Lobby wants more inclusion of African women in banking to boost economic growth

A lobby group has urged Africa to create a more robust financial inclusion for women-led enterprises in a bid to boost economic growth.

Women’s World Banking noted that a lot of women are excluded from the formal financial sector.

Women’s World Banking CEO and President Mary Ellen Iskenderian said expanding microfinance institutions and programs that specifically target women can provide the initial capital necessary for women to start and grow their businesses.

“African states can also establish credit guarantee schemes that reduce the risk for banks and other financial institutions when lending to women-led businesses,” Iskenderian said.

She spoke in Nairobi at the Serena Hotel when Women’s World Banking celebrated the financial inclusion of women in the banking sector.

The event brought together senior leaders from financial services, policy-making and other key stakeholders across Africa to spotlight the crucial work to empower nearly one billion women excluded from the formal financial sector.

A 2023 report from the African Development Bank (AfDB) reveals a US$42 billion financing deficit for African women-led enterprises compared to their male counterparts.

Despite strides in financial inclusion, approximately 500 million women in Africa, including over 300 million in Sub-Saharan Africa, remain excluded from formal financial systems.

This exclusion is compounded by infrastructural challenges, perceived risks in lending to women in the informal sector and entrenched social and cultural norms that limit women’s access to and usage of financial services.

Iskenderian further stated that there is a need to address the gender gap in access to finance.

“This can profoundly impact economic growth, poverty alleviation, and social development,”  she said.

“Women make up 58 per cent of Africa’s self-employed population and contribute around 13 per cent of the continent’s Gross Domestic Product but until gender parity is improved throughout the African continent, female entrepreneurs will remain under-earning compared with their male counterparts.”

Women’s World Banking Advisory Services Director –Africa Angela Wambugu argued that African states can start by enacting policies promoting gender equality in the financial sector.

“Ensuring women have equal rights to property and inheritance can empower them economically, making it easier for them to access credit as they can offer collateral. We should also introduce innovative financial products that can help cater to women entrepreneurs’ unique context and needs,” Wambugu said.

Since 2018, Women’s World Banking has enabled 1.6 million African women to access financial solutions, working with over 20 financial services providers across the region.

The organization also engages with a diverse set of policymakers through programs like the Leadership & Diversity Program for Regulators, including collaborations in Rwanda, Nigeria, Egypt, Kenya and Ghana.

Women’s World Banking’s goal is to drive access and responsible use of formal financial services for 15 million women in Africa by 2027.

Wambugu said another factor that is vital for the growth of women-led enterprises in Africa is the need to improve the financial literacy and business skills of women.

“As an organization, we have been offering training programs to financial service providers to enable them to equip women with the necessary skills to run successful businesses and become more bankable.”