By Africa Links 24
Published on 2024-04-02 06:17:26
Affirmative Finance Action for Women in Africa (AFAWA), an initiative of the African Development Bank, is supported by the Women Entrepreneurs Finance Initiative (We-Fi) and participating G7 countries such as France, Italy, Canada, Germany, Netherlands, and Sweden. The primary goal of AFAWA is to address the challenging $42 billion financial gap that women in Africa face when trying to access funding for their small businesses. While obtaining finance in Africa is already difficult, women encounter an even more challenging journey to secure funding for their ventures.
Jules Ngankam, the group chief executive officer of AGF, highlighted the importance of supporting women to enhance their productivity and enable them to actively contribute to the GDP of the African economy. Through the AFAWA Guarantee for Growth program, financial institutions that lend to women-led SMEs are de-risked, thereby increasing their willingness to cater to this specific target market. This program aims to de-risk lending to women and promote a more inclusive financial ecosystem.
It is estimated that around a quarter of African women are engaged in entrepreneurial activities. However, these women face multiple barriers when seeking financial support for their businesses. Lending to women is often seen as riskier, resulting in higher interest rates even for successful ventures. Additionally, women may lack the collateral and guarantees that traditional financial institutions typically require. The lack of understanding and capacity within financial institutions to cater to the unique circumstances of women entrepreneurs further hinders their access to funding.
Despite these challenges, the African Development Bank notes that women are more likely to repay loans and reinvest a significant portion of their earnings into essential areas such as food, health, and education. Empowering women entrepreneurs not only benefits them but also positively impacts financial institutions and African societies as a whole. This conviction led to the launch of the AFAWA Guarantee for Growth program, which aims to provide $3 billion in financing specifically tailored to women-led businesses across Africa.
Dr. Beth Dunford, vice president for Agriculture, Human and Social Development at the African Development Bank, highlighted the importance of empowering women entrepreneurs and the positive impact it can have on African societies. Despite progress in advancing inclusive finance in Sub-Saharan Africa, the gender disparity in access to financial services remains significant, with only 49% of women having access compared to 61% of men.
The AFAWA Guarantee for Growth program goes beyond providing financial support to women-led businesses. It works with partner financial institutions to share risks, incentivize lending to women, and offers technical assistance to guide institutions in designing products tailored to women’s needs. By enhancing the capacity of women entrepreneurs through training programs, AFAWA aims to maximize the impact of the funding provided.
The program has already shown promising results, with success stories from women entrepreneurs in Rwanda, Kenya, and Togo. These success stories highlight the transformative impact that AFAWA is making for women entrepreneurs across the continent. As the program continues to expand its reach, it is poised to make a significant difference in promoting gender-inclusive finance and fostering economic growth and sustainable development in Africa.
