Women are the backbone of African economies and according to The Global Entrepreneurship Monitor (GEM) 2016/2017 Report the continent has one of the highest percentages of women entrepreneurs in the world with 25.9% of the female adult population engaged in entrepreneurial activity. This means that one in four women start or manage a business in Africa.
Despite the fact that women constitute a high number of the population engaged in business, they do not enjoy equal access to high-quality, demand-driven financial services. According to the IFC’s report Women-Owned SMEs – A Business Opportunity for Financial Institutions, the lack of access to financing is a common constraint on business growth cited by women-owned SMEs.
The African Development Bank (AfDB), indicates that there is an estimated $42bn financing gap for African women across business value chains, including $15.6bn in agriculture alone. Some of the challenges they point out have to do with the lack traditional collateral and guarantees. Furthermore, they indicate that financial institutions do not fully understand and respond appropriately to women entrepreneurs. Finally, the AfDB also cites the business environment where legal and regulatory frameworks hinder women’s full participation.
Female small business owners in the informal sector are also said to typically reinvest up to 90% of their income in the education, health and nutrition of their families and communities, compared to up to 40% for men. Furthermore, we find that women are more likely to follow through on loan repayments so developing a product that matches women’s cash flow cycle will help boost financial activity.
Providing financial support
The game changer for women-led SMEs will be to enable their businesses receive the required financial support to quickly expand their business.
In Ghana, individuals have access to loans at the click of a button. Partnership between financial institutions, mobile network operators (MNOs) and fintechs are critical for rolling out credit solutions for the African women owned businesses. The partnership between Ecobank and MTN in Ghana on microlending is a real example of how financial services combined with advisory services can create positive outcomes. 3.6m microloans worth over $195m have been disbursed to 1.1m unique MTN Mobile Money wallet holders, with a proportion of 28% of female when the programme was launched.
The role of technology
Technology will play a crucial role in harnessing the potential of the female economy. Digital financial services offer women owned businesses in Africa the opportunity to receive and make payments easily. In this era of Covid-19, financial institutions are leveraging on their digital platforms to enhance their value proposition to their customers.
Covid-19, protocols of lockdowns, physical distancing and staying safe at home have provided the impetus for customers to embrace the digital agenda and we have seen an exponential growth in digital adoption. For example, in 2019 the value of transactions processed via Ecobank’s digital platform OmniLite was $320m. This rose to $1.2bn at the end of June 2020.
Embracing digital amidst Covid-19, provides an excellent opportunity for small business owners (SMEs) to increase their productivity at lower costs. If we consider ongoing public-private sector actions taken by to boost SMEs’ fragile economies like the partnership between AUDA-NEPAD and Ecobank Group, upskilling SMEs’ digital capabilities remain important.
The partnership between Ecobank Group and Google offers an opportunity for women owned businesses amongst others to develop an online presence through Google My Business and Google Ads. This will make it easy for their customers to find them, allows them to reach more people, increase the credibility of their business, support marketing in a cost-effective manner and build a stronger brand overall.
Women-owned businesses have immense potential to develop and further support our economies. To scale up women’s business from small to medium-sized companies and eventually to large corporates we will leverage on technology. Collaborative efforts across industries have significant impact and can make financial services work for women in Africa and grow the potential that is there.
Josephine Anan Ankomah, is Group Executive, Commercial Banking at Ecobank Transnational Incorporated.