The silent struggle: Women entrepreneurs in Africa and the financial divide 

• African women entrepreneurs face a staggering $42 billion financing gap.
• Unfortunately, banks have more stringent loan terms for women-owned businesses.
• To counter this, Women Creating Wealth (WCW) and Afrishela Fund are providing capital funding options for women in Africa.

Financial inclusion for women in Africa remains a challenge. According to a recent report by the African Development Bank (AfDB), women in Africa running various forms of businesses are facing a staggering $42 billion financing gap.

“Traditional banks often view women-led businesses as high-risk, making loans complicated to obtain and expensive,” AfDB notes in part. Consequently, banks place harder terms for women applying for loans.

“Many women need more business and financial skills to qualify for these loans,” notes AfDB, adding that women also face more stringent legal and regulatory hurdles that further limit the potential of women-owned enterprises.

The AfDB report was shared at a recent workshop held in Tanzania by Women Creating Wealth (WCW) with support from the investment fund Afrishela that is created and run by Graça Machel Trust to help increase financial inclusion for women.

To address these financial inclusion challenges, WCW focuses on alternative financing models that could help women entrepreneurs access capital. “WCW is more than a programme; it is a movement transforming economic opportunities for African women entrepreneurs,” explains Ms. Anabahati Mlay, WCW Country Lead-Tanzania.

Speaking to media after the workshop, she explained that, “the programme has already supported numerous entrepreneurs, helping them expand their businesses and contribute to economic growth.”

According to the country director, WCW continues to make significant strides by supporting more than 1,000 female entrepreneurs who together generate in excess of $1 billion in revenue, and also create well over 200,000 jobs for youth.

“Through WCW, we have built a community of successful women entrepreneurs,” she said, adding; “We want to invest in women-owned businesses and create a network focused on wealth creation for women.”

WCW does not operate in Tanzania alone, rather, it has a presence in Kenya, Malawi, South Africa, Senegal, and Zambia. In all these countries, WCW helps women-owned businesses become more visible and most importantly, become fundable.

According to the WCW country director, there are several alternative financing options for women including crowdfunding, where small amounts of money are raised from many people, and is usually done online.

To boost financial inclusion for women, you also have private equity options, which are investment funds that provide capital to private companies in exchange for a stake in the startup. You also have venture capital options, which involve funding for startups that have high growth potential.

Ms. Mlay also suggested angel investors as an option for women businesses to raise capital. These involve getting wealthy individuals to invest in startups, often for convertible debt or equity.

“These options offer more accessible funding than traditional bank loans, which often have high interest rates and require collateral,” she said.

Ms. Jane Muia, the representative from the Graça Machel Trust said Afrishela Fund provides an important financing option for women entrepreneurs. She explained that Afrishela, which translates to “Her Money,” and is an impact fund created by African women for African women.

“We saw a critical gap in capital access for women…we wanted to create a fund designed by African women, targeting African women,” she explained.

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Financial inclusion: Impact of alternative financial options

Further still, Afrishela supports women-led businesses across Africa, “particularly those focused on climate-smart and sustainable initiatives,” she said. It accomplishes this by offering flexible capital options, including loans with rebates or discounts, grace periods, and reasonable terms that are tailored to women-owned enterprises, the fund makes financial support more accessible and adaptable to women’s unique needs.

According to the spokes lady, Afrishela has invested in numerous early-stage businesses across the continent. Giving her testimony on the impact of Afrishela, Maida Waziri, Chairperson of the Voice of Women Entrepreneurs (VOWET) noted, “I have learned and grown from the WCW programme and sessions like this.”

“I am now classified as a large contractor nationally, the largest woman-owned contractor in Tanzania. I have won national and regional awards. I credit part of my growth to WCW. Women should take this programme seriously because it pays off,” she said.

Another benefactor, Patricia Kakorozya, CEO of WA Farmwise Tanzania added; “Running and sustaining a business is hard work. Sometimes, you fail, but you must get back up. Sessions like these are critical, and women must use them.”

At the end of the day, the workshop acknowledged that financial inclusion is only part of the solution and that women entrepreneurs must also be prepared to meet investors’ demands.

“This involves establishing strong business operations, cultivating a positive financial mindset, maintaining accurate bookkeeping, improving negotiation skills, and recognizing the importance of networks and mentorship,” Ms. Mlay explained.

“Access to finance has been a cry for many women, but we have to be ready…Programmes like WCW and funds like Afrishela are providing the knowledge, skills, and capital that women need to succeed.

The success stories of Maida and the CEO of WA Farmwise Tanzania demonstrate what is possible when women have equal opportunities. Supporting women entrepreneurs gain financial inclusion leads to job creation, innovation, and sustainable development,” she concluded.