Africa’s women mean business, but they need finance. Banks need a new approach to African women entrepreneurs, whose inability to raise funds holds back growth.

Women’s Economic Advancement

The U.S. Department of State has made women’s economic advancement a foreign policy priority, and this is especially promising in developing and emerging economies where women have for too long been relegated to the margins and hidden in the shadows of the informal economy. This has been the case in Africa, for example, where we are implementing new initiatives to bridge barriers that have traditionally kept women from entering and competing in the business arena and contributing to the progress and prosperity of their nations.

Just over a year ago, the Department of State launched the first African Women Entrepreneurs Program (AWEP) as a means of advancing women’s leadership and growing women-owned small and medium enterprises (SMEs). The AWEP initiative is empowering more women to leverage the benefits of the African Growth and Opportunity Act (AGOA), expanding opportunities for exports and U.S. investment in sub-Sahara Africa, creating stronger national business climates, and cultivating regional women’s business networks and follow-on programs. Already, the African Women Entrepreneurship Program has empowered small business owners and provided them the tools to export under the terms of AGOA. Others are working to increase their export capacities and establish business relationships with U.S. partners.

Following the success of the inaugural class of African women entrepreneurs in 2010, ExxonMobil committed to funding two more follow-on trainings in Africa in partnership with Vital Voices. This initiative, which first began in 2010, works to empower African women entrepreneurs to become part of their national and global business networks by:

• Increasing opportunities for women to use the AGOA program
• Expanding opportunities for exports and U.S. investment in sub-Saharan Africa
• Recognizing and expanding the roles women play as advocates for changes in laws, regulations, customs, and incentives that support women in businesses in their countries

With low bank penetration and a very large informal sector, Africa is fertile ground for microfinance. This is reflected in the wide variety of financial service providers operating in lower income market segments on the continent, employing a broad range of lending methodologies. Amongst the various business models, some have emerged that are replicable at scale. For instance, the savings and lending methodology, developed over the years by CARE, is now being scaled up from just over 1 million customers in Africa alone to 30 million by 2015. Africa, like Asia, now has some microfinancegiants. Whereas the giants in Asia became large in an environment highly favorable to steady growth, with relatively low inflation and a notably higher population density than other regions, those MFIs on the rise in Africa are growing despite demanding Macroeconomic contexts.