AFAWA Initiative Secures $1.2B for Women-Led SMEs in Africa

The Affirmative Finance Action for Women in Africa (AFAWA) Initiative has made significant strides in its mission to empower women economically and promote financial inclusion on the African continent. AFAWA has secured financing commitments totalling over $1.2 billion for on-lending to women-led small and medium-sized enterprises (SMEs) across 32 African countries. This outstanding achievement was announced during the 5th Edition of the AFAWA Finance Series, which took place in Nigeria.

Lamin Barrow, the Director-General of the African Development Bank (AfDB) Nigeria Country Department, revealed these impressive figures. The event was jointly organized by AfDB, the African Guarantee Fund, and the Chartered Institute of Bankers of Nigeria, emphasizing a collaborative approach to tackling gender disparities in access to finance and opportunities for women-led businesses.

AFAWA seeks to address the significant gender financing gap by facilitating access to finance for women entrepreneurs. The initiative aims to mobilize a total of $5 billion in financing for women-led businesses in Africa by 2026.

Since its inception two years ago, AFAWA has made substantial progress, with the current commitment of over $1.2 billion being a testament to its impactful work. This funding will be pivotal in supporting and scaling women-led SMEs, allowing them to thrive and make a substantial contribution to Africa's economic growth.

Highlighting the gender disparities in access to formal financial services, Barrow referenced the World Economic Forum's Global Gender Gap report for 2022, which ranked Nigeria 123rd out of 146 surveyed countries. Despite some progress in recent years, women in Nigeria still face significant barriers to accessing financial services, with less than half of women utilizing formal financial services compared to 56% of men.

Women-led businesses are often characterized as informal and encounter major challenges in securing financing and fostering business growth. To address these issues, the AfDB conducted a baseline study in 2022 to understand the challenges women entrepreneurs face and proposed key principles for the successful implementation of guarantee programs in 16 African countries, including Nigeria. This research emphasizes the urgent need for solutions to bridge the gender financing gap and promote women's economic empowerment in the region.

Barrow underscored the vital role of women's economic empowerment in achieving inclusive economic growth and building resilient societies. By closing the gender gap, not only is economic growth stimulated, but income inequality is also reduced, contributing to a more equitable and prosperous society. AFAWA's innovative approaches are de-risking lending to women entrepreneurs, dispelling the perception that they are a risky investment and demonstrating the vast potential they hold.

Nigeria's commitment to AFAWA-related activities and financial inclusion efforts was acknowledged, and the AfDB is actively supporting the private sector to enhance access to finance. Through risk-sharing mechanisms and conventional financing instruments, the AfDB aims to create an enabling environment that unlocks the full potential of women-led businesses in Africa.

Achieving this goal will require the collective efforts of government, the financial sector, the private sector, civil society organizations, and development partners, with a focus on supporting programs that expand opportunities for women. The AFAWA initiative is pivotal in this process, providing a robust platform for dialogue, training, and business engagement in advancing gender equality and women's economic empowerment in Africa.