Experts weigh in on Africa's new Affirmative Finance Action for Women

Three women, each with a large basket full of fresh fruits, sat in the shade of a wide sign-post just outside the main gate of Mulungushi International Conference Centre where the 51st Annual Meetings of the African Development Bank are ongoing.
LEFT: ABSA chief executive Mzinga Melu speaks during the meeting. RIGHT: Anna Gincherman, chief product development officer at AFAWA, contributes during the panel discussion. (Courtesy)
LEFT: ABSA chief executive Mzinga Melu speaks during the meeting. RIGHT: Anna Gincherman, chief product development officer at AFAWA, contributes during the panel discussion. (Courtesy)

Three women, each with a large basket full of fresh fruits, sat in the shade of a wide sign-post just outside the main gate of Mulungushi International Conference Centre where the 51st Annual Meetings of the African Development Bank are ongoing.

Apart from being aware of the presence of an unusually big number of foreign guests in their city, it’s unlikely that the three women outside the Mulungushi gate knew what business the delegates were discussing in the meetings.

It is a few minutes past noon on Wednesday, the third day of the AfDB Annual Meetings and a particularly interesting session has just ended. It was about the AfDB’s new programme, ‘Affirmative Action for Women in Africa’ (AFAWA).

The session attracted a full house, with majority of in attendance among Africa’s prominent and successful women seated both on the panel and in the audience; nonetheless, they were there to talk about affirmative action. For whom?

Perhaps the three women outside the Mulungushi? Those women are present across Africa. Struggling to raise money through running small informal businesses, amidst challenges of raising capital to grow their enterprises.

To set the stage, the moderator, Nicholas Norbrook, from the Paris-based publication, The Africa Report, invited Geraldine Joslyn Fraser-Moleketi the AfDB’s Special Envoy on Gender.

“AFAWA,” Fraser-Moleketi announced, “is a new programme of the AfDB to demonstrate the bank’s commitment to advancing the Gender Equality Agenda by particularly addressing the challenges that women face in an attempt to access finance.”

In AFAWA, she will lead the AfDB efforts to engage its partners in mobilising funding of up to $300 million to finance African women.

The full objective is to run a $3 billion fund that will be available through the AfDB’s non-concessional window and channeled to worthy women through intermediary institutions.

With that, AFAWA will help address the financing gaps estimated to be over $30 billion that currently exist with respect to women’s access to finance.

Daunting statistics

There is more daunting statistics availed by studies on the subject. They indicate that only 16 per cent to 20 per cent of women in sub-Saharan Africa are able to access long-term financing from formal financial institution.

They also show that although women owned business enterprises account for only 25 per cent of all businesses in sub-Saharan Africa, the median capital available to male entrepreneurs is more than twice that of women is some of Africa’s largest economies including Nigeria and Kenya.

It is a situation that varies from one country to another. For instance, in Kenya, despite women owning 48 per cent of the micro and small enterprises, they access only 7 per cent of the credit.

A 2011 study by the International Finance Corporaruin found that three to four million formal women owned enterprises had an estimated total financing gap between $21 billion and $26 billion.

These are some of the daunting statistics that inspired the establishment of AFAWA.

Do women need affirmative action to fill their financing gap?

A quick vote by show of hands found that majority of those in the room believed affirmative action is needed but the participants weren’t short of those that thought otherwise. Deeper insight into the matter was provided by a high-level panel that had four women and two gentlemen.

They included Sahar Nasr, Egypt’s minister for international cooperation; Jennifer Riria, group executive for Kenya Women; Ngozi Okonjo-lweala, Nigeria’s former finance minister; Merisa Loga from the US Treasury; Ashish Thakkar, founder of Mara Group and Mara Foundation; as well as Admassu Tadesse, president and chief executive of PTA Bank.

Inprinciplethe panel agreed thatwhile affirmative action is needed in certain areas such as legal framework, women actually don’t need special treatment but rather equal treatment in facilitating them to access finances in their respective countries.

According to Ngozi Okonjo-lweala, Africa has one of the world’s highest female labour participation rates at about 63 per cent compared to 50.3 per cent globally which goes to show how women are very active in the African economies.

“If we have women very active but they don’t have access to something that can make them more productivein the economies, then we are missing something,” she argued, adding that the actual value added by women in African economies is undervalued, which breeds the negative perception that they don’t play a major role.

Ngozi said there’s need to invest in data citing the recent ‘Women Deliver Conference’ in Copenhagen, Denmark, where the Melinda Gates Foundation announced an $80 million fund to invest in collecting data of the value added by women.

“The AfDB should add a data component to AFAWA and seek partnership with the Melinda Gates,” she advised.

Ashish Thakkar made a case for mentorship and backed the need to invest in data, noting that there is a huge bias against young female entrepreneurs.

Thakkar, who runs a mentorship program for young African entrepreneurs, said his foundation currently supports more than 850, 000 young people in Nigeria, South Africa, Ghana and just recently in Zambia. Fifty per cent of those young people are women.

“Women are extremely competent, they are more reliable than men in terms of finance and I have never heard women seek special treatment, nor do I think they need it; what they need and deserve is a level playing field for both men and women,” he said.

Egyptian minister Sahar Nasr argued that there was a misguided perception that women are high risk customers to lend but that data shows the opposite, with women having their non-performing loans lower than those of men across the globe.

She, however, called for affirmative action in the area of legal and regulatory framework because African tradition stands in the way of most women to own property which limits their access to finance efforts as they don’t have collateral.

“Also, to avoid distortion in the finance sector, we need to avoid using the term ‘affirmative action’ and use a more inclusive term such as ‘diversification.’ What women need is equal opportunity but not special treatment,” she said.

Merisa Loga added a US perspective to the conversation noting that those who want to help women need to take a step back and learn how women use money.

“It is not enough to make money work for women. We must make the entire finance system work for them. That calls for increased access to financial services,” she said and quickly reemphasised the need for reform of the legal regulatory framework.

All panelists agreed that African central banks have a central role to play in reforming legal and regulatory frameworks and remove barriers that play against women.

A more radical view came from Kenya’s Jennifer Riria, who said women activists have talked so much but done so little over the years. She called for action backed by clear KPIs to be able to measure the walk against the talk.

“After all the speeches by these clever people I don’t know what to say other than the truth. I come from 26 years of working with low income Kenyan women, now three million in number,” she said.

“From UN conferences in 1975, to Beijing in 1995 to today, we have had meetings like this; we shall continue talking and talking but we are like a team that gets to the pitch, half the team plays and the other half does nothing. This is what we have done over the years.”

Last to speak on the panel was PTA’s Admassu Tadesse. He said his institution appreciates the constraints of finance by SMEs especially women and pledged to work together with AfDB’s AFAWA to address the ecosystem challenges.

“I agree with what everyone has said. The analysis is first class. The real issue now is execution and the AfDB through AFAWE has done excellent work to bring out the issue in such a clear way,” he said.

As the debate raged, President of the AfDB Dr Adesina walked in and added his voice on why AFAWA was an important initiative of the bank. Dr Adesina explained that the success of the AfDB’s five-highs depends on what is done, first, for women.

“When women are supported, they deliver. When you empower women, everything changes. When women win, Africa wins. About 97 per cent of women pay back their loans and the 3 per cent are stopped by husbands on their way to pay,” he said.

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