The African Development Bank’s Affirmative Finance Action for Women in Africa (Afawa) has enhanced lending to women entrepreneurs to ease their access to capital for investment and business expansion.
The initiative has reached a $1 billion landmark in approved funding. In the last two years, the bank, through Afawa, has multiplied the volume of investments towards women-owned small and medium enterprises (SMEs) seven-fold.
AfDB Gender, Women and Civil Society director Malado Kaba has revealed that by the end of last year, Afawa-approved lending to the enterprises reached $1.051 billion.
Of that, Kaba said $135 million targets women in the agriculture sector. Afawa was launched in 2015 in Dakar during the first Feed Africa conference (Dakar 1 Africa Food Summit).
Across the continent, women entrepreneurs face an estimated $42 billion gender financing gap compared to men across business value chains, including $15.6 billion in agriculture alone.
Pride
Announcing the milestone, Dr Beth Dunford, AfDB vice president for Agriculture, Human and Social Development said she is incredibly proud of the financing achievement.
“Afawa’s benchmark reminds us that when we invest to grow Africa’s food systems, we must also invest in Africa’s women agripreneurs. The approved lending reaches across 27 countries, and through 56 financial institutions. Already, 4,115 women business owners have benefitted from Afawa financing instruments. This is just the beginning,” said Dr Dunford.
Women run most of Africa’s agricultural sector SMEs, yet they face significant barriers to accessing finance. The Afawa initiative is addressing the barriers.
Afawa is, for example, working to boost the professional and financial capacities of over 200 women cooperatives in the staple crop food sector in Cote d’Ivoire. This includes training in and access to a digital platform connecting women producers to buyers of agricultural products like wholesalers, retailers and consumers across Cote d’Ivoire.
The project is working with Eco Bank on the “Financing Climate Resilient Agricultural Practices in Ghana” project, which mobilised $20 million from the Green Climate Fund, and $5 million from Eco Bank Ghana as co-financing, to fill the gap for working capital to farmers.
The Afawa project aims to provide financing and technical support to 400 women-led, farmer-based associations and women-owned SMEs, to foster their agricultural productivity and strengthen their climate resilience.
Guarantee mechanism
And to accelerate progress towards unlocking $5 billion in lending for women by 2026, Afawa has established a guarantee mechanism that de-risks the women’s market and increases the ability of financial institutions to lend to women business owners.
Afawa also launched the Women Entrepreneurship Enablers programme, which provides up to $250,000 for women’s business associations, incubators, accelerators, women-led cooperatives, and civil society organisations.
The second call for proposals to the programme drew more than 1,200 applicants. Those who have qualified will be announced later this year.
“In 2023, we will continue to work closely with our partners to accelerate their ability to lend to women-led micro and small enterprises. Ensuring that the enabling environment is inclusive to enhance women’s ability to access financing will be critical,” said Kaba.
Collaboration
Kaba said they will work closely with policymakers to ensure the right reforms are in place to accelerate women-led SMEs’ financial access.
According to the bank, women entrepreneurs face multiple challenges accessing finance, with many financial institutionsseeing lending to women as riskier. As a result, they face prohibitive interest rates and often lack traditional collateral and guarantees.
On capacity, the continental bank opines that financial institutions do not understand and respond appropriately to women entrepreneurs, who also often lack the financial and business acumen to respond to the needs of financial institutions.
It also reckons that the business environment in many countries, legal and regulatory frameworks hinder women’s full participation in private sector growth.
Africa’s gender gap in access to finance can have a dramatic impact on social and economic progress. Women today dominate agriculture, the continent’s most important sector. When women farmers lack access to financial services, their ability to invest in modern technologies to raise their productivity is limited. They cannot diversify their farms.
