The rise of small and medium scale entrepreneurship is now ever evident with mushrooming business incubation and accelerator programmes. The Government is also placing focus on women. Nevertheless, funding of women-led enterprises remains scarce.

Women entrepreneurs in Africa, according to the African Development Bank, face a funding shortfall of $42 billion.

In the first quarter of 2020, women-led startups accounted for a paltry 3.2 per cent of total funding raised by African tech ecosystem, reports a data intelligence firm Briter Bridges.

While different factors causing the disparity point out that female enterprises are less in the first place, the picture appears to change in Rwanda.

A Credit Swiss-led survey in July showed that businesses owned by females increased to 41 per cent in Kigali. Yet, global average lingers somewhere between 10 and 20 per cent.

Reasons for insufficient funding revolve around the traditional way of sourcing capital, according to local entrepreneurs.

"It is difficult to gather financial capability to implement your business idea,” says Aurore Kayitesire, who owns a fashion house, Weya Creations Ltd.

"You need to have something like collateral to approach banks and microfinance. Although there are institutions such as BDF (Business Development Fund) that are supposed to help women, they don’t pick you from the bottom.”

BDF, a government-owned company founded in 2011 to grow SMEs through financing, was in September faulted by the Parliament for falling short on its mandate.

Sandrine Abayisenga, a university graduate, now runs a home business of making liquid soap and pills packaging.

She had a promising poultry project which she says BDF and one bank liked but ended up on hold.

"These institutions have this one person who gets to decide whether you get the loan or not,” Abayisenga said. She alleged that; "That results into bribery, sometimes involving sex.”

According to her, sex bribe in order to acquire funding from a financial institution is a serious issue facing young women entrepreneurs. 

She narrates testimonies of herself and two friends who went through the situation.

"Sometimes you need to go ahead but face that block. Then you have to turn back and find a new way,” she said.

Need for tailor-made financial products

In order to bridge the funding gap, private financial institutions have taken the lead. Experts say that women entrepreneurs need specialized financial products.

Tailor-made schemes to finance female-owned enterprises will be able to bridge the gap, according to Nathalie Niyonzima, Managing Director of Inkomoko Entrepreneur Development, a business consulting firm working with micro, small and medium enterprises.

"Access to finance is actually the most cited challenge for entrepreneurs and sometimes, the barrier to accessing finance is the lack of systems in every business to show their financial management,” Niyonzima said.

Through Urumuri pitch competition, Inkomoko partners with Bank of Kigali to help women-led enterprises get ready for finance through business training and a chance to acquire an interest-free loan capital.

The sentiment of specialized outlook towards female entrepreneurs is also maintained by Access to Finance Rwanda (AFR), a financing non-profit.

Financial Institutions ought to understand what the entrepreneurs need to be able to design women-centric financial products and services, says Jean Bosco Iyacu, AFR Acting Country Director.

He added; "Most women are currently being served by informal financial mechanisms such as savings groups for various reasons; there’s, therefore, a need to link them to formal financial institutions.”

He said that improving financial literacy and practical entrepreneurship skills for women based on realities of the sectors they operate in such as agribusiness would make a significant impact.

Like financing entities, women entrepreneurs also believe that unusual mechanisms are needed to change the usual financing imbalance.

"Financial institutions should establish specialized chambers and products tailored for female entrepreneurs in order to be able to solve special challenges we face,” said Kayitesire.