Written by AFAWA’s Ambassadors
From finance to business, to music and non-profit work, together, our combined experience spans a dazzling array of sectors. But there is a common thread that weaves together all our professional lives: a passion for empowering women in Africa to realise their potential. We know what women can do when given the opportunity. But we also know that all too often, women are held back.
One way that African women are stifled is by the lack of financing for their businesses. There is, in other words, a glaring disparity between the funding that women have access to and the funding they need to sustain and grow their business operations. In total, that disparity – the so-called “finance gap” – is $42 billion.
That’s why we have joined forces to advocate for the “Affirmative Finance Action for Women in Africa” (AFAWA) initiative. This programme, spearheaded by the African Development Bank, aims to unlock up to $5 billion in financing for women’s businesses. Already, since its launch in 2019, AFAWA has leant more than a billion dollars across 56 financial institutions, benefiting more than 4,115 women-owned businesses in every region of Africa.
We are honoured to be the inaugural AFAWA Ambassadors. In this role, we will amplify voices of women entrepreneurs that all too often go on unheard; we will represent the diverse needs of women entrepreneurs; and we will endeavour to break down the structural barriers that impede the growth of women-owned businesses.
There is so much to be gained from supporting female entrepreneurs. After all, one in four women on the continent starts her own business – one of the highest rates in the world. Moreover, women typically invest 90% of their income in their families and communities. And women are disproportionately represented in agriculture, so their business outcomes are inextricably linked to the continent’s nutritional profile.
Overall, women entrepreneurs contribute $250 billion to the African economy. Clearly, there are real development advantages to investing in women. That matters in a continent where 490 million people live under the poverty line, and where fewer than half of its countries have experienced inclusive growth, defined as growth that reduces poverty and inequality, between 2000 and 2020.
We believe a comprehensive effort is required to break through the structural barriers impeding women in business. For one, banks must be encouraged to stop seeing women-owned businesses as inherently riskier than those owned by men. Right now, banks lend to women at unfairly high interest rates to manage what they believe is a riskier investment. That means women’s businesses are being set up to fail rather than helped to thrive.
That perception is partly down to the fact that women tend to have less collateral than men. Unfair property rights that favour men are partly to blame for this. We must push both for property law reform and for banks to take a more creative approach to risk.
Women’s businesses can also be de-risked with more early-stage support. That could mean cheaper loans for new businesses, for instance, or more business and finance advice and education for women entrepreneurs. Governments can support women-owned businesses by paying more upfront for services.
What is exciting about this approach is that it will spark an upward cycle. The data that banks draw on to assess risk will show that women-owned businesses can and do succeed. Plus, more data and insight into women’s businesses could be used to offer bespoke products more appropriate for women’s needs, something that is critically needed.
We must, in tandem, counter prejudice and stereotyping. No successful track record will make a difference if women are not respected and seen as capable and ambitious.
And women must be helped to unlearn feelings of inadequacy, too. Women are still disproportionately represented in the informal sector, often scratching a living without support nor a voice. These women entrepreneurs must be helped to formalise their businesses and grow them as they wish. We must ask ourselves: How can we help women structure their businesses? How can we boost women’s own ambition and appetite for risk?
All women entrepreneurs are different. But whether she is working to better the lives of her family and community, or aiming to build a major corporation that could employ hundreds and sell across the world, or anything in between, we must support and believe in her. As the first AFAWA Ambassadors, we will do just that: believe in and support women-entrepreneurs. And we call on everyone else to do the same.