Lenders have been urged to advance more credit to women entrepreneurs in efforts to seal the existing finance gap.
A forum held in Kigali, Rwanda, which brought together stakeholders from various multilateral development banks, financial institutions and the private sector, was told that lenders need to overcome the perception that women entrepreneurs are high-risk borrowers.
“Gender champions” at the Global Gender Summit, underscored the benefits of banking on women entrepreneurs.
“We know that women are a good bet since they pay back and run excellent businesses, yet they are not getting financed. An important step is for multilateral development banks to offer credit guarantees to commercial banks as an incentive to intensify their lending to women entrepreneurs,” said Dr Jennifer Blanke, African Development Bank Vice President for Agriculture, Human and Social Development.
While acknowledging the progress that has been made in bridging the gender inequity gap in financing, experts however faulted the slow pace in the effort.
According to World Economic Forum data, if the current rate of progress is maintained, it will take at least 200 years to close the global pay gap between men and women.
Sakiko Tanaka, Asian Development Bank’s Gender Lead, highlighted the increased awareness on the need for women’s financial inclusion to achieve gender equality.
“There’s more money coming in for gender equality. However, there are still major gaps globally,” said Mr Tanaka.
A the summit, it was noted that women face unique challenges such as difficulty in accessing collateral for financing, running smaller business in comparison to their male entrepreneur counterparts as well as blurred lines between women’s personal and professional finance expenditure.
Wendy Teleki, Head of the We-Fi (Women Entrepreneurs Finance Initiative) Secretariat led six panelists in examining how financial institutions and multilateral development banks are employing innovation in a bid to expand women’s access to finance.
Apart from risk-sharing intervention ventures such as credit guarantees to lenders, panelists said increasing women’s financial literacy is pivotal to closing the gender gap.
Another major point of discussion at the forum was how to harness financial technology, alternative credit information, and online tools for financial services as a way to grow businesses owned by women.
Tesi Rusagara, the head of Kigali Innovation City, suggested the adoption of digital spaces as a key tool in addressing the financing gap. He noted that introduction of more services for documentation and online financing tools would be a great value addition for women.
John Wilson, chief operating officer of Equity Bank, echoed Mr Rusagara’s sentiments on the importance of technology but added that making lasting human connection with the customers is a key ingredient in bridging the gap.
“The need to close the gender gap is not about corporate social responsibility or charity. It’s about business development by developing a proper set of financial and non-financial services,” said Barbara Rambousek, Director for Gender and Economic Inclusion at the European Bank for Reconstruction and Development.
Despite the strides in other spheres of gender equality, there still exists a $42 billion financing disparity gap between men and women in Africa, the summit heard.
To date in some developing regions of the world, women still face challenges such as getting basic documents like a birth certificate which are required by commercial bank for loan applications.