AFAWA - Afrikan Heroes

AFAWA Hits $1 Billion Investment Milestone in Lending to Women Entrepreneurs in Africa

February 5, 2023

The Affirmative Finance Action for Women in Africa (AFAWA) (http://bit.ly/3sggisg) initiative of the African Development Bank has reached a landmark $1 billion in approved funding designated for lending to African women entrepreneurs.

This is yet another milestone for the bank following an historic summit last week to tackle the escalating challenges of food security in Africa. The Dakar 2 Africa Food Summit, co-hosted by the Bank and the Government of Senegal, was attended by 34 heads of state and government, more than 70 ministers, farmers’ representatives from the private sector and development partners.

AFAWA was launched in 2015 in Dakar during the first Feed Africa conference (Dakar 1 Africa Food Summit).

Dr. Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development said: “I am incredibly proud of AFAWA’s financing achievement. AFAWA’s benchmark reminds us that when we invest to grow Africa’s food systems, we must also invest in Africa’s women agripreneurs.”

Women run the majority of Africa’s agricultural sector small and medium-sized enterprises (SMEs), yet they face significant barriers to accessing finance. Across the continent, African women entrepreneurs face an estimated $42 billion gender financing gap compared to men.

In the last two years, the Bank, through AFAWA, has multiplied the volume of investments toward women-owned small and medium enterprises sevenfold.

“By the end of December 2022, AFAWA-approved lending to women-led small and medium sized enterprises reached $1.051 billion. Of that, $135 million targets women in the agriculture sector,” said Malado Kaba, Director of the Bank’s Gender, Women and Civil Society Department. “AFAWA’s approved lending reaches across 27 countries, and through 56 financial institutions. Already 4,115 women business owners have benefited from AFAWA financing instruments. This is just the beginning,” she added.

Already, financial barriers to African women ‘agripreneurs’ growing their businesses, are being addressed through AFAWA investment. AFAWA is working to boost the professional and financial capacities of over 200 women cooperatives in the staple crop food sector in Cote d’Ivoire. This includes training and access to a digital platform connecting women producers to buyers of agricultural products like wholesalers, retailers and consumers across Cote d’Ivoire.

Furthermore, AFAWA is working with Ecobank on the “Financing Climate Resilient Agricultural Practices in Ghana” project. The project mobilized $20 million from the Green Climate Fund, and $5 million from Ecobank Ghana as co-financing, to fill the gap for working capital to farmers. The AFAWA project aims to provide financing and technical support to 400 women-led, farmer-based associations and women-owned small and medium enterprises, to foster their agriculture productivity and strengthen their climate resilience practices.

To accelerate progress toward unlocking $5 billion in lending for women by 2026, AFAWA has established a Guarantee Mechanism (http://bit.ly/3DtOnuS) which de-risks the women’s market and increases the ability of financial institutions to lend to women business owners.

AFAWA also launched the Women Entrepreneurship Enablers program, which provides up to $250,000 for women’s business associations, incubators, accelerators, women-led cooperatives, and civil society organizations. The program increases women SMEs readiness to access credit and scale their businesses. The program inducted its first cohort of 10 Enablers (http://bit.ly/3wFoVi8) in July 2022, who are expected to apply skills acquired in the Enablers program to reach more than 15,000 women-led micro and small enterprises. The second call for proposals to the program drew more than 1,200 applicants. The second cohort will be announced later this year.

“In 2023, we will continue to work closely with our partners to accelerate their ability to lend to women-led micro and small enterprises. Ensuring that the enabling environment is inclusive to enhance women’s ability to access financing will be critical. Thus, we will work closely with policymakers to ensure that the right reforms are in place to accelerate women-led small and medium enterprises’ financial access,” said Kaba.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

AFAWA Will Unlock Entrepreneurship Potential of African Women —–Marieme Esther Dassanou

July 31, 2020

Marieme Esther Dassanou, Coordinator of Affirmative Finance Action for Women in Africa (AFAWA)

Marieme Esther Dassanou is the Coordinator of Affirmative Finance Action for Women in Africa (AFAWA) the African Development Bank’s flagship pan-African initiative, which aims to bridge the $42 billion financing gap facing women entrepreneurs in Africa.

She previously led IFC’s Gender Secretariat’s work on advancing women’s inclusion in the insurance and financial sectors.

In this interview, she outlines progress made with the AFAWA initiative and its future plans.

You recently joined the African Development Bank as AFAWA coordinator. Can you tell us more about the initiative?

AFAWA is a Pan-African initiative launched by the African Development Bank in 2016 to promote gender-inclusive financing and unlock the women entrepreneurship potential in Africa. Through AFAWA, the Bank seeks to bridge the $42 billion financing gap faced by women-empowered businesses (WEBs) by deploying financing instruments better suited to addressing their finance needs for the growth of their businesses.

These financial instruments are coupled with technical assistance to financial institutions to better address the needs of WEBs as well as capacity building for women entrepreneurs to increase their profitability and bankability. AFAWA also includes a business-enabling environment component to ensure regulation is conducive to enhancing the ability of financial institutions to lend to women. Through AFAWA the Bank aims to unlock up to $ 5 billion in the next five to six years.

Read also :https://afrikanheroes.com/2020/06/22/reaffirmation-of-standard-poors-aaa-rating-of-african-development-bank-good-for-africa/

Why is it important for the Bank to have such a vehicle or mechanism in place?

The development and growth of women-owned businesses on the continent is a priority for the African Development Bank. The continent’s women entrepreneurs start businesses faster than anywhere else in the world, and in most countries represent at least 30% of formally registered businesses. Taking into account the informal economy, one could comfortably say that women represent the largest part of the SME sector. Thus, aiming to develop our continent without them would not make economic sense. They are fundamental and key drivers of sustainable economic growth and widespread and inclusive prosperity.

It is important to support these businesses to grow by ensuring they have the financial and business tools they need. AFAWA, through its Guarantee for Growth programme, supported by the G7, the Netherlands, Sweden and Rwanda, is a good starting point. Implemented together with the Africa Guarantee Fund, the programme reduces the guarantee requirements for women when they need a loan. AGF is a pan-African financial institution that provides financial institutions with guarantees and other products specifically intended to support small and medium-sized enterprises in Africa. Together, we will work with financial institutions to enhance their understanding of women entrepreneurs and their different risks, which should be considered in the development of financial services for women.

Read also :https://afrikanheroes.com/2020/06/05/nigerias-new-five-year-strategy-gets-african-development-banks-approval/

The Bank is also further leveraging its lines of credit, trade finance lines and investment in equity funds to increase access to finance for WEBs of a certain size even more. The partnership signed with the Women Entrepreneurship Finance Initiative (We-Fi) supports the Bank in increasing it financial coverage for women entrepreneurs through these traditional instruments, as well as increase trading opportunities for women entrepreneurs and grow the fashion and creative industries.

What are the commitments so far?

The program has so far received commitments from G7 members, including France, the UK, Canada, Italy and Germany, as well as the Netherlands, Sweden and Rwanda. AFAWA has also received its first tranche of funding from We-Fi , a portion of which will go towards enhancing to the capacity of women-owned businesses to respond to the COVID-19 crisis.

We invite other governments, especially our regional member countries, to partner with us in helping to bridge the finance gap for women-run businesses in Africa.

On the implementation front, what ground has been covered?

We’ve made great progress since the G7 Biarritz Summit last year. On 31 March 2020, the Board of Directors of the African Development Bank approved the two mechanisms that will enable us to de-risk women-led businesses and increase their ability to access to loans with lighter collateral requirements. We’ve been slightly delayed by COVID-19, but we expect that the Guarantee for Growth Programme will be operational before the end of 2020.

Read also :https://afrikanheroes.com/2020/03/28/african-development-bank-launches-3-billion-fight-covid-19-social-bond/

In the meantime, we are leveraging the Bank’s lines of credit, trade finance and equity funds to enable women to access funds and grow their businesses. The Bank is also ensuring that the SME component of its COVID-19 Rapid Response Facility (CRF) package, has a part specifically dedicated to women businesses. The Bank is also exploring opportunities to work with equity funds in enhancing the ability of women enterprises to further participate in the COVID-19 response to increase their operations and production.

Who is eligible to borrow?

It’s not only about borrowing. The access to finance gap is in part due to the inability of women-owned and led businesses to access funding, their lack of skills in presenting financially viable businesses, and an environment that is not always conducive to increasing women’s access to financial services. The AFAWA approach addresses all these areas. Thus, depending on their needs, women entrepreneurs will be eligible at different levels including access to finance for those with viable and bankable projects and also access to training and capacity building for those who may not yet be eligible to borrow but could improve their financial management skills, record keeping, marketing and any other area to enhance their bankability.