Fearless Fund’s roadblocks underpin gender financing challenges

… could inject additional $9billion into Nigeria’s GDP by 2030

Roadblocks to the Fearless Fund highlight challenges facing gender financing across the world, including Nigeria.

Fearless Fund is an Atlanta-based venture capital firm intentionally positioned to bridge the gap in venture capital funding for women of colour founders building scalable, growth aggressive companies.

Earlier in June, U.S. Court of Appeals for the 11th Circuit issued a concerning ruling on Fearless Fund that could have significant implications for efforts to address systemic inequalities. This decision, though troubling, undermines attempts to create more equitable opportunities for marginalised groups who have historically faced substantial barriers to accessing capital and resources, Black women, in particular, have long grappled with the compounded challenges of financing in the business world, and Nigeria is no exception.

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The court decided to temporarily block Fearless Fund from issuing grants reserved for businesses owned by Black women. The court’s rationale is that this would likely amount to unlawful discrimination against business owners of other races.

The gender gap in access to finance for women in Nigeria is a pressing issue, with women-owned businesses representing nearly 40 percent of the market but facing formidable obstacles in securing funding for growth. The International Finance Corporation (IFC) projects that closing this gap could inject an additional $9billion into Nigeria’s GDP by 2030, underscoring the urgency of addressing gender inequalities in entrepreneurship.

According to Ada Osademey-Udechukwu, senior gender advisor at IFC Africa, metrics such as female labour force participation rates, women’s entrepreneurship rates, and gender representation in leadership positions provide valuable insights into the impact of investments on gender equality.

Osademey-Udechukwu emphasised the importance of tailored financial products, capacity-building programmes, and market access for women entrepreneurs in Nigeria.

“One notable programme making strides in gender lens investing in Nigeria is the ‘She Wins Africa’ initiative, led by IFC. This programme aims to accelerate access to capital for women-led startups across sub-Saharan Africa, with a focus on providing finance, investor matchmaking, and capacity-building opportunities to 100 women entrepreneurs in Nigeria,” she highlighted.

Ayodele Olojede, divisional head, retail and SME, Wema Bank, stated that in Nigeria, as well as most African countries, inequalities result from accumulated access restrictions to various opportunities and resources. She said these include lower rates of job market participation, confinement to traditional sectors with relatively lower profits, but also social restrictions, and finally, lower education levels, limiting women’s ability to deal with bureaucratic procedures and technology.

“On WEMA Bank’s role in contributing to the solution, firstly, as an organisation, we have mainstreamed gender in our operations. This is evidenced in our approach to women in the workplace, marketplace and community – WWN, SARA and sustainable impact programmes.

“In 2023 alone, we offered over 1,000 WMSMEs access to over 60,000 buyers. This year, we are taking it a notch higher by offering international market access with over 100,000 buyers. We are also very deliberate about ease of collection and as the first fully digital bank in Africa, we have designed payment and collection platform to make selling easier for our customers,” Olojede revealed.

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Yemi Keri, co-founder of Rising Tide Africa, added her voice to this call. According to her, “Gender lens financing can be leveraged to address access to finance for women in Nigeria by adopting investment strategies that intentionally focus on supporting women’s economic participation. One of such strategies is providing capital to businesses that promote access to finance to Nigeria,” she said.

Adebola Toyin Oruma, group head of the Gender Business Group at the Bank of Industry, further buttressed this point, stating that specific support mechanisms for women-led businesses in Nigeria, including programmes like Women’s World Banking Nigeria, She Leads Africa, Diamond Bank BET Programme, WEConnect International in Nigeria, Empower Women Nigeria and others, are key to promote this progress. “The Bank of Industry has played a pivotal role in providing financial and non-financial support to women entrepreneurs, recognising the significance of gender equality in fostering economic development,” Oruma stated.

She added that the BOI Gender Business Desk from inception in 2006 focused on capacity-building and advocacy role for gender support. The bank, apart from having a dedicated desk, partners with the Federal Ministry of Women Affairs in empowering women. “We always seek possible partnerships and collaboration to support women entrepreneurs and also make available services of business development support providers to assist in preparing women-led businesses ready for financing.”

Companies that invest in women have a lot to gain too. For instance, research from the World Economic Forum shows that companies with gender-diverse leadership teams are 36% more likely to excel financially.

This approach, according to Emuwa Anino, MD, Avandis Consulting, and founder, 100 Women At Davos, requires financial institutions to move beyond symbolic gestures like “pink products” and instead focus on removing barriers for women in accessing finance.

“Effective implementation includes setting clear targets for investing in women-led ventures or establishing specific gender lens funds. Notable examples in Nigeria include Rising Tide Africa and Aruwa Capital. It’s not just about directing funds to women, fostering diverse leadership within investment teams is crucial,” Emuwa said.

While gender lens financing offers significant potential to drive gender equality and women’s empowerment in Nigeria, there are several risks and limitations that stakeholders should be mindful of.

Adesuwa Okunbo Rhodes, founding partner & CEO, Aruwa Capital Management, said one key risk is the availability of reliable data and metrics to assess gender impact. According to her, in many cases, data disaggregated by gender is limited or unavailable, making it challenging for investors to accurately evaluate the gender-related outcomes of their investments.

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“This lack of data transparency can hinder the growth of the asset class and gender inclusive practices. Furthermore, there may be challenges related to scalability and sustainability of gender lens initiatives in Nigeria.”

Without addressing these underlying structural inequalities, Adesuwa insisted that gender lens investments might struggle to achieve meaningful and lasting impact at scale.