Women entrepreneurs confront a $42 billion gender funding gap while owning 58% of Africa’s SMEs and contributing $300 billion to the continent’s GDP. If the gap is closed, their contribution can more than double.
In the streets of Douala, Onitsha, Dar es Salaam, Cape Town and across major African cities, it is very common to come across businesses owned and operated by women — they are a visible part of the economy. According to the Global Entrepreneurship Monitor (GEM), one in every four African women starts or manages her own business. Sub-Saharan Africa has the world’s highest rate of female entrepreneurship, at 27% but they are mostly small and medium enterprises (SMEs) with limited growth potential.
These businesses are spread throughout several sectors, offering a wide range of products and services. They contribute a bulk of their earnings (90%) to catering to the well-being of their families and communities. They also contribute $250 billion to $300 billion to African economic growth (13% of the continent’s GDP). The importance and contributions of female entrepreneurs to the African economy cannot be overstated.
Notwithstanding, one cannot help but wonder why Africa has a $42 billion gender finance gap, as revealed by AfDB in 2021. Globally, the International Finance Corporation (IFC) estimates a $300 billion gender finance gap, with more than 70% of women-owned small and medium-sized businesses having insufficient or no access to financial services. Aside from business funding, WSMEs are the most financially excluded group in Africa, with just 37% of women having and owning bank accounts.
The gender finance gap goes beyond availability or affordability, but also WSMEs’ willingness and capacity to access financing options. An IMF research of 47 African nations found that women are more prone to opt-out of loan offers due to low perceived creditworthiness.
While women-owned and women-led enterprises now benefit the African economy, there is still a lot more potential to be realized. According to a McKinsey report on the power of parity in Africa, bridging the gender financing gap could double the contribution of WSMEs to GDP by 2025.
It is crucial that all stakeholders (government, banks, investors, development partners, etc.) offer the necessary support to promote and protect women entrepreneurs and address the challenges that prevent their businesses from succeeding. We can develop a gender-inclusive economy in Africa with the relevant laws and interventions, unleashing women entrepreneurs. This provides us with a chance to enhance economic growth while also lifting millions of people out of poverty.
Understanding these challenges, Creative Space Startups in partnership with Sociocapital, The Learning Gate and WETECH with support funding from AFAWA (Affirmative Finance Action for Women in Africa) designed Growth4Her an accelerator program targeted at building the capacity of women-led small and medium enterprises (WSMEs) to enable them to transition to high potential fundable growth stage businesses.
For her first cohorts, Growth4Her is currently accepting applications from women entrepreneurs to develop their capacity, equipping them with the relevant resources to build sustainable and productive businesses.
To apply click here.