In Nigeria, women-owned businesses face significant hurdles when securing funding, a challenge far more pronounced than for their male counterparts. Despite contributing significantly to the country's economy, women entrepreneurs struggle to access the capital they need to start, run, and expand their businesses.
The stark reality is that, per a recent case study by Moniepoint, a mere 16.7% of these women can secure loans from financial institutions, leaving the vast majority — 83.3% — relying on personal funds, family, and friends for their business capital. Besides, there is a 32% financing gap for women-owned businesses in Nigeria.
Beyond statistics, the gap represents the daily struggle of countless women who do not have access to funding or are offered smaller amounts than they need.
The result is a reliance on personal savings and informal loans, which, while helpful, are often insufficient to fuel significant business growth. For 40.2% of female entrepreneurs, individual funds and savings are the primary source of capital.
While self-financing can be argued to show commendable resilience and resourcefulness, it also highlights the systemic barriers that prevent these women from accessing more substantial and sustainable funding sources.
The over-reliance on personal funds is not just a financial strain but also a limiting factor in the ability of these businesses to scale.
A closer look at external funding — which Nigerian women turn to when they hit a roadblock — reveals that many women turn to family and friends, receiving loans or cash gifts to keep their businesses afloat.
Relying on informal sources of capital underscores a deep-rooted issue within Nigeria's financial system — excluding women from formal financial opportunities.
This exclusion is not just a consequence of societal constraints and unconscious bias in the financial system but is fuelled by stringent collateral requirements and the lack of financial products tailored to the needs of women entrepreneurs.
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Without access to adequate capital, women-owned businesses are less likely to expand, innovate, or compete effectively in the marketplace. This not only stifles individual business growth but also limits the overall economic potential of Nigeria, where women-owned businesses play a crucial role.
Fintech companies like Moniepoint claim to be bridging this gap by offering data-driven, accessible lending solutions tailored to women entrepreneurs. Yet, much work remains to be done.
Closing the 32% financing gap and empowering women-owned businesses will require a concerted effort from traditional financial institutions, policymakers, and the broader business community to create more inclusive, accessible, and equitable financial systems.
