African Development Bank (AfDB) and African Guarantee Fund have announced plans to mobilise $5 billion in financing capital for African women by 2026, through Affirmative Finance Action for Women in Africa (AFAWA).
AFAWA is a pan-African initiative that intends to bridge the $42 billion financing gap facing women in Africa.
“AFAWA seeks to increase women’s access to finance in the African continent,” Lamin Barrow, director general, Nigeria country department at African Development Bank said at the signing ceremony in Lagos.
He said AFAWA brings initiatives other than credit such as skills to keep female-led SMEs’ financial books and it can also convince banks that women repay their loans.
“Women repay 99 percent of their loans,” Barrow said while adding that through AFAWA, banks are changing the perception that women cannot manage loans for investment.
Barrow implored stakeholders, financial institutions, and private sectors to give finance leverage to women.
According to the Global Entrepreneurship Monitor (GEM) 2016/17 women’s report, the female entrepreneurship rate in sub-Saharan Africa is 25.9 percent of the female adult population, meaning that one in four women starts or manages a business.
Jules Ngankam, group chief executive officer of African Guarantee Fund said to close the small and medium-sized enterprises (SMEs) financing gap, Affirmative Finance Action for Women in Africa is focusing on the female gender.
He highlighted information gap, product gap, collateral, and perception issues as some of the issues that affect female-led SMEs’ ability to access loans.
“Women-led SMEs suffer from perception challenges which include being African and gender-based challenges which include being women,” Ngankam said, adding that some women have an information gap which means they do not have enough information for their assessment.
He stated that to bridge the skill gap, AFAWA ensures training for female SMEs to know the requirements from the Central Bank of Nigeria and to also fill in for their collateral gap.
“AFAWA covers 75 percent risk on loans given to female-led enterprises while banks cover the remaining 25 percent. We have implemented the program in over 40 countries and we want it to cover the continent,” Ngankam said.
While speaking about the non-performing loans (NPL) ratio of loans given to female SMEs, he said NPL is lower than 1 percent.
Beth Dunford, vice president for Agriculture, human and social development at the African Development Bank said AFAWA’s target is to provide lending of $5 billion to female SMEs.
“It is good business to lend to women hence financiers in Nigeria should know women in SMEs have peculiarities and should find out more attractive loans, tools, and products that women need,” Dunford said.