Accompanying and structuring women entrepreneurs at all links of African agricultural value chains is a matter of common sense. Today, women dominate the African agricultural sector, which is the most important economic sector on the continent. It is estimated that in 89% of African countries, the supply of wage employment is insufficient to meet the demand. Entrepreneurship represents a solution to the employment issue and therefore has an enormous potential that is still under-exploited.
In fact, African women are the most entrepreneurial, with 24% of them involved in an entrepreneurial activity (Roland Berger, 2019). They therefore represent a leverage effect that cannot be overlooked. In sub-Saharan Africa, they are also the only ones to undertake more than their male counterparts throughout the world (WorldBank, 2019).
Yet, a gender gap exists in access to financial services for agricultural entrepreneurship. Nearly one in five women depends on her husband's capital to start her business (World Bank, 2019). Several factors can explain this gap, therefore identifying them is paramount to addressing it and is one of the objectives of LadyAgri's Bankability program.
The main factor lies in the invisibility of women regarding financial services. The role that women play as economic agents is largely obscured by the fact that in Africa, the majority of them work in the informal sector where their contribution is not properly quantified or measured (ILO, 2019).
The many misconceptions about women's place in agricultural value chains, such as that they are only present at the production stage or at the small and micro enterprise level, result in a lack of appropriate financial offerings for women operating at the other levels of agricultural chains or leading larger enterprises. This invisibility impacts the development potential of women-owned enterprises, which, for example, attracted 6 times less investment capital than male-led enterprises (World Bank, 2019).
The lack of collateral needed to obtain a loan is also a reason why women have difficulty accessing financial services. On average, African women own fewer assets than men. Globally, Africa, especially sub-Saharan Africa, has the most legal and cultural limitations on women's property rights (World Bank, 2020). These discriminations manifest themselves in limited access to land, family inheritance, real estate, etc. Financial institutions' distrust of women requires them to provide more collateral for the same loan amount than men. Combined with interest rates, which are particularly high on the African continent, the current collateral requirements can hinder the ability of women entrepreneurs to develop economically.
Another factor that may explain the more difficult access for female entrepreneurs to financial services is their lower level of education. According to the WorldBank, young women in Africa are more than one and a half times less likely than young men to be in education or training (World Bank, 2019). Being able to read and having basic financial education are obviously key factors in accessing the opportunity to obtain a loan.
Finally, a study conducted by the African Development Bank (AFDB) in 2019 across 47 African countries, highlighted the tendency of women to self-exclude from financial services because they consider their own banking creditworthiness insufficient to approach banks.
For all these reasons, LadyAgri, through its Bankability mission, is committed to encouraging women to approach financial institutions and to creating an ecosystem conducive to the emergence of women entrepreneurship supported by the financial sector. By building confidence and understanding of the banking system among women entrepreneurs active in agricultural value chains, LadyAgri works for economic development, food security and women's empowerment.
