn financing gap exists for African women across business value chains – $15.6bn in the agriculture alone. If we cannot empower African women entrepreneurs and get them involved in supply chains, we will be doing the continent a disservice.

One of the key challenges is moving women into the mainstream economy. Currently 70% of economically active women are in the informal sector, with limited access to financial services. In recent years, this trend has started to shift and we are encouraged to see an increase in women-owned businesses in fields such as aviation, fashion, farming, IT, mining, manufacturing and natural resources. 

It is critical that this funding gap is closed and there are a number of levers which can be pulled to tackle this. 

Government Policy: 

Visibility and access to market opportunities in corporate supply chains for women entrepreneurs is an important departure point. Large corporates should do more to educate women in Africa on supply chain opportunities and how they can access them. 

South African businesses are familiar with the Preferential Procurement elements of their B-BBEE scorecards but similar initiatives are being introduced in the rest of Africa.

The Access to Government Procurement Opportunities (AGPO) program is founded on the  Constitution of Kenya  espouses fair, equitable, transparent and cost-effective public procurement of goods and services. Under this policy women, youth and persons with disabilities are required to access 30% of Government Procurement opportunities.

It is time that more countries follow in Kenya’s footsteps by implementing policies supporting preferential procurement practices that include women owned businesses in Government Procurement practices.

Sustainable Development Goals and Supply Chains

Many multinationals operating in Africa have committed themselves to the UN Sustainable Development Goals (SDGs). These goals aim to have achieved a variety of key metrics by 2030 including SDG5 (Gender Equality) and SDG10 (Reduced Inequalities). 

Larger businesses looking to comply with these SDGs have the opportunity to open up their Supply Chains specifically to women-owned businesses. 

Safaricom is a listed Kenyan mobile network operator who has picked up the baton to do just that. Safaricom is empowering women by allowing more women-owned businesses to be involved in their sourcing activities, capacity development training, mentorship and coaching among other measures. In Line with their mission to ’ Transform lives’. Safaricom has taken strategic actions to reduce inequality and have made a commitment to increase progressively the procurement spend to Women-Owned-Businesses to 10% of the total Procurement spend. 

Access to Finance

There is no question that a significant numbef of SMEs struggle with access to finance and this challenge is compounded as many traditional lending and risk models struggle to accommodate those with limited trading history. 

We as a bank have set our sights on the $80bn Trade Finance funding gap that exists in Africa and we believe if we can develop innovative solutions in this space, entrepreneurs will thrive. 

There are a number of women-focused lenders emerging in the market who are worth watching.  

Affirmative Finance Action for Women in Africa (AFAWA) is a pan-African initiative by the African Development Bank Group, to bridge the $42 billion financing gap facing women in Africa. AFAWA adopts a holistic approach through three pillars: finance, technical assistance, and an enabling environment. AFAWA has entered a partnership with the African Guarantee Fund (AGF) to unlock $1.3 billion in loans to women-owned Small and Medium Sized Enterprises(SMEs) in Africa, by working with financial institutions to enhance their ability to lend to women. 

Alitheia IDF is a pioneering gender-lens fund investing in scalable businesses to leverage the power of gender diversity as a factor for superior performance. Alitheia is a $100 million private equity fund that drives growth in African SMEs by leveraging gender-balanced businesses to generate high financial returns and social impact. They invest in sectors that engage a significant percentage of women, either as entrepreneurs, producers, distributors or consumers. Some of these sectors are: Agribusiness, Consumer Goods, Health, Education, Creative Industries, and Financial and Business services.

Our data suggests that women entrepreneurs are lower risk with better repayment profiles than their male counterparts and banking women business owners makes sense on many levels. We look forward to funding more of these businesses in 2022 and partnering on projects that will change the continent. 

Scroll to Top

We are committed to Africa

Unlike many global publications, for nearly a decade we have been committed to showing a complete picture of Africa – not just a single story.  Offended by one-sided coverage of wars, disasters and disease, the founders of created a website that provides a balanced view of Africa – current events, business, arts & culture, travel, fashion, sports, information, development, and more.

Will you support us?