In sub-Saharan Africa, more women start businesses than anywhere else globally, a testament to their entrepreneurial spirit. However, despite this drive, persistent barriers restrict their economic potential – including financial barriers. As we celebrate International Women’s Day, we want to reiterate that prioritizing investments in women’s financial inclusion is crucial to rectifying these imbalances and to fostering inclusive, equitable economic growth – ensuring that millions of women can reach their full potential.
Women entrepreneurs and access to finance
Over 74% of women in sub-Saharan Africa are employed in the informal sector, and only 33% hold a formal bank account. While informal employment can offer flexibility and options when finding a formal job is difficult, informal employment can lead to significant vulnerabilities: workers do not benefit from public social protection schemes for health, unemployment, and pensions, heightening their risk of poverty and reducing their resilience to crises like the COVID-19 pandemic. The additional domestic duties also sometimes hinder the pursue of economic opportunities, hence creating a vicious circle.
For Africa’s female entrepreneurs looking to start or expand their business, access to capital, like loans or through credit, is a major hurdle. Only 15% of loans to small and medium-sized businesses in the region go to women-owned ventures. Cultural barriers, such as lack of property or land ownership, often prevent women from meeting loan requirements because they don’t have the collateral banks believe they need to give them a loan. Ironically, despite demonstrating higher loan repayment rates than men, women-led businesses are often perceived as riskier by financial institutions. This has created a staggering $42 billion finance gap for women entrepreneurs on the continent, demanding immediate action.
Closing this gap will benefit not just women entrepreneurs, but their families, communities, and our economies. Female-led startups and businesses are key drivers of socio-economic development, creating a foundation of prosperity across the continent. In Mauritania, the West Africa Coastal Areas (WACA) has contributed funding for the establishment of a sardine canning facility for the Mauritanian Women’s Business Council (CMFA), enhancing their capacity to manufacture high-quality canned products, penetrate global markets, and boost their income. Because money in women’s hands matters: When women control household incomes, their children’s health improves, and malnutrition is reduced by 43%. African governments and policymakers can unlock this potential by implementing gender – focused policies and budgeting, which are fundamental in creating an enabling environment that uplifts women.
Empowering women through digital financial inclusion
Innovative digital financial services and tools are empowering millions of African women to access startup capital, conduct business efficiently, and save and invest their money. In Kenya, the mobile money platform M-Pesa has been phenomenally successful in promoting financial inclusion, particularly benefiting young women with limited education and income. Women can use mobile money as the main financial channel for saving, helping them independently access financial services and transition from subsistence agricultural work into formal and self-owned business opportunities. Mobile money, and other digital financial tools, have emerged as an equalizing force, providing women with a critical link to the formal economy and a gateway to economic security.
In Mauritania, one of the leading banks Banque Populaire de Mauritanie (BPM) pioneered efforts in mobile banking through its mobile banking service called Bankily leading to a surge in mobile banking usage, which will significantly boost female entrepreneurship. Furthermore, the Investment Promotion Agency of Mauritania, along with the Ministry of Economy and Ministry of Digitalization, are collectively pushing to improve the economic landscape to expand access for women entrepreneurs.
However, despite double-digit growth in mobile phone ownership across Africa, only 12% of women possess digital finance knowledge and communications technology skills. Additionally, less than 30% of women have access to the internet. In Nigeria, for instance, socio-economic conditions and cultural norms limit women’s digital opportunities, with 77% of rural Nigerians lacking access to the internet and women potentially being prevented from accessing internet services by male family members. Addressing this digital divide is essential to ensuring all women have the power to save and invest for the future, proactively managing their finances.
Building digital inclusion requires equipping women with the skills and resources necessary to fully participate in the digital economy. Investing in initiatives like the Africa Digital Financial Inclusion Facility (ADFI), which empowers women farmers in Kenya, Nigeria and Zambia through affordable digital microinsurance, will catalyze change by building resilience and maximizing the socio-economic returns from digital technologies. Clearly, financial digitalization provides the backbone for socio-economic transformation and must be a priority on Africa’s development agenda.
Closing the gender gap in finance is not just an economic imperative; it’s a social one. African women are entrepreneurial trailblazers, and when women achieve their economic potential, whole societies benefit. This International Women’s Day, we urge African governments, organizations, and communities to not only recognize but actively harness women’s economic potential and power. By leveraging the power of digital solutions to support African women entrepreneurs, we initiate a virtuous cycle of empowerment and prosperity that uplifts all. Embracing collective action and continuous investment in gender-inclusive digital platforms, we can amplify women’s economic influence, propelling Africa toward its overarching development objectives.
