IMPROVING ACCESS TO FINANCE FOR WOMEN-OWNED BUSINESSES
8 March 2022 – Female entrepreneurship has been on the rise across sub-Saharan Africa. According to the World Bank, 58 % of all African small medium enterprises (SMEs) are women owned. However, these businesses continue to lag compared to men owned businesses with fewer employees and lower than average sales.
Their biggest constraint is access to finance. Although access to finance is a challenge to all SMEs, women-owned businesses are particularly disadvantaged. It is estimated that the financing gap could up to USD 50 billion for women businesses. This can be attributed to various reasons, including social and cultural norms that have long hindered women’s right to ownership of assets that could provide collateral when accessing credit from formal financial institutions.
TDB is contributing to bridging this gap, and achieving SDG 5, by streamlining gender equity and equality in its own organization as well as through projects and initiatives. Of the 1.1 million jobs supported by TDB’s active loans, 55% are held by women.
Financing companies supporting women
In Madagascar, a USD 10.6 million trade finance facility to support Les Epices de Madagascar, a woman-owned Fair Trade vanilla exporting company employing over 1,000 workers. The financing from TDB has had a positive impact on agricultural productivity and incomes of small-scale food producers, in particular women, indigenous people and family farmers. The company also provides agricultural training for women farmers on harvesting quality vanilla beans ensuring they get a premium price for their harvests, empowering and promoting the economic inclusion of women in economic activities in Madagascar.
Through TDB’s SME Off-Grid Facility, in Kenya, TDB provided USD 4.2 million in financing to Sunspot Energy Kenya, operating as Spark Possibilities, an SME which provides large solar home systems to more than 6,000 households in rural and semi-rural communities. Spark Possibilities employs 800 representatives in local communities, 40% of which are women.
Financing financial institutions supporting women
TDB also supports the region’s financial institutions which have as their client base women-owned SMEs. In Uganda for example, TDB extended two financing facilities totaling about USD 2.2 million to Mercantile Credit Bank to strengthen to expand access to banking, insurance, and financial services for Ugandan companies and SMEs in particular. Mercantile Credit Bank’s financing to SMEs resulted in increased access to financing for women-owned businesses, given that the Bank’s customers are primarily women and women groups.
The Trade and Development Fund
To scale-up its impact, in 2020, the Trade and Development Bank Group launched the Trade and Development Fund (TDF)—a sister institution which, among other activities, supports early-stage interventions and unlocks innovative and affordable finance for SMEs, including for underserved segments such as women and youth-owned businesses to advance development across the region. TDF also provides project development grants, capacity building services, thought leadership and programme management services.
By using a mix of financial instruments coupled with technical assistance, TDF is breaking barriers to credit, and supporting women-owned SMEs to take their businesses to scale.
Women at TDB
TDB Group is a proud and equal opportunity employer, with nearly half of its staff consisting of women, with a strong female presence at the executive and board level, and various policies internally and externally promoting gender mainstreaming, diversity, and inclusion.