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<p>Women owned businesses represent only 32 per cent of the registered companies in Rwanda, out of which only 1 per cent amount to large companies. Despite making great strides in the growth of women entrepreneurs in Rwanda, there are still multiple challenges across various dimensions of the business. Two Rwandan women entrepreneurs share their experiences and lessons from the pandemic.</p>


COVID-19: Lessons from women entrepreneurs in Rwanda

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<p>Last month BPN and the University of Rwanda conducted a survey to measure the impact of COVID-19 on Rwandan Entrepreneurs; the subsequent report revealed necessary information for policy makers to develop targeted solutions to the unique challenges facing Rwandan SMEs. BPN themselves also decided to take action and partnered up with UN Women, the PSF Chamber of Women and Kora Coaching to launch an initiative dubbed, the Business Clinic. CNBC Africa spoke to BPN Country Director, Alice Nkulikiyinka for more.</p>


This business advisory clinic seeks to empower women entrepreneurs in Rwanda

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<p>One hundred East African women entrepreneurs were announced the winners of the inaugural 2019 2X Invest2Impact. The initiative was launched to provide these entrepreneurs with networking opportunities, mentorship, business development services, visibility and access to funding, to enable their businesses to thrive and grow. Anne Marie Lévesque, Gender advisor at FinDev Canada joins CNBC Africa for more.</p>


100 women entrepreneurs win Invest2Impact competition

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<p>Research out of Viffa Consult in Nairobi has revealed that women entrepreneurs who lack formal education tend depend more on mobile credit, investment clubs, friends and relatives for funding as opposed to bank loans and personal savings which are more widely used by their educated counterparts, but with government and the banking sector focusing on more financial inclusion, what can be done to tip the scale? Victor Otieno, MD of Viffa Consult joins CNBC Africa for more.</p>


The role of formal education in boosting women’s  access to finance

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<p>This week out out of Biarritz, France, news of a G7 approved $251 million in support African women entrepreneurs has arrived. The package has been committed to African Development Bank’s (AfDB) Affirmative Finance Action for Women in Africa initiative and is reported to be a direct response to the demand by women to ease access to financing that was assigned to the AfDB back in 2015. To give her reaction to the news, Gloria Kamanzi, Chairperson of the African Women Entrepreneurship Programme (AWEP) joins CNBC Africa for more.</p>


G7 commits $251mn package to women entrepreneurs: Are gender inequality gaps narrowing?

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<p>Access Bank CEO Herbert Wigwe says women-owned businesses are at the heart of the economy. CNBC Africa’s Esther Awoniyi caught up with him to discuss the significance of supporting women entrepreneurs.</p>


Supporting women business owners why and how – Access Bank CEO explains

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<p>On the side-lines of the International Women&#8217;s Day Conference CNBC Africa’s Esther Awoniyi caught up with Ayona Aguele-Trimnell, Coordinator of the W initiative of Access Bank and discussed the need for banks to support women entrepreneurs in Nigeria.</p>


Banks urged to support women entrepreneurs

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<p>CNBC Africa is joined by Kabira Akoob, an MBL Graduate at UNISA and a researcher on a report about a significant demographic in South Africa&#8217;s informal economy. 80 per cent of women entrepreneurs are involved in the informal sector&#8217;s economy growth, compared to 65 per cent of men. Just what are the motivational factors driving women entrepreneurs in rural settings.</p>


Understanding motivational factors affecting informal women entrepreneurs

<figure><img decoding="async" src="https://images.theconversation.com/files/234301/original/file-20180830-195319-hw4ka2.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="File 20180830 195319 hw4ka2.jpg?ixlib=rb 1.1" /><figcaption>Research suggests that women enterprises in Tanzania are shy to take up business loans.<br />
<span class="attribution"><span class="source">Shutterstock</p>
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<p>By <a href="https://theconversation.com/profiles/vanessa-naegels-540468">Vanessa Naegels</a>, PhD researcher, <em><a href="http://theconversation.com/institutions/katholiek-universiteit-of-leuven-1712">Katholiek Universiteit of Leuven</a></em></p>
<p>With an annual <a href="https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2017&amp;locations=TZ&amp;start=2013">GDP growth of 7%</a> since 2013, Tanzania is one of the fastest growing economies in sub-Saharan Africa. Much of this economic growth is driven by small and medium sized enterprises, more than half of which are <a href="http://www.fsdt.or.tz/wp-content/uploads/2016/05/MSME-National-Baseline-Survey-Report.pdf">owned by women</a>.</p>
<p>But, women-owned businesses in emerging economies like Tanzania often can’t grow because of a lack of financing.</p>
<p>The most important financing source for small businesses worldwide is debt. However, <a href="http://www.ilo.org/empent/areas/womens-entrepreneurship-development-wed/WCMS_430949/lang--en/index.htm">research</a> shows that many women entrepreneurs in emerging economies don’t hold formal loans such as bank and microfinance loans. Traditionally the assumption has been that this is caused by a lack of supply. But data points to a different answer.</p>
<p>A 2013 <a href="https://www.tandfonline.com/doi/abs/10.1080/13691066.2017.1358927?journalCode=tvec20">survey</a> among women entrepreneurs in Tanzania showed that more than 80% of bank loan applications and more than 90% of microfinance loan applications had been approved. At the same time, only 18% of women entrepreneurs applied for bank loans and 28% for microfinance loans.</p>
<p>This suggests that a lack of demand instead of a lack of supply is to blame for the limited use of formal loans by Tanzanian women entrepreneurs. This is the result of borrower discouragement: women have negative beliefs with respect to bank and microfinance loans, which discourages them from applying.</p>
<p>In our <a href="https://limo.libis.be/primo-explore/fulldisplay?docid=LIRIAS1719250&amp;context=L&amp;vid=Lirias&amp;lang=en_US&amp;search_scope=Lirias&amp;adaptor=Local%20Search%20Engine&amp;tab=default_tab&amp;query=any,contains,staffnr_U0096673&amp;sortby=date&amp;offset=0">study</a> we set out to identify women entrepreneurs’ beliefs about bank and microfinance loans. We also explored where these beliefs originated from and exactly how they discourage women from borrowing. We interviewed 29 women entrepreneurs from Dar es Salaam, Tanzania’s largest city and economic capital.</p>
<p>We found that there are many different reasons why women entrepreneurs don’t apply, many of them interrelated.</p>
<h2>Lack of trust</h2>
<p>Most women we spoke to said they didn’t believe that loan officers discriminated against women. But they complained about the unattractive borrowing terms offered by banks. We heard stories of extremely high interest rates (up to 20% or even 30% annually) and collateral requirements.</p>
<p>Many women told us that they had no collateral. They either didn’t own a house or land or didn’t have their husbands’ permission to use them as collateral.</p>
<p>In addition, those who could use their houses as collateral didn’t want to risk losing them in the event of defaulting.</p>
<p>Entrepreneurs mentioned that high taxes as well as adverse economic and political conditions reduced their profits.</p>
<p>As a result, many feared that they would fail to pay back their loan and would then face harassment or abuse by loan officers.</p>
<p>Apart from unattractive borrowing terms and default risk, many argued that application processes were long and costly. One informant told us she couldn’t provide the extensive financial information required because she didn’t keep accounts.</p>
<p>And loan officers often requested bribes to speed up the process or bend requirements.</p>
<p>The women also complained about various types of inappropriate behaviour from loan officers. Two women mentioned that loan officers asked for sexual favours in exchange for a loan. Others blamed them for exploiting entrepreneurs’ lack of financial knowledge.</p>
<p>For example, women who do end up applying for loans don’t know that payments increase if they are late in paying back their loans, or that the bank has the right to sell their collateral.</p>
<p>We also heard stories of loan officers who visited women entrepreneurs in their businesses or even at home to convince them to take out a loan. One informant claimed that loan officers purposefully sought out entrepreneurs with valuable assets in the hopes of seizing them in case of default.</p>
<h2>Painful experiences</h2>
<p>Two mechanisms shape women entrepreneurs’ beliefs: personal experiences and stories from others.</p>
<p>Some informants applied for loans in the past and were rejected; others had trouble reimbursing their loan or experienced other problems such as corruption. Even if they’d had these experiences taking out informal loans, it nevertheless affected their beliefs about formal loans.</p>
<p>Stories of other people’s negative experiences with both formal and informal loans also shaped their beliefs. These stories either come from within the entrepreneur’s personal network or were passed on within the community.</p>
<p>Women entrepreneurs’ negative beliefs about formal loans give rise to negative attitudes. Some mentioned that getting a loan would reduce their freedom to run the business and use the money as they saw fit.</p>
<p>Because of their negative attitudes most women entrepreneurs said they didn’t intend to apply for a loan any time soon. One said that a bank or microfinance loan would be the last thing she would do to access money for her business.</p>
<h2>What needs to be done</h2>
<p>In the past policymakers have tried to address women-owned businesses’ lack of financing by increasing the supply of finance. But our research shows that this is addressing the wrong problem. In Tanzania women entrepreneurs aren’t deterred by a lack of supply. They don’t apply for formal loans for a host of reasons – most of them negative beliefs.</p>
<p>This is what needs to be changed. But that’s easier said than done.</p>
<p>Often, entrepreneurs’ beliefs are rooted in legitimate issues such as loan officers’ inappropriate behaviour. So it’s imperative that policymakers tackle problems such as corruption, harassment and abuse.</p>
<p>In other cases negative beliefs are probably the result of entrepreneurs’ lack of knowledge and low financial literacy. This can be mitigated by educating women entrepreneurs on how to keep accounts, how to invest loans and explanations on the relationship between interest and risk.<img loading="lazy" decoding="async" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/102429/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p>
<p>This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/why-tanzanian-women-entrepreneurs-dont-apply-for-formal-loans-102429">original article</a>.</p>

Why women-owned businesses in emerging economies like Tanzania often don’t grow

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<p>Doreen Kosi, Vice President of Legal and Corporate Affairs for ABInBev Africa and SAB reveals, what the brewer is doing to create women entrepreneurs and train men for action.</p>


women entrepreneurs

COVID-19: Lessons from women entrepreneurs in Rwanda

This business advisory clinic seeks to empower women entrepreneurs in Rwanda

100 women entrepreneurs win Invest2Impact competition

The role of formal education in boosting women’s access to finance

G7 commits $251mn package to women entrepreneurs: Are gender inequality gaps narrowing?

Supporting women business owners why and how – Access Bank CEO explains

Banks urged to support women entrepreneurs

Understanding motivational factors affecting informal women entrepreneurs

Why women-owned businesses in emerging economies like Tanzania often don’t grow

What ABInBev Africa is doing to create women entrepreneurs

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women entrepreneurs

COVID-19: Lessons from women entrepreneurs in Rwanda

This business advisory clinic seeks to empower women entrepreneurs in Rwanda

100 women entrepreneurs win Invest2Impact competition

The role of formal education in boosting women’s access to finance

G7 commits $251mn package to women entrepreneurs: Are gender inequality gaps narrowing?

Supporting women business owners why and how – Access Bank CEO explains

Banks urged to support women entrepreneurs

Understanding motivational factors affecting informal women entrepreneurs

Why women-owned businesses in emerging economies like Tanzania often don’t grow

What ABInBev Africa is doing to create women entrepreneurs

News Tips

Advertise With Us

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