The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) program agreed to partner with the African Guarantee Fund (AGF) to provide $1.3 to 2 billion in loans to women-owned Small and Medium-Sized Enterprises (SMEs) in Africa, by working with financial institutions to enhance their ability to lend to women.
This comes after the launch of AFAWA’s Guarantee for Growth (G4G) program whose objective is to make available up to $3 billion in financing for women entrepreneurs through de-risking and technical assistance measures. Financial institutions in Kenya, Rwanda, Tanzania, Cameroon, Democratic Republic of Congo and Uganda are signing on to the program.
“As the implementing partner of AFAWA’s Guarantee for Growth program, we are already observing an increased appetite from banks for this innovative product that seeks to support women entrepreneurs. We have recently signed agreements with leading banks on the continent who are keen to increase their women SMEs portfolio,” said Jules Ngankam, African Guarantee Fund’s Group CEO.
“AGF has always been cognizant of the importance of supporting women SMEs to enable them to fully play their role as drivers of economic growth. We are glad the momentum is increasing and that banks are now willing to take on this particular business segment,” Ngankam added.
The Guarantee for Growth, which receives support from the Group of Seven (G7) countries has three pillars; improving the enabling environment for women’s SMEs, boosting access to finance and providing technical assistance to financial institutions.
“The signing of the AFAWA Guarantee for Growth program with the African Guarantee Fund is a critical milestone for the Bank to successfully deploy on-the-ground financing instruments better suited to addressing the financing and training needs of women-owned small and medium enterprises in Africa for the growth of their businesses,” said Stefan Nalletamby, the Bank’s Director of Financial Sector Development.
“There is an urgent need to improve the enabling environment with the right regulations in place, to sustainably de-risk the segment. The Bank will work with regulators to reform the legal and regulatory frameworks affecting women businesses’ access to finance,” said Esther Dassanou, AFAWA’s Coordinator.
Dassanou also added that the Guarantee for Growth is also expected to create 80,000 direct jobs and reach an average of 180,000 women small and medium enterprises.
AFAWA aims to bridge the financial gap which women face which is about $42 billion and is tied to lack of access to collateral in the form of land and property as well as to knowledge, network and mentorship to grow their businesses which are common in the informal sector.
“Donor and private sector-support for the overall AFAWA initiative is helping the Bank set ambitious targets for AFAWA Guarantee for Growth program,” said Vanessa Moungar, the Bank’s Director for Gender, Women and Civil Society. “The entire Bank ecosystem will be at play – inviting more financial institutions to sign into the program – ensuring engagement, implementation, and ownership at the market and policy levels,” she added.
A 2020 TechPoint report estimated that only 10 per cent of west Africa-focused startups with at least one female co-founder successfully raised $1 million or more in the last decade. The African Development Bank has pitted the entire funding gender gap at $42 billion.
Last year South Africa’s Alitheia IDF fund, which focuses on small to medium businesses with high-growth potential, announced it had raised $75 million to invest in mid-sized, women-centred businesses. It plans to invest between $2 million and $5 million in startups from Nigeria, Lesotho, Zimbabwe, Ghana, South Africa and Zambia in the coming years.
“The best way to support female founders is to act consistently and with conviction, and commit risk capital.” Eweniyi, FirstCheck’s co-founder said.
Catalyst Fund, a global startup accelerator, announced that five of the six associates for its 2021 Inclusive Fintech Program are led or co-founded by women in emerging markets, including Kenya, South Africa and Nigeria. Each startup will receive £80,000 in grant capital and six months of support and access to investor networks.