Investing in Women: A key Factor in Sustaining Growth in Africa

Oct 18, 2012
African women represent a huge untapped market as emerging business leaders, consumers and household decision-makers.
According to a recent Nielsen survey, 77% of women in emerging markets believe the future will be brighter for their daughters, noting that key areas where improvements will be greatest are education, careers, financial stability and purchasing power. These changes are already evident in many African countries as socio-economic indicators show an improvement in the living conditions of every-day Africans.

When one looks at the position of African women today versus two decades ago, one can see distinct improvements in the areas of education, health, earning power and entrepreneurial activity.
In Uganda 48% of all small and medium-sized enterprises (SMEs) are owned by women.
In Kenya, the corresponding figure is 49%, and in South Africa 58%.
Motivated by economic necessity, better education and expanding job opportunities, African women have some of the highest rates of female labour force participation in the world.
Overall, 60% of women in Sub-Saharan Africa are in the workforce, with some countries such as Mozambique, Madagascar, Rwanda, Tanzania and Burundi having more than 80% female labour force participation.

With better economic opportunities women’s incomes have increased as has their spending power, fuelling the rise of the African consumer.
McKinsey documents this trend in their study “Lions On The Move,” by showing that the numbers of people living in extreme poverty are falling and that there are more middle-class households in Africa today than India.

The fact that women control or strongly influence many household spending decisions means that their power as consumers will drive demand for products and services in different sectors that is not to be taken lightly.
Globally, women spend close to $20 trillion as consumers and this figure is expected to reach $28 trillion by 2014.

In the banking sector -
one of the sectors mentioned in the McKinsey report as poised for growth in the next decade - massive growth is taking place across the continent due to higher consumer demand and more business activity as the private sector expands. Despite enormous challenges in many countries such as inadequate banking infrastructure and high consumer costs, Africa’s banking sector has grown rapidly in the last decade with total assets of $669 billion in Sub-Saharan Africa, and $497 billion in North Africa. In Nigeria, total banking assets grew by more than 59% annually from 2004 to 2008. The downside is that levels of financial inclusion across the continent are still woefully low with the majority of Africans lacking access to formal financial services.
Women are particularly excluded with as few as 21% of women having an account at a formal financial institution.

This lack of access to capital and a broad range of financial services is a big factor in restricting the growth of women-owned businesses.
African women continue to face well-documented barriers in accessing finance that are gender-specific as well as those that apply to all SMEs, regardless of gender. As entrepreneurs, women struggle with issues of collateral, poor education and business training, a lack of understanding of how banks work and cultural biases which hinder their progress. This situation is made worse by legal and property regimes which often discriminate against women by preventing them from owning assets such as land, or having the right to administer marital property.
A G20 study released in 2011 estimates that the funding gap experienced by women-owned businesses around the world who lack adequate access to finance is an astonishing $300 billion per annum, with African women facing a funding gap of $15-18 billion each year. Seen in another light, however, this SME funding gap represents a huge opportunity for commercial banks and other lending institutions that are willing to take this segment of the market seriously. Some banks are already coming up with specific products geared to the female market while others are experimenting with different types of collateral requirements which are more flexible and take into account women’s realities. These innovative approaches to SME lending are to be encouraged and will hopefully see more investment in women-owned enterprises to boost their growth. There can be no doubt that one of the factors that will drive Africa’s continued high growth is how it treats its women and how it harnesses their enormous economic potential.
At the recently held African Women’s Economic Summit, which took place in Lagos, Nigeria, Dr Ngozi Okonjo-Iweala referred to women as the “third emerging market” noting the benefits of investing in women for themselves, their families and the continent, as a whole.
As she rightly points out,
“we are on the cusp of a very exciting phase in the life of African women. They are the new face of an Africa on an upward trajectory of growth and development.”
Nomsa Daniels is Executive Director and founding member of New Faces New Voices, a pan-African organization which advocates for the empowerment of African women through the provision of better access to finance for women entrepreneurs, skills development and training for women in business and finance, and ensuring more women occupy leadership positions in the financial sector. Ms Daniels has worked in the investment business for the past 10 years, as Executive Director of Scientific Resource Management Holdings, an investment holding company that invests in start-ups, early-stage businesses, and established companies across different sectors in South Africa.
Prior to this, she worked as a Consultant in the Investment Banking Division of JP Morgan where she helped to analyze and identify new business opportunities for the bank and supervised special projects for the Managing Director. Before returning to live in South Africa in 1997, she worked for 10 years as Executive Director of the Professional Development Program, a not-for-profit organization based in New York City that provided management and leadership development training in the United States to black South African business professionals. She has a Bachelor’s Degree from the University of Toronto and a Master’s Degree in Geography and Environmental Studies from Hunter College in New York.
She serves on the board of the Graҫa Machel Trust, the African Leadership Academy and several investee companies.

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