Women entrepreneurs in the Fast Moving Consumer Goods (FMCG) value chain are surmounting the tough business environment in Nigeria and creating enterprises where women are making profitable business decisions.
With the support of Women Entrepreneurs Finance Initiative (We-Fi), in partnership with the International Finance Corporation (IFC) and Daraju Industries Limited, a dynamic case study has been launched that shows how women entrepreneurs are riding on opportunities in Nigeria’s fast-moving consumer goods space. But women entrepreneurs are still barely scratching the surface of opportunities in the FMCG sector due to limited access to credit and logistics, the case study showed.
The FMCG sector is critical because it is the third-largest contributor to the Nigerian economy, estimated at 16 percent of gross domestic product (GDP). The sector depends on micro, small, and medium-sized enterprises (MSMEs), which constitute more than 96 percent of all businesses in Nigeria. Thirteen percent of these informal businesses are owned and run by women. Women own and lead roughly 6.6 million formal SMEs and 39 million micro-businesses in emerging markets.
The case study surveyed 250 male and female distributors on factors affecting sales performance, which included access to finance, logistics, technology and networks. Overall, distributors identified six business bottlenecks as the main barriers to their growth. In addition to the ones listed already, manpower and business management skills have been critical.
Female distributors who participated in the survey had on average fewer years in operation, less experience as a distributor, and fewer employees than male counterparts. They are older, more educated, have fewer family dependents, and spend more time on their businesses. But sales revenue for female distributors is on par with male counterparts and even higher in some regions.
“Female distributors that accessed credit in 2017 in the FMCG space had 20 percent higher sales and 26 percent higher in 2018,” said Heather Kipnis, lead, Women’s Entrepreneurship at IFC.
“Women distributors cited lack of access to finance and logistics (particularly access to vehicles and storage) more than men in the survey,” Kipnis said at the launch of the case study.
With access to their own vehicles, distributors gain flexibility in both picking up inventory and dropping off goods to customers in remote, rural, and hard-to-reach markets. Similarly, with access to storage facilities, distributors can hold more inventories in stock and in closer proximity to consumers. But social and cultural legacies still exclude women, who constitute over 50 percent of the market in Africa.
“Strong unequal distribution of assets among men and women still skews and deprives women of playing critical roles in Nigeria’s social and economic spheres. There are many female entrepreneurs in Africa partly because women have fewer options. In Nigeria’s mostly informal economy, women thrive and open up new markets,” Eme Essien, Nigeria country manager at IFC, said. “The IFC has mapped out over $1 billion as part of a global agenda to improve access to finance for women entrepreneurs.”
However, most businesses run by women entrepreneurs in Nigeria are failing to formalise business operations by not doing as little as registering a business name. Without a formalised business, banks find it difficult to deal with them. This is in addition to the fact that male distributors have 50 percent more employees than female distributors.
“We have financial instruments designed for female entrepreneurs. But to access this, the woman must own at least 50 percent shareholding in the company. With this, the business can access a credit facility at 15 percent per annum,” said Ayo Olojede, group head, emerging businesses at Access Bank.
The case study also identified solutions to the challenges impairing women’s ability to reach peak performance in the FMCG sector. These include an increase in access to finance and the need to target women distributors to drive penetration into newer markets. This also implies leveraging technology in terms of smartphones, provide logistic support and create opportunities for networking among distributors and with external representatives from financial institutions and local businesses.
“When the IFC approached us at Daraju, I was concerned about how the outcome of the study would be implemented because at Daraju we are results-oriented and did not want to chase after a wild goose. Besides, it is usually difficult to get business owners to talk to you about how their businesses are doing with relevant documents,” said Peeyush Garg, chairman of Daraju Industries Limited. “I am happy we are now reaping fruits of the study.”
Despite the tough business environment, companies in emerging markets that rely on distributors to sell their products and services consistently find that supporting the growth of female distributors positively impact their bottom line.
STEPHEN ONYEKWELU
