How to revive women-led SMEs in Africa

Geschreven door Charity Nyawira op 1 december 2021

Nothing quite brought the world to its knees like the 2020 COVID-19 outbreak. And while the pandemic has somewhat subsided, some of its economic setbacks persist. For one, the resulting rise in gender inequality.

The World Economic Forum (WEF) predicted that it will now take 135 years1 to achieve gender parity, up from the already daunting forecast of 100 years, pre-pandemic.

Owing to the pandemic:

- Women in low and middle-income countries took up over 3X more unpaid labour2 than men, resulting in poorer mental health and lost income opportunities

- In Africa, female workers lost 9X more jobs3 than men


  • Before we dive in, let’s evaluate the current situation of female entrepreneurs 
  • Why is it important to care?
  • Challenges and opportunities for women-led businesses in Africa
  • What do women need to get back on their feet?
  • Opportunities and financing trends 
  • How Lendahand can contribute to closing the gap


Women businesses hit harder by the pandemic

Further, women-owned businesses faced the greater wrath of the pandemic, with most reporting revenue losses of over 50%4.

Raman, a businesswoman in South Sudan selling cereal in the marketplace, for example, reported making less than $34 a week, $76 less than what she used to make before the pandemic. People just didn’t want to visit the market anymore.

The narrative is the same for Irene from Kenya, a groceries seller who lost all her stock worth $500 after the lockdown.


Women enterprises and GDP contribution

Despite the inequalities, women in Africa rule the self-employment space. 

About 26%5 of the female adult population in Subsaharan Africa are businesswomen, the highest rate globally.

Although most of these businesses are small, informal, and operate below their potential4 they are a centrepiece for GDP growth. 

According to a McKinsey report, if countries focused on reducing gender inequality from the onset of the pandemic, we'd be looking at $13 billion6 gains in global GDP by 2030.

Otherwise, there’ll be a $1 trillion loss.


The challenges and opportunities for women-led businesses in Africa

Women still have to overcome certain limitations to run successful SMEs.
Some of the pressing issues facing women SMEs are:

  • Inadequate business skills

Most women running SMEs need business training, especially in technical areas such as crop and livestock farming. In addition, women could use financial, marketing, and soft skills to help them better manage their businesses. 

Organizations have come up to help women attain these skills. The International Finance Corporation (IFC), for example, partnered with several banks in Kenya, Nigeria, and Ghana to train SME owners. These entrepreneurs, mostly women, learned business skills such as sales and product differentiation. 

  • Digital illiteracy

The world is all about digital transformation, especially after the pandemic. 

Businesswomen, mainly those in rural areas may have a challenge keeping up with digital trends. Having access to and knowledge of how to use mobile apps and financial technology can help women run competitive businesses. 

Digitization can help more women access capital, keep better financial records, access training and mentoring, and even market and sell their products with ease. 

  • Inadequate financing

Women-led businesses continued to receive much less financial support4 than their male counterparts, thanks to their perceived high risk. 

Most female-owned businesses are small and informal, while others were operating in sectors under strict COVID restrictions, like daycare and hospitality.  


What women enterprises need

Longer-term loans, lower interest rates, alternative collateral, and repayment grace period - These are some of the loan features that would appeal to the typical female SME owner.

With traditional financial institutions such as SACCOs* and banks offering restrictive loans, women are forced to look for money elsewhere.

*SACCO is an abbreviation for Saving and Credit Cooperative.


Opportunities and financing trends for women-led SMEs in Africa

Enterprising women have been hard-pressed on every side.

However, thanks to the support they have received from various institutions and their innovative solutions, women are getting back on their feet. Here’s how:

  • Traditional financial institutions tailor their products to serve women SMEs

During the pandemic, some SACCOs cut off their financing for women SMEs especially those in high-risk areas such as hospitality7.

Businesses operating in the agriculture and manufacturing sectors continued to get funding as they were expected to have minimal losses in the short and long term.

Some SACCOs, in an attempt to lower their lending costs and accommodate SMEs, sought to ditch capital-intensive management systems and adopt cashless transactions.

Another suggested solution was to introduce guarantee lines to lower lending risks from defaulting borrowers. Banks also joined in the move to relax their lending regulations. 

Some of the accommodative measures that banks took in some countries in West, East, and Southern Africa are:

- Deferring the repayments of loans

- Reducing interest rates

- Waiving interest and late-payment penalties for a specified time


  • Savings and table banking groups

Women savings groups (also known as chamas or table banking groups) have helped many women keep their ventures afloat.

Jirani Moyie8 is one such savings group, bringing together a group of women slum vendors in Kenya. Members gather once a week to contribute money to the group. They lend the money to members, who pay back at the agreed interest rate. The women then bank the remaining savings.

Table banking opens up more financing opportunities for such women since they can:

- Use the money as collateral for loans from certain financial institutions

- Access loans and grants from community organizations that support small businesses


  • Microfinance institutions focused on women

COVID impacted most MFI lending capabilities, with most borrowers unable to repay their loans. Some MFIs started to diversify their lending to target low-risk sectors such as agriculture to avoid losses.

Kenya Women Finance Trust (KWFT) is one of the few MFIs formed to focus on financing businesses started by low-income Kenyan women. KWFT in partnership with UN Women has helped women without assets or collateral access affordable loan products, revive their businesses, and provide for their families. The partnership disbursed more than $60,0009 to over 300 women entrepreneurs in Kenya. 


  • Mobile loans

Mobile loans are easily accessible to SMEs as they require few protocols to access. The catch, however, is their high-interest rates coupled with shorter repayment periods. The government of Kenya, through regulation, is working to tame mobile lenders who are extorting high fees from borrowers10.


  • Crowdfunding

The crowdfunding market is still young and unregulated in most African countries. It is, however, a high potential means of financing in Africa11. One of the types of crowdfunding that has especially been popular during the pandemic is donation crowdfunding. Over 50 agricultural SMEs from Nigeria, Kenya, and Mali12 have joined the move, sourcing funds for their businesses through donation crowdfunding.

Debt crowdfunding platforms such as Kiva have also helped women get much-needed funding.


  • Women funds and other Government and Non-government Outreach Programs

Government initiatives like the Women Enterprise Fund (WEF) in Kenya have been funding women-led businesses. The fund gives subsidised loans to individuals and women groups to a maximum of KES200,000 or KES500,000 (€1582 or €3954) depending on the type of loan.

In June 2020, for instance, Nainyoyie Lolkunono, a rural savings group, received $93913 from the WEF to venture into livestock and poultry farming and set up convenience stores. WEF also provides entrepreneurship training and supports enterprising widows by providing them with uncollateralized loans.


Lendahand plans to support small female-led businesses

Lendahand is also joining in the efforts to close the gender gap, and we have received a grant from US AID to accelerate this trend. 

We will soon have the tools to provide smaller loans to small entrepreneurs so that you can also contribute to the SDG-5 - Gender Equality agenda.

You can already invest in exciting women-focused projects such as Kori, which funds women-led businesses by providing group loans. 

Creze is also a good investment opportunity that can help you reach and support small female entrepreneurs. The company provides small loans to MSMEs, even those with no credit history.

Keep an eye on our projects page, or turn on your project email notifications, so you don’t miss any new investment opportunities.





1. - 2. - 3. - 4. - 5. She Leads Africa - 6. Mckinsey - 7. International Raiffeisen union - 8. Devex - 9. - 10. Business Daily Africa - 11. Springer - 12. Next billion - 13. BOMA Project - 14. Standard Media

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