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Beyond the Transaction: Every Transaction Has a Story

Women Entrepreneurs and Financial Inclusion in Nigeria

The first and only Financial Inclusion 2020 Global Forum was held in London in October 2013, where leaders from the public and private sectors—including representatives from banks, microfinance institutions, NGOs, and Mobile Network Operators—were invited to attend.  I had the honor of representing Youth for Technology Foundation (YTF) at the Forum, where I put forward my vision to achieve full financial inclusion by 2020.

Since then, the number of people financially excluded has decreased.  The number of unbanked has declined by 500 million[1] but there are still two billion people worldwide without access to formal financial services.  But even as the overall numbers of the unbanked have declined, the gap between women and men who are banked has remained fixed.

Including women in the financial services value chain provides economic advantages, as they control over US $20 trillion of total consumer spending globally, and make or influence 80% of buying decisions around the world.

With support from MasterCard, YTF has provided business skills and financial inclusion training to 3,100 Nigerian women entrepreneurs in the missing middle through the Nigerian Women Entrepreneurs and Mobile Value Added Services program since 2013.  These are entrepreneurs whose businesses are too big to quality for microfinance loans, but too small to qualify for commercial credit.  Working in partnership with civil society, the Ministry of Women Affairs, and market-based organizations, YTF recruits and trains these entrepreneurs across 12 states in Nigeria.  These women are representative of four industries: wholesale and retail, light manufacturing, social services, and hospitality.

Women’s potential to participate in businesses that play a key role in driving economic growth and social development is limited by systemic challenges, including: limited access to finance or capacity building opportunities, lack of access to credit cultural restraints, norms and regulations that prohibit products that will enhance inclusion.  Having been involved in training women entrepreneurs for over 15 years, YTF knows that it is important to target the following areas, none of which can be implemented in silo: education and training, business support and advice, business capital and financial support, and technology.

In one of YTF’s training sessions organized in Lagos in September, I met Mrs. Grace, the CEO of Grace Building Materials Enterprises, a business she has had for seven years, and which employs four non-family members.  Recently widowed and a mother of six children ranging in age from 12 to 23, she explained that she wasn’t interested in seeking a loan from her primary financial institution to grow her business.  Her explanation: fear.

“You know, I have children,” she said.  “I won’t have peace if I go to the bank for a loan.  In Nigeria, very often we cannot predict when customers that have bought our products on credit will pay back.   Especially, when many of my customers are men in this industry, I don’t feel comfortable calling them to remind them to pay me.  If I owe someone money, I won’t sleep, I won’t have peace.  I want both.”

Women entrepreneurs who participate in the Nigerian Women Entrepreneurs and Mobile Value Added Services program, like Mrs. Grace, gain a deeper understanding of how to manage cash flow in their businesses and to weather financial setbacks, such as late or non-payments.

Since 2011, the number of unbanked people in the world has dropped by 20%, from 2.5 billion to 2 billion, according to Findex.  While 62% of adults worldwide were banked as of 2014 (up from 51% in 2011), the differences between those living in the developed versus the developing world are stark.  In the developed world, 94% are banked, compared to 54% in the developing world.[2] In Nigeria, 44% of the population are now financially included, a 50% increase over 2011, when that number stood at 29.7%.  Women participate in the economy primarily through entrepreneurial businesses, most of which are Micro, Small and Medium Enterprises (MSME).  MSMEs employ 84% of Nigeria’s labor force and contribute 48.47% to Nigeria’s GDP.  However, in Nigeria, 54% fewer MSMEs have female ownership than in sub-Saharan Africa as a whole.  Only 16.8% of small enterprises and 12.2% of medium enterprises are owned by females in Nigeria, compared to 35% and 29% in sub-Saharan Africa[3]. Although women entrepreneurs account for nearly half the owners of micro enterprises, far fewer own small or medium-sized enterprises.  There’s a 90.4% disparity between female-owned and male-owned SMEs[4], which means there’s a significant growth opportunity for women entrepreneurs in the Nigerian Women Entrepreneurs and Mobile Value Added Services program.

When women earn an income, they invest 90% of it into their families.  Comparatively, men invest only 30-40 percent.  This multiplier effect has social and economic impacts for entire communities[5].  These women, many of whom are entrepreneurs, have been the ones driving innovation on the continent.

Many women entrepreneurs in the missing middle segment, although they may have a personal and/or business account, are not taking full advantage of the array of services financial institutions provide because of a limited amount of education about those services.  While we do not expect our training efforts to change the landscape overnight, we know that with progressive and likeminded partnerships with private sector companies like MasterCard, we are making strides in the right direction and changing the landscape for woman-owned businesses in Nigeria, one woman entrepreneur at a time.

[1] World Bank Global Findex Database (2014)

[2] Ernst & Young: Empowering Women: Uncovering Financial Inclusion Barriers.

[3] Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).  SMEDAN and National Bureau of Statistics Collaborative Survey: Selected Findings (2013)

[4] Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).  SMEDAN and National Bureau of Statistics Collaborative Survey: Selected Findings (2013)

[5]Jackie Vanderburg, September 2013, “The Global Rise of Female Entrepreneurs” Harvard Business Review