Author: David Mparutsa, Business and Supplier Development Manager ex SA
Currently, an estimated financing gap of $42 billion exists for African women in commercial value chains – $15.6 billion in the agricultural sector alone. If we cannot empower African women entrepreneurs and involve them in supply chains, we will be doing the continent a disservice.
One of the main challenges is to bring women into the traditional economy. Currently, 70% of economically active women are in the informal sector, with limited access to financial services. In recent years, this trend has started to change and we are encouraged to see an increase in women-owned businesses in areas such as aviation, fashion, agriculture, IT, mining, manufacturing and natural resources.
It is essential that this financing gap is closed and there are a number of levers that can be used to remedy this.
Visibility and access to market opportunities in business supply chains for women entrepreneurs is an important starting point. Big companies should do more to educate women in Africa about supply chain opportunities and how they can access them.
South African companies are familiar with the preferential sourcing elements of their B-BBEE dashboards, but similar initiatives are being introduced in the rest of Africa.
The Access to Public Procurement Opportunities (AGPO) program is grounded in the Constitution of Kenya and advocates fair, equitable, transparent and cost-effective public procurement of goods and services. Under this policy, women, young people and people with disabilities must access 30% of public contracts.
It is time for more countries to follow in Kenya’s footsteps by implementing policies supporting preferential procurement practices that include women-owned businesses in government procurement practices.
Sustainable Development Goals and Supply Chains
Many multinationals operating in Africa are committed to the United Nations Sustainable Development Goals (SDGs). These goals aim to achieve a variety of key metrics by 2030, including SDG5 (gender equality) and SDG10 (reduced inequalities).
Large companies looking to comply with these SDGs have the option of opening their supply chains specifically to women-owned businesses.
Safaricom is a publicly traded Kenyan mobile network operator that has taken over to do just that. Safaricom empowers women by enabling more women-owned businesses to engage in their procurement activities, capacity development training, mentoring and coaching, among other measures. In line with their mission to “transform lives”. Safaricom has taken strategic steps to reduce inequality and has pledged to gradually increase procurement spend by women-owned businesses to 10% of total procurement spend.
Access to finance
There is no doubt that a significant number of SMEs are struggling to access finance and this challenge is compounded by the fact that many traditional lending and risk models struggle to adapt to those with a track record. limited trade.
As a bank, we have set our sights on the $80 billion trade finance gap that exists in Africa and believe that if we can develop innovative solutions in this area, entrepreneurs will thrive.
There are a number of female-focused lenders emerging in the market that are worth watching.
The Affirmative Finance Action for Women in Africa (AFAWA) is a pan-African initiative of the African Development Bank Group aimed at closing the $42 billion financing gap faced by women in Africa. AFAWA takes a holistic approach through three pillars: funding, technical assistance and an enabling environment. AFAWA has partnered with the African Guarantee Fund (AGF) to unlock $1.3 billion in loans to women-owned small and medium enterprises (SMEs) in Africa, working with financial institutions to strengthen their ability to lend to women.
Alitheia IDF is a pioneering gender-focused fund that invests in scalable companies to leverage the power of gender diversity as a driver of superior performance. Alitheia is a $100m private equity fund that drives the growth of African SMEs by leveraging peer ventures to generate high financial returns and social impact. They invest in sectors that engage a significant percentage of women, whether as entrepreneurs, producers, distributors or consumers. Some of these sectors are: agribusiness, consumer goods, health, education, creative industries, and financial and business services.
Our data suggests that female entrepreneurs are lower risk with better repayment profiles than their male counterparts and that female bank business owners make sense on many levels. We look forward to funding more of these companies in 2022 and partnering with projects that will change the continent.