Women can’t grow the economy if we lock them out

There’s no disputing it – worldwide, women’s access to finance is disproportionately low. Despite substantial overall progress—in 2017, the World Bank reported, 1.2 billion more people had bank accounts than in 2011—there is still a large gap between women’s and men’s access. In sub-Saharan Africa, only 37% of women have a bank account, compared with 48% of men, a gap that has only widened over the past several years. The figures are even worse in North Africa, where about two-thirds of the adult population remains unbanked and the gender gap for access to finance is 18%, the largest in the world. The graph below indicates account ownership for sub-Saharan Africans.

Africa is making strides in female entrepreneurship: the continent has the highest rate of entrepreneurial activity for women in the world: 24% of African women entrepreneurs vs. 11% of women in the Southeast Asia & Pacific countries, 9% of women in the Middle East, 6% of women in Europe and Central Asia.

In South Africa, more than two-fifths of households are run by women, who carry the main financial responsibility. Despite that, the financial gap between men and women is a South African and global problem. In the case of women entrepreneurs, financial inclusion involves being able to save and invest, and having products that help them manage their businesses sustainably. It’s a problem because excluding women financially prevents them from participating and contributing to society’s social and economic activities. This is bad for women, and for society.

The lack of access to credit women face in South Africa is a critical issue that demands attention. Women entrepreneurs face unique challenges in accessing credit, hindering their ability to thrive and contribute fully to the economy.

Women Entrepreneurs in South Africa

Although women comprise only 19,4% of business owners, women-owned businesses established between 2018 and 2022 generated as much as R175-billion a year and create 972 000 jobs. The Covid-19 pandemic would obviously have had a massive impact on these projections but the potential for growth is unmistakable. South Africa moved up two places on the Women Business Owner 2021 benchmark to rank 44, with 22% of all businesses owned by women in 2021. Botswana (38.5%) ranks first in the world with the highest percentage of women business owners, followed by Uganda (38.4%) and Ghana (37.2%), Mastercard says. An upsetting statistic considering the majority of the population are women and even more upsetting in the global context for us to move up in ranking with that number.

Mastercard’s Index of Women Entrepreneurs (MIWE) revealed that South Africa is one of only 12 economies where women’s entrepreneurial activity rates increased, with 11.1% of working-age women engaged in early-stage entrepreneurial activities. While South Africa moved up one place from 2020 to rank thirty-seventh in 2021, with a score of 54.9, women’s advancement remains hampered by less supportive entrepreneurial conditions compared with other global economies such as the US, which ranked first, with a score of 69.9; New Zealand, ranked second, with a score of 69.8; and Canada in third, with a score of 68.6.

Further, South Africa ranked a lowly fifty-fifth in the Knowledge Assets and Financial Access component of the MIWE, reflecting a great need for improvement. Women are constrained by poor access to finance, down four places to rank fortieth, and government SME support, which was stable at rank fifty-four. So, the question is, why are women struggling with financial access?

The structural issues limiting the potential of women entrepreneurs.

In an interview with SME South Africa, Irene Ochem, founder and chief executive officer of Africa Women Innovation and Entrepreneurship Forum (AWIEF), a pan-African women economic empowerment organisation, highlighted the following advantages.

“Unlocking the economic potential of women makes economic and social sense. It increases women’s bargaining power, positively affects economic growth and national incomes, makes for greater job and wealth creation and ultimately benefits the greater economy leading to a more inclusive and prosperous Africa.”

In reality, women face several difficulties to establish their businesses. These have been highlighted by economist, entrepreneur, and writer, Trudi Makhaya:

  • A lack of capital and assets to leverage as collateral.
  • Fewer business-oriented networks in their communities.
  • Higher levels of domestic responsibility.
  • Culturally induced lack of assertiveness and confidence in their ability to succeed in business.
  • The most important, lack of access to financing, which affects women’s ability to take advantage of economic opportunities and access resources to enable them start, build and grow businesses.

Female entrepreneurs have limited access to finance due to inherent biases in the system, lack of appropriately designed financial products, weak institutional capacity, and lack of incentives within banks to target and lend to women. In fact, a study by Morsy and Youssef in 2017 showed that women face more stringent loan requirements than men. In South Africa, it is estimated women only receive 10% of the funding available to entrepreneurs. This leads women to rely on self-financing, limiting their ability to grow and enhance their businesses.

Several women entrepreneurs have stated this:

Aisha Pandor (CEO of SweepSouth) – Not being taken seriously by male entrepreneurs and VCs, having to work doubly hard for the same results or recognition as males. Having to present to panels, to male VCs and face questions about their personal lives that male counterparts are never asked (about relationship status, family planning, balancing family life with startup responsibilities etc.)”

Irene Ochem – Venture capitalists and financial providers do not view women-owned businesses seriously. Women get offered smaller amounts of financing or loans. We have very few women fund managers and investment committee members. Thus, when pitching for funding, women are most of the time faced with an all-male panel. Women are asked tougher and personal questions which is not usually the case with male entrepreneurs. In certain situations, you get outright harassment that come in different forms and manners.

Donna Rachelson (CEO of Branding & Marketing YOU and bestselling author of book Play to Win) – Research suggests that women tend to be judged on their performance while men get rated on their potential. Men are believed to be able to create more influential networks, hold higher-ranking positions and of course, command more money, which is intrinsically linked to higher value. Basically, women end up asking for more but are receiving less.

Vuyolwethu Dubese (Startup Partnerships Lead for Africa for global intelligence firm, Thomson Reuters) – The systematic challenges that women face includes a gendered meritocracy of an old boy’s club that leads to a lack of access and knowledge to such opportunities. The shared (and false) opinion of how much of a bigger risk female founders are to invest in and the overt display of not being taken seriously.

Kelley Henry (executive director of the SoGal Foundation) – The system just wasn’t built for women. As an entrepreneur, accessing capital can be an uphill battle, but for underestimated entrepreneurs, when you factor in that practically every investor you pitch to has no understanding of your perspective or life experiences, the hurdles get that much higher, and barriers increase.

Women and credit – do they handle credit better?

Since the start of the pandemic, many South Africans have struggled to keep up with their debt obligations. A recent report by Experian detailed, amongst other things, how men and women have handled this change – and, it turns out, there are differences.

According to the report, excluding home loans repayments, men are more likely to default on their credit agreements. In a press release issued last August, Jaco van Jaarsveldt, chief decision analytics officer at Experian South Africa, said that women also score lower on the Consumer Default Index (CDI) than the total South African credit market. They also released an infographic for the American debt market as seen below.

Despite the evidence showcasing the success of women entrepreneurs and their ability to manage credit effectively, there remains a contradiction in their limited access to credit opportunities. Gender biases and stereotypes still exist, affecting women borrowers’ access to adequate and appropriately priced credit. Many financial institutions perceive women-owned businesses as hobby/lifestyle operations or fronts for husbands/family members. Biases also exist in credit underwriting algorithms.

To address these disparities, government and private sector initiatives are crucial. Efforts should focus on promoting financial inclusion, addressing gender biases, and designing financial products and services that cater to the unique needs of women entrepreneurs. Recognizing the success and creditworthiness of women borrowers, it is essential to provide equal access to credit opportunities, thereby empowering women entrepreneurs and promoting economic growth and prosperity.

Women are getting some help, but nowhere close to enough.

Recognizing the importance of supporting women entrepreneurs, the public and private sector have developed initiatives to support women businesses. Including the Isivande Women’s Fund provided financial support of over R200 million disbursed to more than 6,000 women-owned businesses. Different institutions are working on financial inclusion in South Africa. The Financial Sector Conduct Authority also has a mandate for financial inclusion and the Financial Sector Charter was another initiative implemented by the government and financial service providers to transform the sector by increasing the use of – and access to – financial services.

Another gender empowerment vehicle is the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) program, which facilitates women’s access to finance via an innovative risk-sharing mechanism. AFAWA offers capacity building services for women entrepreneurs and advocates for reforms to support women-owned businesses.

Although these initiatives have made some headway, a great deal of change is required if we aim to achieve a truly inclusive funding environment.

The Small Enterprise Development Agency (Seda) report states that only 28% of women-owned SMEs in the country have access to formal finance. It also mentions that despite the support provided, the funding gap for women entrepreneurs in South Africa is estimated to be around R345 billion.

The private sector also plays a crucial role in supporting women entrepreneurs’ access to credit. Financial institutions have started implementing gender-responsive lending strategies, offering specialized financial products and services tailored to the needs of women-owned businesses.


In South Africa, addressing the challenges faced by women entrepreneurs in accessing credit is crucial for fostering inclusive economic growth. The Altvest Credit Opportunities Fund aims to do just that by discounting loans to women owned and led businesses and limiting the red tape required to obtain finance. However, we cannot do it alone. SME credit lending practices require widespread change if we are serious about including women in our economy.



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