Running a Micro, Small, and Medium Enterprise (MSME) presents considerable challenges for African female entrepreneurs, where various cultural, financial, and operational obstacles create a complex environment. Despite being called the “backbone of the African economy,” women entrepreneurs face significant hurdles. According to the Women In Africa philanthropy report (2020), female entrepreneurship contributes an estimated 7–9% to the continent’s GDP, translating to roughly $150–200 billion. Access to financial resources remains a critical issue; women in sub-Saharan Africa are 20% less likely than men to hold a bank account and 17% less likely to obtain formal credit.
As Kede Ndouna and Tsafack Nanfosso (2017) noted, the situation for women in rural areas across Africa can be pretty harsh. In countries like Nigeria and Cameroon, entrepreneurship revolves around low-wage, informal activities, which typically yield limited productivity and lack social protection. With few livelihood options available, many women are stuck in low-output ventures where business and household responsibilities often overlap. This dual burden stifles their potential and leaves their entrepreneurial talents unrecognized.
Financial literacy and effective money management are essential to breaking through these barriers. Women who master these skills are better positioned to navigate the competitive landscape and transform their businesses into sustainable, thriving enterprises. Understanding budgeting, saving, and investing can distinguish those who merely survive from those who excel.
Given these challenges, we have curated a comprehensive set of money management tips for African female entrepreneurs. These practical strategies empower women to tackle financial hurdles confidently, enhancing their ability to sustain and grow their MSMEs. Women can unlock new opportunities by investing in their financial education, paving the way for a more inclusive and dynamic entrepreneurial ecosystem across Africa.
- Separate Personal and Business Finances
Blurring the lines between personal and business finances can lead to tax complications and difficulty tracking the business’s financial health. One of the first steps in effective money management is separating your personal and business finances; separating your personal and business financials leads to clarity, mismanagement, and even financial ruin for your business. Open a dedicated business bank account and ensure all business-related transactions—income or expenses—flow through this account.
It matters because separating finances allows for better tracking of business performance, more precise cash flow management, and easier tax preparation. It also helps you understand whether your business is genuinely profitable.
- Budget and Plan Regularly
Creating a detailed budget for your business is essential for controlling spending and managing cash flow. A budget will help you track income, expenses, and profits, providing a roadmap to keep you on course with your financial goals. As an MSME owner in Africa, unexpected costs such as fluctuating electricity prices, transportation, or inflation can impact your business, so budgeting helps you anticipate and prepare for these challenges.
- Pro Tip: Revise your budget monthly or quarterly based on actual business performance. This will allow you to adjust for external factors like economic conditions or changes in customer demand.
- Maintain a Cash Flow Forecast
Cash flow is the lifeblood of any business, and for MSMEs, poor cash flow management is often a significant reason for failure. A cash flow forecast helps you predict when money will come into your business and when it will go out. This ensures you can meet your financial obligations, such as paying suppliers, employees, and yourself.
- Tip for women entrepreneurs: Cash flow forecasting is especially crucial if you juggle multiple responsibilities, such as running your household alongside your business. It helps avoid surprises and ensures you can effectively balance personal and business needs.
- Leverage Mobile Money Platforms
Africa is a leader in mobile financial services, and MSME owners should take full advantage of this technology. Mobile money platforms like M-Pesa, Smobilpay, MoMo, or Orange Money are more than just payment solutions—they allow you to manage your finances in real-time, even if you are running your business from rural areas where traditional banking is not easily accessible.
- Key Benefit: These platforms are convenient for sending and receiving payments and enable you to save and access credit. Mobile money provides financial inclusion for women facing challenges accessing formal financial institutions.
- Embrace Small, Low-Interest Loans
Many female entrepreneurs hesitate to take out loans because they fear debt. However, when used responsibly, loans can provide the capital needed for business expansion, inventory purchases, or operational improvements. Many African governments, NGOs, and financial institutions offer low-interest loans for women entrepreneurs (Growth4her).
- Tip: Only borrow what you need and have a clear plan for using and repaying the loan. Avoid borrowing for day-to-day expenses, such as Electricity, fuelling, transportation, etc. (Operational Expenditure); instead, use loans to invest in assets (Capital Expenditure) that will generate income for your business.
- Invest in Financial Literacy
Financial literacy is a powerful tool for any entrepreneur, especially for women who face unique challenges in the business environment. Understanding the basics of accounting, taxes, and financial statements will help you make informed decisions and avoid pitfalls. If you need clarification on economic management, consider partnering with a financial advisor or attending workshops that teach basic finance principles tailored to African MSMEs (Growth4Her).
- Why it matters: Many women-owned businesses fail because their owners need to gain basic financial management knowledge. Taking the time to learn financial management can transform your business from surviving to thriving.
- Build a Safety Net (Emergency Fund)
Every MSME owner should have a financial safety net to deal with emergencies, such as unexpected expenses, equipment breakdowns, or a sudden drop in sales. Setting aside some of your profits into an emergency fund will protect your business from unforeseen challenges that could otherwise cause significant setbacks. This is especially true in Africa, where there are so many business-crippling policies/laws put in place by the various heads of government.
- Women entrepreneurs’ perspective: This is especially important for women, as societal pressures may often force them to dip into business funds for family or personal emergencies. A dedicated business emergency fund ensures you can handle unexpected business costs without destabilizing your operations.
- Monitor Your Debt Levels
Debt is a tool that, if managed well, can fuel business growth. However, uncontrolled debt can quickly spiral out of control and threaten the survival of your MSME. Be careful not to overburden your business with debt. Always review the terms of any loans and ensure your business can meet the repayment schedule comfortably.
- Tip: If your current financial situation is stretched, prioritize paying off high-interest debt first and avoid taking on additional loans.
- Invest in Your Business’s Future
Reinvesting profits back into your business is vital to long-term growth. Whether purchasing better equipment, expanding your product line, or improving marketing, investing strategically in your business will help it grow. Don’t be tempted to spend all your profits on personal luxuries or non-essential items.
- Why this matters: Many businesses remain small because owners need to reinvest profits. As the company grows, so do expenses, and the habit of not reinvesting profits will begin to thin out your earnings, and you will begin to record fewer profits compared to previous periods.
- Embrace Technology for Financial Management
Technology has indeed been a great help to humanity and businesses. The advent of technology has given rise to cloud-based accounting solutions. Gone are the days when you would need an expensive server machine to power your business activities financially. With accounting software like QuickBooks, Wave, or Zoho Books, you can easily track your business finances and generate reports.
- Why this matters: This accounting software are tools that can easily give you an overview of your business health and help you make informed financial decisions.
- Build Financial Literacy: Many successful entrepreneurs started with little to no accounting knowledge, but by improving their understanding of business and finance, they could scale up their business operations. Attend workshops, read books, consult financial experts, attend finance and business classes, and even get an MBA!
- Why this matters: A strong understanding of accounting terms and concepts (e.g., Debit, Credit, Cash basis, Accrual basis, etc.) will make it easier to interpret the financial reports and help avoid costly mistakes.
- Take Advantage of Government and NGO Programs: The government and well-meaning organizations have risen to the task of empowering women in business through aids, knowledge, and skills that will help them scale their businesses. Programs like the Growth4Her women accelerator are an intervention of the AFDB implemented by Creative Space Startups to help women business owners become investment-ready. Growth4Her supports and empowers women entrepreneurs, providing them with the capacity and tools to transition from small to high-potential, fundable growth-stage businesses. The program equips beneficiaries with investment readiness skills, connects them directly to funders, and cultivates an ecosystem that supports their businesses. Recently, in Cameroon, the inaugural National Women’s Entrepreneurship Expo (Snef) was held in June to elevate women’s roles in Cameroon’s economic fabric. Organized by the Federation of Women Entrepreneurs Associations of Cameroon (Fasfecam) and co-sponsored by the Ministry of SMEs, Social Economy, and Handicrafts, alongside the Ministry of Women’s Empowerment and Family, the expo also receives support from the Cameroon Chamber of Commerce.
Many African governments, NGOs, and banks offer grants, loans, or training programs for women-owned MSMEs. Research and stay updated through government announcements and industry publications, as well as engage with business communities to get information on programs and grants you can plug into. Growth4Her will keep you updated through our newsletters; sign up and stay tuned. Use these programs for financial support and business advice. Applications are currently open for the 4th cohort of the Growth4Her Accelerator Women Program for Nigerian female entrepreneurs only, apply before the November 22, 2024- https://growth4her.org/growth4her-cohort-4-call-for-applications-for-women-led-smes-in-nigeria/
Conclusion
As a female African MSME owner, understanding and practicing effective money management will help you grow and sustain your business. By separating your finances, budgeting, monitoring cash flow, using mobile technology, and investing in financial literacy, you can overcome financial hurdles and build a thriving enterprise. Managing your business’s money wisely is a decisive step toward long-term success and economic independence.
References:
Kede Ndouna F. et Tsafack Nanfosso R. (2017), « Contraintes environnementales et entrepreneuriat informel au Cameroun », Revue africaine de management – African management review, vol. 2, n°1, pp.68-86
Roland Berger, Women in Africa Philanthropy, Entrepreneurship study, “Women in Africa: plongée au cœur de la ruche entrepreneuriale,” 2018
https://hellofuture.orange.com/en/entrepreneurship-a-real-challenge-for-women-in-sub-saharan-africa/
https://aaeafrica.org/cameroon/identifying-the-importance-of-group-organisation-for-financing-women-entrepreneurs-in-rural-areas-a-case-study-of-the-mokolo-women-and-family-promotion-centre-in-cameroon/
https://onafriq.com/view/cameroon-based-fintech-maviance-plc
