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Barriers To Financial Access For Female Entrepreneurs

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Women are a crucial tool for economic development and in Africa they account for over 50% of the population. Further, Sub-Saharan Africa leads the world in female entrepreneurship rates and Ghana is one of the top ranked countries in this regard. Surprisingly, given these facts, in 2018 Africa’s women contributed only a third of the continent’s GDP[1].


This irony hints at a gap between entrepreneurial activity and profitability. One of the reasons for this gap is that accessing appropriate finance to operate and grow their businesses continues to be a struggle for women. The result is smaller, less capital intensive, less revenue earning and less profitable businesses that provide fewer jobs, compared to men’s businesses.


Women often cite difficult access to finance as a major business hurdle and it needs to be overcome for the achievement of equitable business outcomes with their male peers. This was the motivation for recent workshops organized by GCIC for its women cohort.


The factors behind difficult access to finance for women include many that are external to them or exogenous, and others that are shaped by their own behaviours and are therefore endogenous. Some of these factors are shown below:


Exogenous Factors:

  • Funders associating women’s businesses with higher risk.
  • Lack of suitable types of finance for women’s needs.
  • Male-controlled funding organizations
  • Prohibitive cost of finance.
  • Lack of assets to use as collateral for loans.
  • Customary laws and traditions that limit women’s inheritance rights or land acquisition.


Endogenous Factors:

  • Women’s self-perception of being unqualified.
  • Women’s risk aversion.
  • The informality of many women’s businesses.
  • Women’s lack of investor readiness.


To overcome exogenous obstacles, a profound paradigm shift is required to enable women to inherit and own assets to use as collateral, remove the perception of their lower competence and attract more women financiers to decision making positions. Such a move is long overdue and would help to put more finance in the hands of women who need it.


While development finance institutions acknowledge the need to provide more capital for women and have contributed to funds designated for this purpose, qualifying criteria is often challenging. Also, access can be through traditional banks that do not have a history of being particularly women friendly.


Endogenous barriers stem from factors which include women’s lack of self-confidence, lack of business skills and expertise, their risk aversion, and sometimes a lack of attention to proper structures and systems in their businesses. A lack of confidence combined with risk aversion could hold women back from applying for financing opportunities because they assume they would fail to qualify or consider it too risky.


Training in business and leadership skills would increase competence and self-confidence and make them better prepared to apply for finance. but in addition, women would also benefit from being offered a wider choice of funding options. Hybrid financing models are needed which offer a balance of patient capital with elements of mentorship, expertise, and market access. Examples are venture capital and revenue share loans where investment is accompanied by business support.


Incubators like GCIC play an important role by giving women tools to empower themselves and their businesses. Through its Women Entrepreneurs Transformation Programme (WETP), GCIC delivers curated programmes to increase the confidence of female entrepreneurs and better prepare them to overcome barriers to achieving their business goals. This includes helping them to be more investor ready.


At the end of the day, for women owners of small and growing businesses, the need is not just for finance, but appropriate finance coupled with skills to operate and grow their businesses to profitability and success.

[1] Mckinsey, 2019