With women in Africa making about half of the total continent population, it’s no wonder they play a key role in the economies of the continent. A recent report by the World Bank further indicates that sub-Saharan Africa is the only region in the world where women make up the majority of those who are entrepreneurs. However this drive to start a business is not born started to pursue an opportunity but out of economic necessity as paid job opportunities are limited in Africa, reports the Global Entrepreneurship Monitor.
The 2019 Mastercard Index of Women Entrepreneurs (MIWE) confirms Uganda and Ghana as being on top of the list with the highest percentage of women business owners at (38.2%) and (37.94%) respectively[1]. This is despite the region having harsher socio-economic conditions for entrepreneurs to operate. The International Finance Corporation (IFC) estimates a financing gap for women entrepreneurs’ informal sector SMEs in developing countries of $320 billion and an estimated $20 billion for sub-Saharan Africa alone. This gap in finance has contributed to women-owned businesses not fulfilling their growth potential and being more likely to close operations within the first five years.
Women’s limited access to finance is rooted in three aspects: culture, collateral and capacity. According to research findings from the World Bank, women in the middle and east Africa region (MEA) are generally marginalized in the following ways: Disparity in access to the Internet & Technology; institutional barriers to accessing funding such as high-interest rates, lack of collateral guarantees, complicated process and lack of business track record to secure financing; restrictive cultural and social norms and lack of confidence needed to deal with the region’s bureaucracies and financial institutions because of hostility and criticism they receive from communities.
In a business setting, these challenges translate into inherent biases that have privileged male entrepreneurs in matters such as labour participation, wages, career advancements and fundraising for entrepreneurial ventures. Loan approval rates for women are reportedly 15-20% lower than men and loan sizes are also 58% smaller[2].Research continues to show that African women entrepreneurs still have a long way to go to fill the gender gap within the financial sector – which has not adequately sought to understand intricate needs to inform investment.
Women in business have therefore resorted to self-exclusion from traditional capital sources like microfinance and banks. They have low awareness of alternative types of capital which can cater towards more customized needs addressing business stage, sector and term. However, women in business are not homogenous thus different approaches should be considered when investing in them. Gender lens investing is being intentional, deliberate and conscious in the entire investment process to increase, create, manage and monitor gendered impact outcomes.
“While gender lens investing may have different meanings to different players, we fundamentally believe that investing in women is neither achieved retrospectively or accidentally but through a series of guided actions to Put capital in the hands of women.”- Andia Chakava, Investment Director Graça Machel Trust
By combining convening, research, advocacy, network building, program design, technical assistance support and funding, we at the Graça Machel Trust proudly align with Sustainable Development Goal (SDG) 5, at the heart of our investment strategy, which puts business women’s participation and inclusion as a critical step towards fostering greater social, political and economic development across the continent. The metrics involve women owned-led businesses, products and services dedicated to the female segment, women’s representation in governance and management structure, including the role of power and influence across supply chains.
Deal sourcing is a function of networks and investments are usually based on trust and track record. With investors having proven to have an affinity towards pattern matching, what better way to capitalize on this than betting on the small and growing dynamic pool of African female indigenous fund managers to support Africa’s women entrepreneurs?
It’s about time we give more than lip service to the ‘Africa rising’ narrative through recognizing the catalytic and integral role played by Africa’s women entrepreneurs not content with ‘playing small’ but running core businesses to create a legacy. These women are addressing some of the community’s most pressing needs, engaging in regional trade and producing the next generation of gender-diverse African leaders. So if we are serious about investing in Africa, we cannot ignore its industrious female entrepreneurial environment.
Andia Chakava, Investment Director Graça Machel Trust
[1] Master Card Index of Women Entrepreneurs, 2019
[2]Why Women Entrepreneurs Have a Harder Time Finding Funding, Jared Hecht, CEO Fundera, Sep 2016
The Trust supports and mobilises civil society networks on issues of ending child marriage, ending violence against children, ending female genital mutilation and promoting children’s rights, to carry out advocacy and action across Africa. Special focus is placed on Malawi, Mozambique, Tanzania and Zambia where child marriage continues to be a problem largely driven by poverty, gender inequality, harmful traditional practices, conflict, low levels of literacy, limited opportunities for girls and weak or non-existent protective and preventive legal frameworks.
Education is a fundamental right for all children, which is also a vehicle for social, economic and political transformation in communities, countries and the African continent at large. Recent studies indicate a lack of progress in some of the critical commitments aimed at improving education quality, access, retention and achievement, particularly for girls. In most African countries, girls may face barriers to learning, especially when they reach post-primary levels of education. By implementing multi-dimensional approaches to education which includes core education, personal development, life skills and economic competencies, the Trust partners with funding partners, governments, civil societies and the private sector to improve education access.
The Nutrition and Reproductive, Maternal, New-born, Child and Adolescent Health and Nutrition, (RMNCAH+N) of the Children’s Rights and Development Programme aims at promoting the Global Strategy for women, children and adolescents’ health within the Sustainable Development Goals (SDG) agenda. The strategy emphasises on the importance of effective country leadership as a common factor across countries making progress in improving the health of women, children and adolescents.
Through its Early Childhood Development (ECD) plan, The Trust will seek to put into action the new science and evidence Report that was presented by Lancet Series on Good and early development – the right of every child. This will be achieved by mobilising like-minded partners to contribute in the new science and evidence to reach all young children with ECD. The Trust’s goal is to be a catalyst for doing things differently, in particular, to rid fragmentation and lack of coordination across ECD sectors. In response to evidence showing the importance of political will in turning the tide against the current poor access and quality of ECD. Even before conception, starting with a mother’s health and social economic conditions, the early years of a child’s life form a fundamental foundation that determines whether a child will survive and thrive optimally.