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Farida Yahya: Solving The Funding Challenges That Women Entrepreneurs Encounter

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Nigeria’s business scene is buzzing with tons of micro, small, and medium businesses (MSMEs) run by amazing women. Statistics reveal that most Nigerian women start their businesses as passion projects or to augment their household income. However, as they establish themselves in the market, they realise the significance of designing proper structures and positioning their businesses to thrive. Yet, these women often face obstacles when securing the funds required to grow their businesses. As we celebrate Women’s History Month, it is important to highlight some of the challenges, in terms of loans and financial aid, that still hinder the exponential growth of women-owned businesses and explore ways in which the public and private sectors can help alleviate these challenges.

What exactly is holding them back? Let’s closely look at the five key financing challenges that female entrepreneurs face, and consider how the private and public sectors can step up and be their allies.

Collateral Catch

Banks love collateral like houses and land. But many women entrepreneurs don’t own these assets outright, thanks in part to cultural norms. This makes it super tough to qualify for loans, even if their business idea is great. In cases where they do own these assets, it is classified as unqualified largely due to unconscious bias. Banks need to get creative, look at cash flow, positive references, or even group guarantees from other women-owned businesses. Also, public institutions should help out by offering loan guarantee schemes specifically for women entrepreneurs which reduces risk for lenders.

Lack of Information

Sometimes, amazing financial options are out there, but women entrepreneurs might not know about them, or feel unsure about negotiating the best deal. When building alternative finance products and services targeted at women, it is important to do proper market research by speaking to the women and testing the core elements with your target audience. To solve this, private sectors can host workshops and training programs specifically for women, teaching them the financial ropes. Public institutions can also set up resource centres with financial advisors who can guide them through the loan application jungle.

Unconscious Bias

Let’s be honest, sometimes unconscious bias creeps in. Loan officers might question women’s business plans more intensely compared to men with similar ideas. Companies should train their loan officers to recognise and eliminate unconscious bias. Public-private partnerships need to also create mentorship programs connecting successful women entrepreneurs with aspiring ones, fostering knowledge sharing and building confidence.

Funding Flowing the Wrong Way

Financial institutions tend to focus on industries that are primarily dominated by men, such as construction, rather than those dominated by women, such as agribusiness and beauty. However, these industries have a lot of growth potential, and many women entrepreneurs excel in them. Private investors should establish special investment funds that target women-owned businesses in these thriving sectors. Public institutions could also offer tax breaks or other incentives to encourage banks and investors to invest in female-led ventures.

Familial Conflicts

Women entrepreneurs face a great challenge in juggling their businesses and family life. They often deal with issues related to childcare and limited flexible work options. This makes it difficult for them to dedicate enough time and energy to grow their businesses. Private companies can help by offering flexible work schedules or on-site childcare facilities. Public institutions should prioritise the development of affordable childcare options to give working mothers a much-needed break.

To bridge the gender gap in financing, both private and public sectors must contribute. By implementing these solutions, we can create a financial system that is fair and supportive for all. It is important to note that collecting data on the experiences of female-owned MSMEs is crucial for designing effective support systems. However, delivering on impact should also be a priority alongside data collection. Let us empower women entrepreneurs, unlock their full potential, and witness the Nigerian economy soar with the power of its amazing women entrepreneurs.


Feature Image by Andrea Piacquadio for Pexels

Farida Yahya is a 2021 Mandela Washington fellow, an author, Start-up coach, and social entrepreneur with over 10 years working experience in the media and development sector.  Farida Yahya is the 11th President of MWFAAN (Mandela Washington Fellowship Alumni Association of Nigeria), a leading network of over 500 young leaders across Nigeria's 36 states and the FCT who are Alumni of the US state department's Mandela Washington Fellowship across the business, civic and public management tracks. She also founded the Brief Academy, a learning hub dedicated to developing and supporting female-owned startups to achieve wealth and scalability.  Farida is also the author of Redefining Beautiful, a book that discusses the realities of starting a natural hair business. You can connect with Farida Yahya on Instagram via her personal page @thefaridayahya

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