#IWD2024: African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) is investing in women, accelerating Africa’s progress toward gender-inclusive economic growth
Africa is undergoing a fundamental reset in mindset toward investing in its women entrepreneurs. For too long, too many commercial banks and other financial institutions have been on the wrong side of business practice when doing business with Africa’s women-led small and medium enterprises.
Africa’s women entrepreneurs face an estimated $42 billion financing gap compared to men. Across the continent, there has been a misperception that women are not suitable candidates for loans – a lack of collateral and finance savvy lead justification for turning women entrepreneurs down for financing.
Fact is, numerous studies have shown that women in Africa, as in many places worldwide, are a better credit risk for microfinance than men, and are more trustworthy - and by a wide statistical margin, women produce higher repayment rates than men.
The African Development Bank Group created the Affirmative Finance Action for Women in Africa initiative, or AFAWA, to reduce that gap by increasing African women’s access to financing. In under two years, AFAWA has secured more than $1.5 billion in Bank-approved investment for Africa’s women-led small and medium businesses. This financing is a pillar of AFAWA incentivizing financial institutions to invest in women, and so far, we’ve unlocked this financing to more than 7,000 women-led small and medium enterprises. AFAWA is accelerating progress by advocating that women-led businesses are engines of African economic growth worth financial support and are suitable for banks’ bottom lines – after all, Africa has the highest percentage of women entrepreneurs in the world.
I was recently in Lagos to participate in an AFAWA campaign to sensitize commercial banks, government agencies and other finance sector decision-makers to this reality. Our AFAWA Finance Series in Nigeria was one stop in AFAWA’s roadshow that makes the business case for financial institutions to invest in Africa’s largely untapped market of women entrepreneurs.
The series introduced AFAWA’s partnership services to the Nigerian market. They included training sessions that show financial institutions how to evaluate their products and services through a gender-smart lens to better address the needs of women entrepreneurs.
With AFAWA Finance Series events also held in Angola, Ghana and Kenya, more than 500 bank representatives and other finance sector workers have completed our certificate training. The series is accelerating from strength to strength, attracting more bank C-suite executives and sending a message to staff to embrace this mentality.
The AFAWA Finance Series is a product of the Bank’s partnership with the African Guarantee Fund. The Fund is implementing our Guarantee for Growth program – an initial $250 million risk-sharing facility working to make up to $2 billion in financing available for women-led small and medium enterprises in Africa through financial institutions. Guarantee for Growth has signed up close to 100 financial institutions in 32 African countries that have committed to setting up or enhancing financial products tailored to the needs of women entrepreneurs.
Credit Bank in Kenya is one of our Guarantee for Growth financial institutions. Credit Bank’s “Elevate Her” financial services helped entrepreneur Mary Thou meet cash flow gaps when her commercial building cleaning clients are late to pay her bills. Before linking up with Credit Bank, Thou says other banks told her they feared a woman would not repay a loan.
Last month in Nairobi, our Guarantee for Growth team discussed scaling up the program to reach more entrepreneurs like Mary Thou. Joining us at the table were representatives from AFAWA donor countries and organizations that include participating G7 countries, France, Italy, Canada, Germany, as well as the Netherlands, Sweden and the Women Entrepreneurs Finance Initiative (We-Fi). We took donors to visit Guarantee for Growth partner commercial banks and to meet entrepreneurs benefitting from AFAWA programs.
We also updated the group about AFAWA’s Women Entrepreneurship Enablers program, which provides up to $250,000 in grant funding to women’s business associations, incubators, cooperatives and other organizations advancing women’s entrepreneurship. Inductees into this program last year have since provided business and financing training to more than 5,000 women running small and medium enterprises in 20 countries.
We hear a lot of talk about making Africa’s women entrepreneurs more “bankable” – AFAWA is delivering on that. I believe AFAWA’s investment in incentives and capacity-building tools to make financial institutions more “woman-able” will continue to accelerate Africa’s progress toward more gender-inclusive economic growth.
Dr. Beth Dunford is the African Development Bank Group’s Vice President for Agriculture, Human and Social Development. The Bank’s Gender, Women and Civil Society Department is under her portfolio.
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