International Womens Day: improve access to finance for female entrepreneurs
Written by Hans Kramer on 7 March 2022
Women are more likely to start a business that has a positive impact on their environment. This was concluded by ABN Amro, based on its own research into inclusive banking in the Netherlands. That same study reports that women have more difficulty finding financing for their businesses, which is one of the reasons why women's businesses generally show less growth. But if that’s already the case in the Netherlands, how are things in Africa, where the gender gap is generally wider?
Up to here and no further
On the African continent more women than men are entrepreneurs. Because women are less likely to find employment, they are more likely to choose entrepreneurship. And times are changing, women are entering into sectors previously reserved for men. Women still have less access to information, education and spend more time on household chores. But with, for example, the widespread availability of cell phones and the internet, more women have opportunities to develop themselves than ever before.
Yet African women, like Dutch women, still experience more obstacles when they want to grow their businesses. On average, the monthly profit of an African company with a female leader is 38 percent lower than for companies owned by men. A study in ten African countries found that male-led enterprises have, on average, six times more capital than female-led enterprises. In the Netherlands, the problems are similar. Here, three times more men than women continue to grow their businesses.
Femininity as a risk factor
When women apply for a loan, they are less likely to get it than men. Women's entrepreneurship is not always valued. Traditionally, women in African countries mainly run small businesses - think of a stall at the market - to provide income for their families. Not something an investor would go for. Too many bankers have that traditional image in the back of their minds, even when an ambitious woman with a solid business plan knocks on their door. Too risky, they think. Not something to be taken seriously.
And these prejudices are not only ingrained in financial institutions - also in women themselves. You have to be very strong to keep going when your community prefers to force you into a traditional female role. Too many women entrepreneurs do not even try to apply for a loan because they are convinced that they will not be taken seriously.
Education and coaching can change this. For example, training in financial literacy, marketing and leadership make a difference. Financially educated entrepreneurs generally make more well-informed decisions and are able to assess their own creditworthiness more objectively. They will have a better idea of their opportunities.
Banks could also make sure their financial products meet the needs of women entrepreneurs. For example in the Netherlands, women often seem to be interested in personal advice on their specific situation from a bank’s financial consultant. This is not a service that banks generally offer, although it could bring in more female clients.
New financial products that respond to women's interests are also needed in African countries. Many African women are used to operating in informal environments. Financial products with similar features to those in the informal sector appeal to them. For example, this could be loans that accept movable property as collateral, or that are backed by gold. In Palestine, some local banks offer these types of loans, in conjunction with financial literacy programs and advisory services specifically tailored to the needs of women.
This is what PlusPlus does
At PlusPlus, inspiring businesses run by women entrepreneurs pop up on a regular basis. Exotic, for example, a company that buys macadamia nuts from small-scale farmers and exports them. Not only does the management team consist of women only, so does 80% of their workforce.
We strive for a 50/50 split between male- and female-led companies. That's not easy, because fewer women knock on the door for funding than men. And it is more difficult to find companies that meet the requirements for funding. Our staff in Asia, Africa and Latin America actively seek out these types of companies, so PlusPlus can help address the inequality in funding opportunities.
How can you celebrate Women's Day?
Of course, any day is a good day to support a woman-led business. But on International Women's Day even more so. So take a look at our projects and meet our female entrepreneurs. Like Jane’s company, who with a loan of 25,000 euros can buy more macadamia nuts from small-scale farmers and provide more jobs for women. Check out her business at https://plusplus.nl/en-NL/projects/6904-exotic-2.