The African Development Bank has launched a multibillion initiative to bridge the funding gap facing women. The financial package was announced at the Global Gender Summit in Kigali through a programme dubbed Affirmative Finance Action for Women in Africa (AFAWA) Risk-Sharing Facility. The gender summit, the first to be held on the continent, runs from November 25 to 27 under the theme: “Unpacking constraints to gender equality.” AFAWA aims to close the $42-billion gender credit gap facing women enterprises in Africa. In Africa, AfDB says, 70 per cent of women are financially excluded. The continent has a $42 billion financing gap between men and women, the Bank says. Women, who are mainly engaged in farming, face a financing deficit of close to $16 billion in agriculture alone, it adds. AFAWA’s approach, according to the Bank, challenges the gender gap in access to finance and liberates women’s entrepreneurial capacity in Africa. Akinwumi Adesina, the African Development Bank President, said that the Bank will invest $300 million in the facility so as to generate up to $3 billion new lending banks and financial institutions to women enterprises across Africa over the next 5-years. Uzziel Ndajiminana, the Minister for Finance and Economic Planning, said Rwanda fully supports this initiative and is ready to work with AfDB to make it a success. The Government has committed to contribute $1 million in support of AFAWA, according to a tweet by the Government of Rwanda says. The funds, considered as guarantee will be channelled through various banks operating on the continent, as well as the Africa Guarantee Fund, according to AfDB. “We want that for every $1 that we guarantee, we get 10 times that ($10) for financing women,” Adesina said, pointing out that in case banks want to get credit lines from AfDB, they will be first asked to show what they have done in line with financing women. He indicated that, generally, it was realised that banks are not willing to lend to women just because they are biased against them, not because women do not repay their loans. “The African Development Bank believes in women. Women are bankable,” Adesina said. He explained that over 90 per cent of women’s enterprises pay back their loans. “We want to de-risk the bias of banks not lending to women,” Adesina said. The risk-sharing facility will offset potential losses of the African financial institutions that lend to women enterprises without requesting for collateral. Sahle-Work Zewde, the President of Ethiopia, said that for long the call for capacity building among women had attracted little attention. “Women need access to education for them to catch up with their male counterparts, and be competitive,” she said. Factors for inadequate financing for women AfDB says that women are considered to be riskier clients for the lending institution, so they face prohibitive interest rates. In addition, women often lack traditional collateral and guarantees, it says. Moreover, the Bank explains that financial institutions lack the capacity to understand and respond appropriately to women entrepreneurs, who also often lack the financial and business acumen to respond to the needs of financial institutions. And, in many countries, legal and regulatory frameworks hinder women’s full participation in private sector growth, the Bank added. editor@newtimesrwanda.com
