- Women have for a long time faced numerous challenges, which prevent them from attaining their full potential in business.
- Lack of financial support to startups or established ventures continues to be one of the major challenges that they face thus limiting their contribution to the economy.
Women have for a long time faced numerous challenges, which prevent them from attaining their full potential in business. Lack of financial support to startups or established ventures continues to be one of the major challenges that they face thus limiting their contribution to the economy.
While lack of finance is a universal challenge especially for small and medium enterprises, regardless of gender, it tends to disproportionately affect women-owned businesses. One of the main reasons for this is lack of assets such as land that can be used to secure funds from financiers.
Women make up more than half of the world population and it is, therefore, needless to say that growth will accelerate when half the population is more productive. In fact, research by McKinsey Global Institute shows that if women were to participate in the economy to the level of men, they could add as much as $28 trillion or 26 percent to annual global Gross Development Product (GDP) by 2025.
Countries that support women-owned businesses are reaping the benefits as their economies continue to grow and have numerous jobs created. For instance, a study conducted by the American Express OPEN dubbed The State of Women-Owned Businesses of 2019 shows that over eight million firms in the United States alone are now owned by women, hiring more than seven million people and generating $1.5 trillion in revenue.
In Kenya, the number of female-owned businesses is still low as compared to their male counterparts with statistics by the Kenya National Bureau of Statistics (KNBS) showing that about 30 percent of small and medium enterprises are owned by women. This shows that there is need to support women-owned businesses financially as economies including ours cannot afford to have continued underrepresentation of the gender in entrepreneurship.
It is encouraging that various efforts have been advanced in this regard by both the government and the private sector. The government through the Women Enterprise Fund and Uwezo Fund for instance continue to support many women entrepreneurs to advance their ventures through provision of loan facilities.
In the private sector, there are various financial institutions that have remodelled their businesses to incorporate the needs of women. More financiers that were previously reluctant to finance women entrepreneurs are now open to funding their firms and help them grow. There are also institutions that have exclusively dedicated their services to women, and which continue to support women entrepreneurs.
On the same note, Citi has for a long time been a champion of financial inclusion and has made significant investments towards increasing financial support to women-owned businesses.
In 2020 for instance, despite the challenges occasioned by the Covid-19 crisis, Citi partnered with 4G Capital to tackle financial exclusion in Kenya through provision of a Sh285 million loan providing digital financial access to over 25,000 small businesses of which 81 percent are led by women.
And while these efforts by the government and the private sector are commendable, more needs to be done to ensure additional financial support for women businesses.
The time is, therefore, ripe for wider discussion on this as evidence of the gains from economic empowerment of women continue to mount. There is no doubt that households, firms, farms, communities, and the whole economy will perform significantly better when women have opportunities to raise their productivity. Supporting their ventures would, therefore, be a step in this right direction.
Similarly, the government should increase funding to agencies that provide financial support to women to ensure that more of them have access.
Women have proven ability to be great contributions to the economy when granted the opportunity and it is, therefore, important that they are supported. By breaking one of the biggest barriers to their participation in the business world, that is lack of financial support.
Mwende is a transaction specialist, at Citi’s inclusive finance global office in London UK, while Ferdinand is the corporate banking, capital markets and advisory head, Citi East Africa.