Five ways financial firms can empower women in SMEs

Financial institutions have the potential to empower women in Small, Medium, and Micro Enterprises (SMEs) in Nigeria by enabling them to access capital and manage finances, a new survey revealed.

The Women’s World Banking survey “Empowering Nigeria’s women micro-entrepreneurs: Actionable insights for financial services providers” showed that financial institutions can support women’s economic empowerment and business growth by creating more impactful, accessible, and inclusive solutions.

Women micro-entrepreneurs are SMEs who operate in small businesses with limited resources but require financial services such as online banking, auto insurance, mortgage brokerage, mobile banking, and even business loans to run their businesses.

“Financial services providers should focus on providing products with detailed features that are tailored with women micro-entrepreneurs in mind. By doing so, they can better meet the needs of Nigerian market women, facilitating their economic empowerment and fostering more inclusive growth in the financial sector,” the survey said.

However, the 2024 women’s entrepreneurship report “Reshaping economies and communities” highlighted that one of the major barriers women entrepreneurs face is to convert intentions into actual business.

Other barriers faced by women entrepreneurs are access to funding, networking opportunities, work-life balance, perception of risk and confidence, market barriers, gender bias, resource limitations, and regulatory obstacles.

“Gender bias can impact their growth potential by limiting their ability to obtain bank loans or venture capital; Market barriers may hinder their ability to compete and access markets while Social censure can impact the willingness of women entrepreneurs to take risks and compete for digital technologies, and market expertise,” the report said.

Read also: Why African SMEs need tailored funding to drive growth

The Women’s World Banking report highlighted five ways financial institutions can empower women SMEs to overcome these barriers:

Create tailored financial products

Financial institutions can develop financial products tailored to the needs of women micro-entrepreneurs, such as interest-yielding savings accounts as well as low-interest and easy-to-access microloans. Products with easy repayment terms, moderate single-digit interest rates and savings accounts with features tailored to different saving habits can empower SMEs.

Enhance loan products

Fintechs can design loan products with lower interest rates, longer repayment periods, and more lenient collateral requirements. Incorporating features like grace periods or payment holidays would ease financial pressure and support business expansion without the fear of immediate repayment burdens for SMEs.

Increase accessibility to financial services

Financial institutions can also expand the reach of financial services to rural and remote areas by establishing more local branches, ATMs, and agent networks. Mobile banking units or partnerships with local businesses can help to provide financial services in areas with limited access.

Strengthen digital financial infrastructure

Financial firms need to upgrade their digital platforms to ensure robust and reliable network coverage to address issues such as connectivity problems and transaction failures. They can provide personalised guidance and problem-solving customer support to assist women micro-entrepreneurs with financial products and services.

Implement targeted educational programs

Fintechs can develop and deploy financial capability-building programs tailored for women micro-entrepreneurs, covering topics such as budgeting, debt management, and investment strategies. These programs could be delivered through workshops, online courses or community events, and should include practical, hands-on training.