The ongoing coronavirus outbreak has significantly affected growth in Sub-Saharan Africa (SSA). According to the World Bank, SSA is heading for a recession. The growth forecast in the region shows a sharp fall from 2019’s 2.4 percent to -5.1 percent in 2020. A recent study in 2020 has demonstrated that the current pandemic will have a disproportionately negative impact on women. For most low-income women, entrepreneurship is a means of escaping poverty. Millions of micro and small businesses are shutting down globally due to the pandemic, including those owned by women. These highlights are indicative that more than ever, women-owned and led enterprises need more support if the gains of women’s active economic participation that leads to higher economic growth, must be actualized.
The African Development Bank (AfDB) acknowledges that women account for a majority of small- and medium-sized businesses in Africa and dominate the agriculture sector as primary producers and food processors. Women smallholder farmers represent 43 percent of agricultural labor in the developing world. If they have equal access to resources such as land, capital, and livestock, total agricultural output in developing countries could rise by more than 14 percent, and hunger rates could fall by 17 percent. In Africa, women are more likely than men to be entrepreneurs and makeup 58 percent of the self-employed population. Research supports the assertion that women farmers are as efficient as men farmers, and greater gender equality in land ownership and access to other agricultural inputs would increase agrarian output.
In Nigeria, an article from the Council on Foreign Policy (CFR) shows that the nation’s GDP could grow by 23 percent (US$229 billion) by the year 2025 if women participated in the economy at the same level as men. Also, women-owned businesses significantly contribute to the Kenyan economy. They account for 48 percent of all MSMEs, which adds 20 percent to Kenya’s GDP. Because women usually re-invest in their children’s health, nutrition, and education, economically empowered women are significant catalysts for development. Reducing gender inequality in resources and improving women’s status is thus smart economics. Despite this relevance, women’s economic potential remains dwarfed by challenges, many of which can be eliminated. What has been done, and what needs to be done to facilitate African women’s economic participation? To answer these questions, the operations of some international financial institutions in Nigeria and Kenya are considered.
Challenges of Women Entrepreneurs
The World Bank 2020 report on Women, Business and the Law, highlights the women, business, and the law 2020 index for 190 countries. The highest score is 100 and the least, 26.3. Nigeria scored 63.1, lower than Kenya’s 80.6 scores. Likewise, in its 2015 Africa Gender Equality Index, the African Development Bank ranked 52 countries in terms of gender parity. In that ranking, neither Kenya nor Nigeria came in the first 10. While these rankings may seem a fair percentage, more needs to be done to support women-businesses in both countries.
In terms of financial services, women-owned businesses are underserved. They are less likely to obtain formal financing and have been reported to pay higher interest rates, which often leads to their reliance on group loans or private funding for their businesses. A joint report by the IFC and Global Partnerships for Financial Inclusion, suggests that female owners of formal small and medium-size businesses face a credit gap of up to US$300 billion globally. An AfDB report indicates that only 16 – 20 percent of women in Africa have access to long-term financing from formal financial institutions. The SME finance gap in Nigeria is estimated at US$92 billion, and the women-owned SME finance gap at US$18 in 2017; however, only 5 percent of women can get a loan from a bank. In response to women’s lack of access to finance, providing micro-credit has been the default solution. While that has substantially increased access over the years and has brought about an improvement in welfare and consumption, it is not enough for growth-oriented women entrepreneurs.
Women play a vital role in agriculture, and equal access to agricultural resources will increase women farmers’ productivity by 20 percent and reduce the number of hungry people by 150 million. However, women in Sub-Saharan Africa own only 15 percent of agricultural land. In Kenya, women provide 70 percent of labor in the farming sector yet hold only 1 percent of registered titles and an estimate of 5-6 percent of registered titles held in joint names. Lack of access to land poses setbacks to agricultural productivity. Having access to property rights and land is also essential for women entrepreneurs as collateral for business credit.
The types of businesses women operate in, impact their ability to access finance. In low-income countries such as those considered in this article, women-owned SMEs tend to concentrate on less profitable industries with their most significant share of involvement being in consumer-based businesses and subsistent agriculture. Compared to male-owned companies, women are nascent in extractive industries such as mining, oil, and gas.
Women are more likely to be home-based and operate within the household than are men heading enterprises. In Sub-Saharan Africa, there is more proclivity for informal or unregistered firms among women entrepreneurs and a higher likelihood of working from home than men. Council on Foreign Relations (CFR) cited the high rate of unpaid work as one of the obstacles to women’s economic participation. According to the report, 75 percent of global unpaid work is performed by women, and more time spent on outstanding care work means less involvement in the labor force.
Country laws and regulations also hinder women. Nigeria still has laws that make it harder for women to work compared to men. Bro and McCaslin highlight that Nigerian laws do not mandate nondiscrimination in employment based on gender. Their writeup mentions that it is also illegal for women to work overnight in manual labor. Other obstacles such as access to justice, access to education, and adequate financial management training and, access to the formal sector – business entry and licensing, amongst others exist.
The World Bank Group
Based on consultations from more than 1,000 stakeholders, 21 countries, and working with the public and private sectors, the WBG studied the global landscape changes and the accumulation of evidence on the best approaches to close gender gaps. The Bank designed a gender action plan outlined in four pillars.
Pillar 1 is Improving women’s human capital, including health, education, and social inclusion. Pillar 2, removing constraints for more and better jobs. The report allusions that at the core of the Group achieving its strategy is an increase in women’s participation in the workforce, a rise in their income-earning opportunities, and their access to productive assets. Pillar 3 involves removing barriers to women’s ownership of and control over assets. Pillar 4, enhancing women’s voice and agency and engaging men and boys and promoting women’s participation and decision-making in service delivery.
The International Finance Corporation (IFC)
The IFC strategy is to increase female representation in the recruitment of Fund Investment roles, increase female employment within the Fund and portfolio companies, and to enhance the pipeline development for portfolio companies that are women-owned and led. As part of its operations to increase access to finance in Kenya, the IFC partnered with AfDB to implement the Growth Women Enterprises Program, which was launched in 2006. The IFC initiative’s objective was to facilitate the growth of women-owned businesses through the provision of partial financing guarantees of between $20,000 and $400,000. The program also included extensive business management training. By 2011, the program had approved 33 loan applications, trained 148 women entrepreneurs, and helped create more than 130 jobs.
The IFC’s Women Entrepreneurs Finance Initiative (IFC We-Fi) program, a part of the World Bank Group’s We-Fi program: Creating Markets and Finance for All, works with private sector actors to enable women entrepreneurs, to start and grow firms. IFC uses We-Fi funds to provide investment and advisory support, in line with blended finance principles. The program partnered with Tide Africa to offer 20 women-founders structured mentorships and was projected to provide 10 percent Fund investment in women-led tech companies in Nigeria and Kenya.
To support the Bank’s lending to SMEs, in March 2018, the IFC launched a US$60 million investment in a regional risk-sharing facility to provide better tailored financial services and business support to women customers and to document the business case further. In Nigeria, IFC partnered with AXA Mansard, an insurance company, to design insurance policies that meet businesswomen’s needs and to recruit more women into the industry (IDA, 14).
In terms of providing data, the IFC has engaged non-governmental organizations (NGOs) to conduct case studies that show the relevance of women entrepreneurs in Africa. The Gender-Smart Business Solutions Case Studies, for example, highlight the importance of women entrepreneurs. Although not peculiar to Africa, the IFC’s report prepared in partnership with Rockcreek and Olivier Wyman on Moving Gender Forward in Private Equity and Venture Capital provides robust data that can promote women’s participation in entrepreneurship.
In Nigeria, The IFC, with support from the Women Entrepreneurs Finance Initiative (We-Fi) and in partnership with a private company, researched how the fast-moving consumer goods sector in Nigeria can support women entrepreneurs and optimize their growth prospects. The report Women Entrepreneurs Find Business Opportunities in Nigeria’s Fast-Moving Consumer Goods Sector. The World Bank and IFC’s Lighting Africa, Kenya program engaged Practical Action, a non-governmental organization, to conduct a case study highlighting innovative business models to ensure the inclusion of women in the solar energy value chain as both consumers and entrepreneurs. These case studies provide evidence for the business case in gender-lens investing.
International Development Association (IDA)
In 2018, The WBG approved US$100 million for Nigeria for Women project with IDA as the financer. The project’s objective is to support improved livelihoods for women in targeted areas of the country. This project also has a goal to support the advancement of dialogue, strengthen technical implementation capacity and coordination among implementing partners at all levels of government. The first part involves building the social capital of women by galvanizing them to become women affinity groups (WAGs).
In terms of control over assets focusing on financial inclusion, ten IDA operations in countries including Kenya addressed gaps between women and men in access to and use of financial services through risk-sharing facilities for mortgages to women borrowers. It also included building institutional capacity to identify and target weaknesses and setting inclusion targets for female entrepreneurs accessing credit. In Kenya, an IDA-supported operation was also launched to address gender-based and student violence in schools in the primary education system.
Also, in May 2018, about US$4 billion was earmarked for operations supporting girls’ education. Another example of IDA’s operation is its commitment to provide tailored financial services and business support to women customers while also documenting the business case. Between April 2016 and May 2018, some US$4 billion, approximately 75 percent in IDA countries, was committed to operations supporting adolescent girls’ education, surpassing the pledge of US$2.5 billion made by the World Bank Group.
The African Development Bank (AfDB)
The African Development Bank has a gender strategy based on three pillars. Through this strategy, AfDB’s priority sectors can be better aligned with the needs of regional member countries (RMCs), and the impact can be increased in the region.
Pillar 1 of the strategy identifies women’s legal status and property rights as vital to inclusive growth and gender equality. Pillar 2 is economic empowerment. Under this strategy, the Bank states its support for advocacy for affirmative action in support of women and women-owned businesses, increasing the productivity of women farmers and women’s inclusion in the market and providing skills training in science and technology for women. Pillar 3 is knowledge management and capacity building. Through this strategy, the Bank promised to provide technical assistance and the resources needed for gender equality knowledge management, improve the Bank’s gender reporting, and build staff capacity to promote gender equality in its operations. The report includes plans to produce better sex-disaggregated data and statistics.
Operations Supporting Women Entrepreneurs In Kenya and Nigeria
The AfDB has promoted women-owned and led businesses through several partnerships with both international institutions and private sector investment organizations across Africa. For example, in 2015, AfDB seeded Alitheia IDF, a fund for women-led African enterprises, with an equity investment of US$12.5 million to support its drive to invest in female-led businesses. The fund is targeted to provide between US$2 million and US$5 million capital to high-potential medium-sized companies in six Sub-Saharan Africa countries, including Nigeria. The company also plans to invest in 12 SMEs with the potential of scaling beyond their countries of origin. In the long run, it is estimated that the investments will create 5,000 jobs for women and also provide access to essential products and services for approximately 100,000 women through its focus on critical sectors such as agriculture, agro-processing, and essential goods and services companies.
In Kenya, AfDB, through its Affirmative Finance Action for Women in Africa (AFAWA) program, collaborated with Women Entrepreneurs Finance Initiative (We-Fi) to bridge the access to the finance gap experienced by women entrepreneurs. The World Bank Group hosts this partnership. In 2019, We-Fi approved the allocation of US$61.8 million to support AFAWA’s drive to bridge the US$42 billion financing gap between women and male entrepreneurs. Kenya and Nigeria are 2 of the 21 African countries targeted for the implementation of this program.
In March 2019, AfDB’s Board of Directors approved a US$8 million-targeted financing to Kenya’s Credit Bank for lending exclusively to SMEs in construction, agriculture, renewable energy, and manufacturing. The loan has a five-year maturity with a two-year moratorium and has the objective of providing access to finance. AfDB’s Board of Directors in May 2019 also approved a €100 million partial credit guarantee to the structured finance company, African Agriculture Impact Investment Ltd., for commercial agriculture development in Africa. According to AfDB, one of the benefits of this PCG is that it will have significant youth and women involvement and generate over 8,000 jobs across the region.
According to an AfDB press release in 2019, a partnership between the U.S International Development Finance Corporation (DFC) and the African Development Bank was sealed. This partnership involves US$2 billion investment with plans to mobilize an additional US$3 billion from the private sector, using debt financing, equity investments, political risk insurance, and other financial tools. Priority sectors are targeted, including critical infrastructure, power, and energy, financial service, and agriculture.
In furtherance of their gender strategy, AfDB partnered with Microsoft to train young women to code through the Coding for Employment program. The program’s objective is to bridge the digital skills gap among women and increase women’s involvement in the ICT sector. It was piloted in 5 African countries. The AfDB’s commitment to promoting gender equality is also exemplified in its provision of US$20 billion to encourage women’s participation in large-scale agricultural businesses in West Africa, over five years.
Future Directions – Recommendations
Partnerships are vital to women’s development in Africa, especially as regards the promotion of women-owned/led businesses. It is commendable that most of the institutions considered in this article already incorporate partnerships in their operations. For example, besides We-Fi’s partnership with AfDB’s AFAWA, there is a collaboration with the UN Women and CARE international to reinforce initiatives of the World Bank, in favor of women entrepreneurs in various sectors mostly overlooked by financiers, donors, and governments. It is also impressive that the IFIs partner with AfDB to a great extent. These partnerships hold potential as the AfDB will bring its Africa-centric perspectives to the table.
These institutions can support the design and launch of gender lens incubation and acceleration toolkits. This will help incubators and accelerators in Africa create their unique fender strategies, providing case studies and strategic frameworks to build a gender-smart entrepreneurial regional ecosystem as done in Southeast Asia.
This research revealed that only IDA included an outlined mitigation action plan against gender-based violence and sexual exploitation in its operations. Although the WBG launched this mitigation strategy, it is recommended that all IFIs and MDBs clearly outline similar plans and provide periodical reports to show project updates.
It is observable that most of the operations of the international institutions are heavily focused on women’s access to finance and provision of training; while this holds the potential to promote women’s entrepreneurship, it isn’t a panacea to the challenges women in business face in the continent. Equal attention should be given to problems such as promoting access to land, robust laws, and regulations that support and protect women-businesses and gender norm change. Although the institutions provide gender-focused data, more is needed. Gender disaggregated research and data can increase awareness and increase gender-lens investments in the region. Hence more commitments should be made towards developing robust data and information dissemination. Also, projects can be bundled to target women with finance, training and skills development, mentorship, and digital financial services. This can be delivered in partnership with local commercial banks, who already provide most of these business support services.
In a working paper by Chang et al. 2020, on what works to enhance women’s agency, it was established that multi-component programs deliver higher impacts across more areas. The review emphasizes that studies of interventions similar to the Graduation approach in Ghana and Uganda suggest that the multi-component nature was critical. Providing access to financial resources alone, such as transfers or savings accounts, did not generate economically meaningful and cost-effective impacts in the way that the integrated packages did. The significance of the graduation model, which was introduced by BRAC, a Bangladeshi non-profit, focuses on solving multifaceted issues through all-inclusive problem-solving. The program’s components include consumption support, asset transfer, livelihood training, savings component, health, and business support services.
SDG 5 – gender equality and empowerment for all women and girls is achievable; there is a positive momentum from institutions and stakeholders that indicates that. However, scale is crucial; programs that create 100,000 jobs out of populations of over a million African women are not sufficient to bridge the gender gap in economic participation.
A wide range of policies and programs can stimulate women’s economic advancement – from strengthening economic rights for women under the law to providing women with greater access to land and property rights and financial literacy. However, it is crucial to critically examine the contexts for which any program is designed to ensure that their implementation leads to actual enhancement of women’s economic empowerment and, ultimately, poverty reduction.
Wofai Ibiang is a Gender Specialist and a Master of International Public policy (MIPP) Graduate.
The Johns Hopkins University School of Advanced International Studies Washington D.C