African women in business and finance-Afdb meeting

Videos of the panel discussion about “African women in business and finance: financial sector innovations to spur growth”.

The role of small and medium enterprises (SMEs) as a big driver of economic growth, job creation and poverty alleviation has become an undisputed fact. The importance of SMEs in the economy shows itself in their contribution to the GDP and employment where again studies show that they “contribute up to 45% of employment and up to 33% of GDP in developing economies (G20 Report). Within the current global context of limited growth in employment creation by both large enterprises and the government sector, SMEs have a major socio-economic role to play.

The uneven quality of the financial environment in which most SMEs in Africa operate is another barrier to growth.

For the most part, African SMEs operate in poorly developed financial markets characterized by deficiencies in their financial infrastructure, i.e. credit reporting systems, collateral and insolvency regimes, and weak legal and regulatory frameworks.

A subgroup within the SME landscape is the position of women entrepreneurs. The challenges faced by women in accessing financial services are even more acute than for  typical SMEs. Even in countries reporting an increase ranging from 10 – 30% over the last decade in the number of women run enterprises (such as South Africa and Zambia in the South, Egypt in the North, Ghana, Cote d’Ivoire, Nigeria in the West and Ethiopia, Kenya and Tanzania in the East), these enterprises still capture, on average less than 10% of all capital invested.

In Uganda, “women own about 40% of businesses with registered premises but only receive about 9% of commercial credit.” (EIU, 2010) The African Development Bank has launched a number of financing products in recent years targeted at the SMEs market and women entrepreneurs. One of the first national loan guarantee schemes was specifically aimed at increasing women’s access to finance under the Growth Oriented Women Entrepreneurs (GOWE) programme.

Another facility being provided by the AfDB with the support of the Danish government and other multilateral and bilateral donors is the African Guarantee Initiative for Small and Medium Enterprises and  microfinance institutions. The AfDB also support SMEs via private equity funds, tracking the gender component of the investments.

The objectives of this side event are: (i) to raise the issue of SME lending and financial inclusion for women at the policy and financial innovation levels and bring up suggestions on how to push both agendas and enhance synergies across Africa;

and (ii) to formally present the results of the survey carried out jointly by New faces New Voices Panafrican Network (NFNV), the AfDB and Mckinsey on how effective financial institutions are in lending to SMEs in general and women in particular.

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