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(B2) Financing women-owned/led formal SMEs in AFRICA

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Problem Statement Information

Category
Alternative lending, Alternative credit scoring, Loan management, SME Finance

Problem statement tags
2021alliancehack alliancehack fintechs smefinancing formalsmes lending accesstofinance womeninbusiness womensmes creditscoring womenownedbusinesses womenledbusinesses

Detailed Description

Moving up in business size, women owned/led formal SMEs (WSMEs) are registered as businesses, have bank accounts where transaction history can be assessed, pay taxes, borrow from multiple sources—often using their credit card. Banks requirements are perceived to be and are onerous. The banks themselves find it difficult to identify these women whether they are their own customers (availing of consumer credit) or are prospect customers; find them costly to acquire them once identified and costly to serve. Create solutions that would improve women business owners’ in the SME segment to access finance in AFRICA.  (B2B, B2B2C or B2C)

AFRICA: Kenya; Nigeria

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Women-owned SMEs face a number of constraints to growth, including access to finance. While financing is almost always a challenge for SMEs, the difficulties are often intensified by gender-related factors, including women’s lack of collateral, weak property rights, tendency to have been in business for a shorter amount of time and be subjected to discriminatory regulations, laws and customs. On average women self-report report less financial literacy and seek out smaller loans or prefer to use credit cards rather than apply for business finance from banks.  With both supply and demand side barriers, the International Finance Corporation (IFC) estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions, amounting to a financing gap – and opportunity – of around $285 billion (Source: Credit where it is due, Goldman Sachs Global Investment Research, 2014). 

Moving up in business size, women owned/led formal SMEs are registered as businesses, have bank accounts where transaction history can be assessed, pay taxes, borrow from multiple sources—often using their credit card. Banks requirements are perceived to be and are onerous. The banks themselves find it difficult to identify these women whether they are their own customers (often availing of consumer credit and in the retail rather than corporate portfolio, and also often using credit cards) or are prospect customers; find them costly to acquire them once identified and costly to serve. .  This segment is growth-oriented and tremendously loyal when served well but still face many of the same constraints as WVSEs when accessing finance.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

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