Microfinance for African women entrepreneurs

 

Access to capital is one of the most crucial elements to the growth and survival of any business.  But this is largely inaccessible to small scale entrepreneurs of limited means, as financial institutions require collateral, and extensive credit histories, backed by loan guarantees—the very elements desired by people seeking sustenance. Enter microfinance.

A mechanism that provides financial services to those who do not otherwise have access. It was unveiled in 1983, as a revolutionary concept. A method designed to improve financial inclusion and alleviate poverty the world over[1]. As developing nations have a greater proportion of people living in poverty, it served to encourage small business owners in these countries to grow their business, where they previously could not. This all done with non-predatory interest rates.  As women entrepreneurs constitute a sizeable majority of small scale entrepreneurs in Africa[2], and as such plays a crucial role in promoting women’s active participation within African societies. Moreover, it helps spur economic activity, also improves overall financial inclusivity.

 

“The overall impact is children’s well-being, and better economic prospects. An added and even more important consequence is the empowerment of women, who historically in some African countries have been disadvantaged by land tenure rights.”

The microfinance space has gone beyond merely providing access to capital, but also provides ancillary services that aid in improving the overall health of business, such as education and a chance to form a community with similarly minded women. The overall impact is children’s well-being, and better economic prospects. An added and even more important consequence is the empowerment of women, who historically in some African countries have been disadvantaged by land tenure rights. Women can now access capital without seeking a male relation to act as guarantor.

Africa has seen a surge in both the number and outreach of microfinance initiatives that offer a diverse array of products. Although the majority of institutions tend to be small—funded through donor aid or pooling of funds by participants, larger financial institutions have recognized the significance of providing such schemes, and have developed a myriad of ways to provide financing to low-income business owners. The most prominent example is Equity Bank, now East Africa’s largest bank, which started out as a mortgage financier for lower-income Kenyans. To date, the company remains one of the largest microfinance providers in Kenya.

The advent of mobile phone technology has aided access as well, with previously unbanked people now having access to mobile money, and hence some form of banking. M-pesa in Kenya and Ecocash in Zimbabwe being some of the more prominent examples. This has opened up ability to secure credit lines as business can demonstrate revenue streams where they previously could not.

The existence of microfinance has afforded women in Africa means to participate in the formal banking sector without the many pre-requirements that would normally have precluded from accessing capital. It has helped low-income families establish businesses, and continue growing them, thereby employing more people, and has been a boon to African countries as a result.

wisinomad believes in an empowered society , cutting across cultures and  gender . That’s why we believe microfinance has a huge impact in african communities. And as such , we strive to connect global institutions, international entrepreneurs, venture capitalists and impact investors  to collaborate locally.

 

To learn more about wisinomad, visit www.wisinomad.com and send in your application

 

References

[1] Matsangou, Elizabeth. “Microfinance: Empowering Female Entrepreneurs.” World Finance, World Finance, 19 Apr. 2017, www.worldfinance.com/banking/microfinance-empowering-female-entrepreneurs.

[2] Belwal, R., Tamiru, M. and Singh, G. (2012), Microfinance and sustained economic improvement: Women small‐scale entrepreneurs in Ethiopia. J. Int. Dev., 24: S84-S99. doi:10.1002/jid.1782

 

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  1. […] issue. The profit and the skills are used to develop and help communities. Grace believes that microfinance is a way of helping empower women and reduce the gender inequality, and overall is important as it […]

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