Women's Financial Inclusion in Africa

Published: December 2014

The financial exclusion of women is a global problem with 'more than 1.3 billion women in the world operating outside the formal financial system' (Demirguc-Kunt, Klapper & Singer, 2013: 2). This situation is mirrored in Africa where more than 70 percent of women are financially excluded and where women's access to finance and financial services is consistently behind that of their male counterparts (MFW4A, GIZ & New Faces New Voices, 2012). Accelerating women's financial inclusion thus requires bold and sustained action to advance women's economic opportunities and rights and to ensure that they can meaningfully participate in the economy without undue constraints and barriers that limit their progress.

This paper examines the persistent challenges women face in accessing finance and financial services, why gender-specific barriers exist and what they are, factors that will contribute to removing these barriers and why women require more innovative support from the financial sector to transcend these barriers and harness their full economic potential.

Key Findings

  • Although the percentage of female entrepreneurs in the formal economy is smaller in Africa, relative to other parts of the world, as a continent, Sub-Saharan Africa has high levels of entrepreneurship with the proportion of male-owned businesses to female-owned businesses being roughly the same.
  • Women entrepreneurs continue to receive only a small fraction of the total capital available for SME investment across Africa.
  • Women business owners face a wide spectrum of challenges, including, but not limited to, 1) lower levels of education and financial literacy, 2) lower income levels, 3) lack of tangible assets or collateral, 4) legal constraints, 5) time and mobility constraints, 6) socio-cultural constraints, 7) inter-role conflicts from juggling domestic and 8) professional roles and a lack of market exposure.
  • Women entrepreneurs maintain that inadequate access to finance is one of their main barriers.
  • Legal restrictions on women's ability to inherit property and restrictions that limit their ability to engage in economic activity have a direct impact on the ability of women to access finance because it deprives them of acquiring assets that can be used as collateral to obtain loans from financial institutions.
  • Women entrepreneurs continue to receive only a small fraction of the total capital available for SME investment across Africa.
  • Lack of education is another serious hindrance that affects women's financial inclusion levels and the growth of women owned enterprises as it deprives them of the necessary skills, experience and judgment to properly manage their business, analyze the competition and take advantage of opportunities.
  • Women business owners face a wide spectrum of challenges, including, but not limited to, 1) lower levels of education and financial literacy, 2) lower income levels, 3) lack of tangible assets or collateral, 4) legal constraints, 5) time and mobility constraints, 6) socio-cultural constraints, 7) inter-role conflicts from juggling domestic and 8) professional roles and a lack of market exposure.
  • Women were found to be more active users of informal financial services than men, which is not entirely surprising.
  • Legal restrictions on women's ability to inherit property and restrictions that limit their ability to engage in economic activity have a direct impact on the ability of women to access finance because it deprives them of acquiring assets that can be used as collateral to obtain loans from financial institutions.
  • There is the need to educate women more widely about the range of products that are available on the market and how these products and services can serve their needs.
  • Lack of education is another serious hindrance that affects women's financial inclusion levels and the growth of women owned enterprises as it deprives them of the necessary skills, experience and judgment to properly manage their business, analyze the competition and take advantage of opportunities.
  • A high percentage of women still prefer to give money to bus drivers who travel between cities and towns to take to family members rather than use mobile money transfers which are quicker and safer.
  • Women were found to be more active users of informal financial services than men, which is not entirely surprising.
  • It is clear that financial institutions need to do a better job in reaching out to women to increase their knowledge on the range of financial products and services they can access.
  • There is the need to educate women more widely about the range of products that are available on the market and how these products and services can serve their needs.
  • A high percentage of women still prefer to give money to bus drivers who travel between cities and towns to take to family members rather than use mobile money transfers which are quicker and safer.
  • It is clear that financial institutions need to do a better job in reaching out to women to increase their knowledge on the range of financial products and services they can access.
  • To increase their economic opportunities, women need a level playing field with a sound educational foundation, more and better jobs, a business and legal climate that supports their economic pursuits, a financial sector that gives them access to affordable financial services tailored to their needs as well as and the recognition of their importance as a market segment which should be cultivated because it makes good business sense.
  • The 'unrecorded economy' in Africa, to which women contribute significantly, continues to be undervalued and underappreciated because of the unavailability of reliable and credible data.
  • To increase their economic opportunities, women need a level playing field with a sound educational foundation, more and better jobs, a business and legal climate that supports their economic pursuits, a financial sector that gives them access to affordable financial services tailored to their needs as well as and the recognition of their importance as a market segment which should be cultivated because it makes good business sense.
  • On average, women have high rates of labour force participation, above 60 percent in many sub-Sahran African countries.
  • The 'unrecorded economy' in Africa, to which women contribute significantly, continues to be undervalued and underappreciated because of the unavailability of reliable and credible data.
  • Although the percentage of female entrepreneurs in the formal economy is smaller in Africa, relative to other parts of the world, as a continent, Sub-Saharan Africa has high levels of entrepreneurship with the proportion of male-owned businesses to female-owned businesses being roughly the same.
  • On average, women have high rates of labour force participation, above 60 percent in many sub-Sahran African countries.
  • Women entrepreneurs maintain that inadequate access to finance is one of their main barriers.

Populations Rural, Urban, Women

Complementary Outcomes Education And Literacy, Gender-based Violence, Political And Civic Participation, Technology, Women's Leadership, Women's Rights

Industries Business, Finance

Publishers Open Society Initiative for Southern Africa (OSISA)

Geographic Focus Africa (Western)-Nigeria, Africa (Western)-Niger, Africa (Western)-Ghana, Africa (Western)-Cô, te d'Ivoire, Africa (Sub-Saharan), Africa (Southern)-Zambia, Africa (Southeastern)-Mozambique, Africa (Eastern)-Uganda, Africa (Eastern)-Kenya

Funded by Open Society Initiative for Southern Africa (OSISA)