There are many myths against women in Africa, but the “high-risk” myth for financing is one of the most damaging to women and the society.
According to that debunked and discredited, but yet, persistent myth, women cannot be trusted with money and loans as they won’t be able to pay back or may lose it all in business. Many people still believe that women belong to big kitchens and not boardrooms.
As a result, 70 percent of women in Africa are not getting the financing they desperate need to build and run businesses, according to the African Development Bank headquartered Ivory Coast.
On Tuesday, leaders from multilateral development banks, financial institutions and the private sector called on peers to dispel myths about women being too “high risk” for financing – and to offer more financial services for women in business to close the gender finance gap.
“We know that women are a good bet. We know they pay back. We know they run excellent businesses – and yet they are not getting financed,” said Dr Jennifer Blanke, African Development Bank Vice President for Agriculture, Human and Social Development.
An important step is for multilateral development banks to offer credit guarantees to commercial banks to invest in women entrepreneurs, Blanke said.
“We know that if we provide those guarantees, then the banks are going to be lending to a lot more women, and they are going to discover that women are an excellent bet – and are an excellent investment.”
Blanke and other leaders were speaking at the “Using Innovative Financing Mechanisms to Accelerate Finance for Women in Business” plenary panel session at the Global Gender Summit on Tuesday.
The international gathering of gender champions from government, finance institutions, multilateral development banks, civil society and private industry, runs from 25 – 27 November in Kigali, Rwanda.
Panelists acknowledged that strides have been taken to bring gender equity to financing. However, according to World Economic Forum data, at current rates of progress it will take at least 200 years to close the global pay gap between men and women.
Asian Development Bank’s Gender Lead, Sakiko Tanaka, noted this 2019 Global Gender Summit has seen increased awareness of the need for women’s financial inclusion to achieve gender equality.
“There’s more money coming in for gender equality. However, there are still major gaps globally and as well as in each region,” said Tanaka, who also serves as chairperson of the multilateral development bank working group on gender.
Women face unique constraints such as poorer access to collateral and land, running smaller business compared to male entrepreneurs and blurred lines between women’s personal and professional finance spend.
Wendy Teleki, Head of the We-Fi (Women Entrepreneurs Finance Initiative) Secretariat and the panel moderator, led the six panelists in exploring how financial institutions and multilateral development banks are innovating to expand women’s access to finance. Aside from risk-sharing interventions like credit guarantees to lenders, panelists said increasing women’s financial literacy was also key to closing the gender gap.
“It’s not about corporate social responsibility or charity,” said panelist Barbara Rambousek, Director for Gender and Economic Inclusion at the European Bank for Reconstruction and Development. “It is about developing that business case and developing a proper set of financial and non-financial services.”
In Africa, 70% of women are excluded financially and there is a $42 billion financing gap between men and women. Yet panelist Solomon Lartey, Managing Director and CEO of Activa International Insurance Ghana sees opportunity, particularly in West Africa, home to what he says is the world’s highest rate of women entrepreneurs.
“To get women where they want to be, we had to walk with them. The first thing is training them [about financial services], then granting them access to legal assistance and to financial education – we have to do all those things,” Lartey said.
The panel also discussed innovations related to financial technology, alternative credit information, and online tools for financial services as a way to grow businesses.
In some developing regions of the world, women face challenges getting basic documents like a birth certificate, required by commercial bank applications.
Tesi Rusagara, the head of Kigali Innovation City, said the more services for documentation and financing tools are brought online, the more value will be created for women.
John Wilson, CEO of Equity Bank, added that it is important to not only use data and technology in financial services, but to also have a physical presence where clients are, to make a human connection.