Finance is key to accelerating African women’s agribusinesses, a necessary driver for their engagement in lucrative agricultural value chains. But many programmes aiming to facilitate women’s economic inclusion struggle to succeed. Two cases studies show how adopting a holistic approach can have more success in providing women agripreneurs with the financial services they need.
Experiences from across Africa demonstrate that women throughout the agricultural value chain face many obstacles when it comes to accessing the finance that is crucial to launching and developing their businesses. That is due to a range of factors, including socio-cultural beliefs and practices, financing mechanisms that are either inappropriate or misunderstood by providers and users, and competing family and household needs. Two innovative approaches are bucking the trend, offering women agripreneurs finance that works for them. Although very different, both initiatives are based on supplying a mix of services, which take women’s specific circumstances into account.
Business management support in Kenya
In 2007, the Kenyan government set up the Women Enterprise Fund (WEF) to provide accessible and affordable credit to support women’s groups and individuals to start up or expand businesses for wealth generation and job creation. Although the fund has supported a number of women entrepreneurs, take-up rates were lower than expected. This was partly due to limited staff available to reach prospective women beneficiaries, most of whom live in rural areas, and partly due to lack of awareness of the fund by women agripreneurs.
These logistical problems have been compounded by reluctance by many women to take out loans, due to negative experiences when they lost property serving as collateral. Invariably, the failure to repay loans was the result of low business turnover, inadequate business records, lack of understanding of loan conditions, and diverting the loan or business profits to meet competing household needs. These experiences have reinforced existing socio-cultural beliefs that women have little capacity to manage finance, beyond running the daily household budget.
Recognising these shortcomings, SNV Kenya entered a formal agreement with WEF under the Enhancing Opportunities for Women Enterprises programme to raise women’s awareness of the funding opportunities, and working with women’s business groups to facilitate linkages with WEF through a pre-grant training programme, covering group dynamics, leadership, financial literacy and market access.
The training is tailored to help women overcome socio-cultural stigma and negative experiences with past micro-lending programmes. As part of the process, both husbands and wives engage in household dialogue sessions and are trained in budget planning. This helps couples decide whether or not to take a loan, and for what amount. Continuous support on record keeping is supplied to the women, before and after they have accessed the loans.
The success achieved by the scheme has shown that, given the right support and conditions, women are highly capable of managing finances. To date, 800 women have benefited from loans totalling €129,410. They have used the money to start or advance agribusinesses, purchasing day-old chicks, business sheds, chicken houses or machines for milling chicken feed. Repayment rates are over 98%.
Networking and confidence building
Women-led agribusinesses often fail to grow because women tend to be risk averse – fearing stringent financial requirements and lacking the confidence and negotiating skills to engage with financial service providers. To address this challenge, the African Women Agribusiness Network (AWAN) works through country chapters and champions to ensure that small, medium and large-scale women’s agribusinesses can harness existing opportunities for economic inclusion, trade and markets.
Through a network spanning 11 countries across the continent, AWAN offers capacity-building services for women in business, including hands-on financial training and support in business planning, helping women to meet the conditions for accessing loans at all levels. At the same time, women are offered coaching and simulated business pitching sessions to boost their confidence in handling money and finances. A recent innovation is the launch of the Agribusiness Intelligence Network in Africa, which will work to provide women agripreneurs with strong business connections, providing more opportunities for networking and confidence building.
Choosing the right formula for women in agribusiness
Both experiences point to some critical factors that can produce positive outcomes for finance mechanisms aimed at women in agribusiness:
- Soft funding mechanisms – like the Women Enterprise Fund – can be effective in triggering start-ups and promoting the growth of entrepreneurship among women in the small-scale agribusiness sector. It is crucial to offer a range of finance options, to lower the risk and facilitate the financial inclusion of women, as a first step to developing their businesses.
- Support for women in accessing finance needs to go beyond making loans available, and should address household and socio-cultural factors that hamper women’s ability to connect with financial services.
- Tailored financial packages are required for different categories of women-owned agribusinesses, depending on their size and the level of operation in the value chain.
- Guarantee funds for women in agribusiness are needed, combined with grant schemes for financial and business capacity-building and skills upgrading.
This article was created through a CTA-led process to document and share actionable knowledge on 'what works' for ACP agriculture. It capitalises on the insights, lessons and experiences of practitioners to inform and guide the implementation of agriculture for development projects.