Empowering Women Entrepreneurs in Sub-Saharan Africa through the Africa Women Rising Initiative
Author:
Benedikt Wahler, partner
Date:
June 26th, 2024
Area Covered:
Africa, Sub-Saharan Africa
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
For the last four years, ConsumerCentriX, in collaboration with the International Project Consult (IPC) and the African Management Institute, has supported the implementation of the Africa Women Rising Initiative (AWRI), funded by the European Investment Bank (EIB). In mid-June, Benedikt Wahler and Dörte Weidig, partners at ConsumerCentriX and IPC, respectively, delivered a “Knowledge Lab” session in Luxembourg to the EIB community to share the large-scale impacts and lessons from this work.
This initiative aims to empower women economically in Sub-Saharan Africa by increasing their access to finance and capacity-building resources, particularly for women entrepreneurs, owners, and leaders in micro, small, and medium enterprises (MSMEs), in alignment with the 2X Challenge criteria.
AWRI Pilots and Builds a Foundation for Mobilizing Large-Scale Gender Finance
As part of the broader “SheInvest” initiative, through which the EIB is mobilizing EUR 2 billion of funding for gender-responsive investments in Africa, AWRI was launched in April 2020. This occurred just as Africa was experiencing the first wave of the COVID-19 pandemic to complement these funds with technical assistance (TA) from the consortium partners.
From the ConsumerCentriX team and our professional network, we contributed the Team Lead, interim team lead, and several senior experts on key factors for the success of gender-inclusive finance: unsecured and cashflow-based lending, market research, strategy and value proposition design, as well as facilitating the work of cross-functional teams to pilot new approaches. Our data team also helped ensure the recommendations reflected a sound basis of analysis and insights.
ConsumerCentriX Managing Director Benedikt Wahler, who stepped up from key expert to interim Team Lead during a medical leave, feels that “AWRI really showed once more the full breadth of expertise we were able to mobilize and the deep bench of colleagues to make one more multi-year, multi-country, and multi-institution TA a success.” It was another instance of a close and successful collaboration with IPC, alongside current joint activities on “Youth-in-Business” and the upcoming Central Asia WE Finance Code.
Thanks to AWRI, nine financial intermediaries (FIs) across four countries – Uganda, Rwanda, Senegal, and Côte d’Ivoire – received customized assistance based on a thorough assessment of their needs, the realities of their clients, and their local market context. In addition to four commercial banks (Bank of Kigali, Ecobank Group, Housing Finance Bank, Atlantic Business International), four microfinance institutions (Pride Microfinance, Centenary Bank, Baobab Senegal, Baobab Côte d’Ivoire), and one development bank (Development Bank of Rwanda) were supported on gender finance.
Before this work started, ConsumerCentriX pioneered a data-driven approach to identifying the right countries for gender finance interventions like AWRI. Using a proprietary benchmarking tool that considers four main dimensions of women’s economic, social, and financial inclusion, we screened and scored 45 economies in Sub-Saharan Africa.
The implementation focused on two main components: “Banking on Change” and “Market Maker.” “Banking on Change” targeted the supply side by enhancing the capability of financial institutions to meet the needs of women entrepreneurs with gender-intelligent products and services, while “Market Maker” focused on the demand side, strengthening women entrepreneurs’ financial and business skills and their networks.
Through the Market Maker initiative, AWRI significantly enhanced women entrepreneurs’ financial literacy and business management skills. Training programs reached 1,087 women, covering essential topics such as financial literacy, record-keeping, customer service, and soft skills. Forty per cent of the participating businesswomen subsequently obtained loans. This initiative also developed 11 non-financial services (NFS) modules tailored to the needs of women entrepreneurs, further supporting their business growth and sustainability. The impact of these efforts was evident, with many women reporting improved business practices and enhanced financial management skills.
The AWRI’s Banking on Change component focused on strengthening the capabilities of partner financial institutions (PFIs) to better serve women entrepreneurs. This included conducting comprehensive institutional diagnostics and capacity needs assessments, followed by tailored technical assistance packages delivered by a team of international and local experts. At two institutions, unsecured loan products and the respective credit processes were developed for the first time. Two others deployed their first-ever savings products tailored to businesswomen, leading to strong growth in their funding base.
Even though most improved solutions were still in the early stages of roll-out, the results were strongly positive. The number and volume of loans grew faster for women than men at all institutions. The portfolios now include 35,400 more women borrowers and EUR 67 million. Compared to the pre-AWRI baseline, our team helped advance the frontiers of inclusion: 16,000 women borrowers who otherwise would not have been expected to receive loans and EUR 40 million in loan volume. All of this was achieved while not merely preserving but even expanding the better repayment performance of women borrowers.
Why Gender Finance is the Right Approach for Impact and Commercial Success
The 2X Collaborative, of which EIB is a founding member, documents the growing momentum among the community of development finance institutions and related stakeholders that a dedicated focus on women (also known as a Gender Lens) delivers better impact. The evidence collected over the past decade by programs like the IFC’s “Banking on Women” or the Financial Alliance for Women from pioneering banks, MFIs, and fintechs around the world makes it clear that there is also a strong strategic and business case for targeting women and women SMEs as clients. At ConsumerCentriX, this reality and our expertise on what that should mean in practice drive around two-thirds of our work.
For those who care about impact, the case for being intentional in focusing on women should be straightforward: though women and men are diverse among themselves, on the criteria that matter for their ability to access and use conventional financial services, women score lower on average.
In the regional context of AWRI in Sub-Saharan Africa, women entrepreneurs face numerous challenges in operating and growing their businesses: less revenue and often smaller businesses in low-margin sectors, lower levels of secondary education and less professional experience in the formal sector, less likely to have mentors, and more limited access to capacity building, supportive networks, and market information. They are also often far less able to post the kind of assets required as collateral to obtain loans.
To truly deliver on the ambition of building an inclusive financial system that can power sustainable and broad-based economic growth, solutions ought to be benchmarked against the realities of such women – in other words, be “gender-intelligent.” To genuinely aim for reaching the marginalized parts among women and other groups, those experiencing the highest levels of such challenges should set the tone, thereby aiming for solutions that stand a chance of being “gender-transformative,” i.e., over time, wearing down these challenges rather than just working around them. The reality of supposedly fair “gender-neutral” approaches is that they are bound to fall short of most women and even a good portion of male users of financial services. They are designed for a type of client who is just not representative of the population at large – let alone those at the frontier of the financial system. (see charts below)
In the AWRI program – as in most of our work – we were tasked with working with for-profit financial service providers. There is now a strong basis of evidence that women and women’s businesses constitute a clear business opportunity. But business bankers tend to ask why they’d need to become “gender-intelligent” in their work. Is not a business and a leasing contract a leasing contract, whoever sits on the client side of the relationship?
For the ConsumerCentriX team, the answer is clear: to actually seize that opportunity, bank executives do well to look closer and remind themselves that what sets MSMEs apart is not that they’re smaller than big firms. It’s the human(s) at the heart of these businesses. The owners and managers whose ambitions, outlook, and idiosyncrasies shape what the business will end up doing – and this is why gender patterns matter. In the space of finance, such patterns emerge 1) from the legal, family, and socio-cultural circumstances in which women have to operate, 2) the mentality and attitudes they bring to financial questions, and 3) the way in which their cashflows are (much more strongly) exposed to lifecycle events like marriage, childbirth, divorce, or care for elderly parents. (see below)
Notably, the success stories featured at events like the Financial Alliance for Women’s Annual Summit come from institutions that have taken such insights into action. This year’s edition in London included two Champions, Access Bank Group from Nigeria and Kenya Commercial Bank, who referred to business banking solutions that emerged from their work with our own Anna Gincherman and Benedikt Wahler.
As Benedikt summed it up: “With the now concluded AWRI program, our team is proud to have laid excellent foundations for seeing more such pioneering examples scale up in Africa.”
Blog: Unlocking the Women's Market: Comprehensive Strategies for Financial Institutions to Engage the Lucrative Women's Market
Author:
Laura Trueba, Head of Latin America
Date:
February 22nd, 2024
Area Covered:
Latin America, Caribbean
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
Significant progress has been made in women’s financial inclusion across Latin America and the Caribbean, with the gender gap for account ownership declining by two percentage points between 2017 and 2021, according to the 2021 World Bank Global Findex report. However, many women, specifically female entrepreneurs, remain underserved or excluded from formal financial systems. To better understand the state of women’s financial inclusion and how financial institutions can expand access, IDB Invest partnered with ConsumerCentriX on a new research study entitled “Women Entrepreneurs on the Rise: A study on the growing financial power of the female market in Latin America and the Caribbean and what this means for financial institutions” The report is the result of a study conducted in over 13 countries in the LAC region with the participation of over 240 financial institutions that assessed the availability of financial offers and strategies that such institutions use to serve women and how they collect and utilize sex-disaggregated data. This blog summarises critical insights from the study, focusing on the state of women’s banking as a significant business differentiator and its potential to strengthen the competitive positioning of financial institutions in the region.
Findings from the research study indicate that women represent a significant portion of financial institutions’ customer base. The research illustrates that female-owned businesses constitute nearly 50% of retail and business customers in the region. Additionally, the research demonstrated that there have been higher growth rates of women’s market portfolios, with individual banks reporting substantial compound annual growth rates (CAGRs), surpassing those of the total portfolio. Such findings reinforce the message that neglecting the expanding financial influence of the women’s market and its diverse customer segments could weaken overall institutional positioning.
The findings also indicate that the degree of ambition and progress regarding leveraging female-owned businesses varies from country to country, depending on the types of financial institutions. Of the banks with products that appeal to the female market, the majority view them through the lens of corporate social responsibility (CSR) or as part of their environmental, social, and governance (ESG) initiatives rather than recognizing them as mainstream growth opportunities. This highlights a prevalent perspective in which women’s market propositions are often considered ancillary to broader social and developmental goals within the banking sector.
Unlike the region’s microfinance institutions, development banks, and cooperatives, which generally share the aforementioned perspective, the fintech sector emerges as a distinct and proactive player. In contrast to most traditional financial institutions in Latin America, who often lack dedicated strategies, fintech companies lead the way with a more driven approach, underscoring the imperative for traditional financial institutions to reassess their strategies.
Findings from the research study also highlight the importance of prioritizing the women’s market for business purposes, revealing a noteworthy trend in loan repayment and deposit behavior. The study found that female retail and business customers consistently demonstrated higher loan repayment rates than their male counterparts, as illustrated by a substantial difference in the 90-day non-performing loan (NPL) ratios. For instance, the average 90-day NPL ratio for female retail customers in commercial banks is a commendable 2.7%, well below men’s 4% average. Previous studies have identified a strong correlation between lower NPL ratios and increased bank profitability.
The increasing interest from financial institutions in the region to serve the women’s market is also evident. The study indicated that approximately one-third of financial institutions currently have a strategy to serve the women’s market, and over 40% are developing one. It also demonstrated that an increasing number of financial institutions are incorporating non-financial services into their women-focused propositions and more robustly collecting sex-disaggregated data, particularly regarding retail portfolios. This continued strategic focus on women, along with improved collection and use of gender data, is likely helping to reduce the gender gap over time by informing more inclusive approaches that have already shown women can be profitable customers.
Despite the growing interest in serving the female market among financial institutions in the region, these institutions have yet to capture this significant market potential. Some key strategies for them to do so and to ultimately advance women’s financial inclusion in the LAC region include:
- Comprehensive women’s market propositions: Financial institutions can develop comprehensive women’s market propositions that involve products tailored to women’s needs and priorities. For instance, institutions like Banco Visión in Paraguay have developed offerings beyond single products to address women’s diverse needs through preferential rates, minimum requirements tailored to female entrepreneurs, partner discounts at women-owned businesses, and insurance partnerships explicitly designed for women.
- Common WSME definition: As discussed in the report, the lack of a universal definition of women-owned/led SMEs across countries and institutions makes it difficult for financial providers to identify and serve this vital segment. A standardized approach would help address this challenge.
- Enhanced gender data: As previously mentioned, most institutions track sex-disaggregated data. However, improving quality, automating the collection, and ensuring data is gathered regarding a wide range of financial services beyond just credit would give providers deeper insights to develop more impactful women-focused strategies and measure their effectiveness over time.
- Integrating gender data into Key Performance Indicators (KPIs): Only half of the surveyed institutions currently incorporate gender performance metrics into management indicators, as noted. Regular tracking and reporting on progress towards gender-focused KPIs could help hold management accountable for women’s market strategy.