Female entrepreneurs can bridge MSMEs’ $158bn credit gap with smartphones- Report

Female entrepreneurs can bridge the $158 billion gap in Micro, Small, and Medium enterprise (MSME) credit through greater smartphone utilisation, a new report has said.

The report titled ‘Access to Credit for Low-income Women’ by Women’s World Banking (WWE) revealed that out of the 23 million female entrepreneurs in the micro-business segment, 36 percent have smartphones with 34 percent actively using the internet.

“With mobile phone penetration on the rise, digital credit solutions present a viable opportunity to accelerate access to credit for women in Nigeria,’ the report said.

According to the 2023 A2F survey conducted by Enhancing Financial Innovation and Access (EFInA) access to formal finance in Nigeria has grown to 64 percent.

Despite this progress, access to formal credit remains a challenge, as only 6 percent of adults borrowed formally during the period.

“The majority of Nigeria’s population relied on friends and family or other informal sources, significant barriers remain, especially relating to access to credit by women micro-entrepreneurs,” the survey said.

Women entrepreneurs encounter specific barriers in obtaining loans, including the lack of physical collateral, resulting in less favorable financial terms compared to men.

This discrepancy translates into higher interest rates, shorter loan durations, and smaller loan amounts for women.

Financial needs for formal MSMEs that have not been met rose to 99.6 percent in 2023, Women’s World Banking reports.

Authors of the WWB report said banks and institutes that assist women with credit solutions operate digitally, while others are hybrid, incorporating digital aspects in parts of the loan process.

“The bank’s digital credit products are majorly accessed via mobile apps while some make use of USSD codes,” they said.

Mary Iskenderian, President/CEO of WWB said women’s financial inclusion goes beyond financial literacy as more women need to be digitally included.

According to her, the importance of digital inclusion for women is achieving true financial empowerment, Also, women’s financial inclusion goes beyond traditional literacy, extending to digital literacy and access to technology.

“Financial services have evolved to be largely smartphone-centric, making digital literacy a critical component for women’s financial inclusion.” Adding that “Merely being financially literate is not sufficient, as a significant percentage of financially excluded women also face digital exclusion.”

The EFinA survey also revealed that mobile phone usage has risen to 93 percent, reaching 103 million individuals in 2023, compared to 90 percent in 2020. However, it also noted a 4-percentage point decrease in smartphone usage and a 1-percentage point decrease in feature phone usage.

Iskenderian of WWB highlighted the growing recognition among women of the convenience and flexibility offered by financial services.

However, she emphasised the necessity for financial institutions to design products that align with women’s specific needs and preferences.

“Banks give smaller loans to women, few products to women, and this should not be because they are the centre of financial services. Women want to keep their money safe not exactly considering their interests,” she added.