Lionesses
Assessing the Business ConfidenceLevels of Africa’s Leading Women Entrepreneurs, Including Their Confidence in Obtaining Growth Finance 2022
Business Confidence Report
Across the African continent, women entrepreneursarepivotingandreinventing themselves to address the multiple ongoing crisis including the COVID-19 PandemicandtheUkrainianfoodcrisis.As part of the reinvention process, they have and areadapting to new working models includingremotework,e-commerceandall types of digital technologies and tools to make them moreefficient, visible, and competitive.
AsAfricanWomenSMEspivotinthisnew era, access to financial services is critical tohelpthemgrowandreachscale.
Even beforethe pandemic, women-led businesses faced significant challenges accessingfinancing,astheyoftenlackthe financial track recordand collateral requiredtosecurebusinessloans;causing financial institutions to perceive them as being a risky segment. The African DevelopmentBank,throughitsAffirmative Finance Action for Women in Africa
Initiative (AFAWA), is committed to accelerating women entrepreneurs’ ability to access finance and the required knowledge to grow their businesses and create jobs. AFAWAaims to unlock up to $5 billion by 2026, in collaboration with financial institutions and women entrepreneurs.
The Bank is also committed to working with African governments to ensurethat inclusive policies arein place to enhance women entrepreneurs’ ability to access financingandtrade.
The second edition of the Lionesses Business Confidence Report and Index comesatacriticalmoment,allowingusto benchmark last year’sdata and evaluate African women-owned business performance,accesstofinance,anddigital transformation. Furthermore,itallowsusto learn how Africa’stop women business leaders assess the state of their businessescomparedtooneyearagoand whatopportunitiestheyseeforthemselves intheupcomingyear.
TheBank,throughtheAFAWAInitiative,is pleased to collaborate with Lionesses of Africa on the latest Lionesses Business Confidence Report and Index. Wehope women entrepreneurs, financial institutions,andgovernmentsusetherich data provided to make strong business andpolicydecisionstounlockthepotential of women-owned businesses across the continent.
EstherDassanou Manager
Affirmative Finance Action for Women in Africa(AFAWA)Initiative AfricanDevelopmentBank
FOREWORD
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INTRODUCTION
ThisLionesses BusinessConfidence Reportsharesinsightsderived from a surveyof Africa’sleading women entrepreneurs.The reportleverages Lionesses ofAfrica’s established 100 Lionesses network,a project thatidentifies and celebrates100 leading African businesswomen whose examplesinspire other women to pursue and realize their dreamsoffoundingand growing successfulbusinesses. These highlyexperienced women entrepreneurs havebuilt successfulbusinessesatscale, acrossa widerange ofindustrysectors.Theyrepresent the footprintofthe Lionesses ofAfricanetwork acrossthe continent,including North Africa, EastAfrica, WestAfrica, Central Africaand Southern Africa.
Thisreportprecedesthe Lionesses BusinessConfidence Index(LBCI),derived from responses collected fromthe 100 Lionesses in first-quarter2022. The experiences and perspectivesofthese businessleaders provide context totheLBCI, especially inlight ofCOVID-19’simpactonglobalsupplychains, marketuncertainty,and inflation.
LBCIwillprovide a forward-looking viewoftheAfrican economy fromthe perspective ofleading women entrepreneurs,surveying their confidence intheir nationaleconomies aswellastheir businesses, capital spending, hiring, revenues, and ability toaccess financing. Thisreport, incontrast, addresses the responseof leading women entrepreneurs tothe challengesofthebusinessenvironment, including their ability toobtain financetogrowand ability to digitizetheir
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FOCUS
Thisreportfocuses onfourkey areas:
The impact ofCOVID-19onbusinessperformance.Leading women entrepreneurs reportontheir satisfactionwithactualversusexpected revenuesfor first-quarter2022and the timetheyexpectitwill takefor themtoreturntopre-COVID-19businessactivity.
How leading women entrepreneurs financed their companies’ activities through2021andintofirst-quarter2022andwheretheysourcedthese funds.Italsosheds light onwhether these women will belookingto sourceexternal financinggoing forward and how confidenttheyfeelin thewillingnessoffinancialinstitutionstoprovideit.
The importance ofdigital transformation. Africa’sleadingwomen entrepreneurs reporttheir confidence in their companies’ digital capabilitiesand how theyplantochangespendingondigital technology.
How Africa’sleading women entrepreneurs assessthe stateoftheir businessesnowcomparedtoayearagoandtheirexpectationsfortheir businessesnextyear. Leadingwomen entrepreneursalsoidentify the mostimportantchallengesfacingtheircompaniesin2022.
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FIRST QUARTER SALES REVENUES
The Lionesses BusinessConfidence Surveyilluminates how COVID-19isaffecting Africa’sleading women entrepreneurs and how their businessesare performing relativetotheir expectations. Lionesses wereasked how first-quartersales in2022 comparedwiththeirpriorrevenueexpectationsforthequarter.Theyreportmixedfirstquarter sales revenues: 30% reportedthat first-quarterrevenuesexceeded expectations(10%reportedrevenueswere“much higherthanexpected” and 20% “higher thanexpected”), 35% “as expected,”and 35% did not meetexpectations (30%“lowerthanexpected” and 5%“much lower thanexpected”). There isa netnegativeof–5%forfirst-quarterrevenues.¹Thisisamorepessimisticrevenueoutlook comparedwiththe 2021report, whenLionesses reporteda net-positive revenue expectationof+2%.
There was someregionalvariation in first-quarterrevenue experiences.Lionesses in Southern Africaweremorelikelytorespond thatsales revenuesexceededtheir expectations, and Lionesses inNorth Africaweremorelikelytoreportthat sales revenueswerelowerthanexpected.
BasedonYourExpectations,RateYourCompany’sSalesRevenuesforFirst-Quarter2022(January, February,andMarch). 10% 20% 35% 30% 5% 40% 30% 20% 10% 0% MuchHigherthan Expected Higherthan Expected AsExpected LowerthanExpected MuchLowerthan Expected
¹The net-positive(ornegative)isthe differencebetweenthe percentage ofrespondentswho reported that theirQ1 2022 revenueswere higherthan expectedand the percentage who reportedthat their revenueswerelower thanexpected. 4
COVID
The Lionesses BusinessConfidence Surveyprovidesanopportunity tolearn about leading businesswomen’s expectationsfor whentheirbusinesseswillrecover from the impactofthe COVID-19pandemic. A majority(65%)indicatethattheir businesses werequite resilient,respondingthattheyeither weren’t impactedbythe pandemic, havealready recovered,orexpecttorecover during2022. A minority(8%)expecta recoverytopre-COVID-19levelsin2024orbeyondand 3%are unsurewhentheir businesseswillrecover.1%reporttheydonot everexpecttorecover topre-COVID-19 levels.
RECOVERY
WhenDoYouExpectYourCompanytoRecovertopre-COVID-19Levels? 12% 33% 20% 23% 8% 1% 3% 40% 30% 20% 10% 0% Our OurCompany Sometime Sometime Sometimein WeDoNot Unsure 5
The Lionesses wereasked where they sourced funds to financetheir company activitiesthrough 2021and intothe firstquarter of2022. The mostcommonsourceof financingwas retainedcompany earnings and owner’s capital. The use ofretained earnings was similar in2021and Q12022, but there was a slightdecreaseinthe use ofowner’s capital inQ12022comparedwith2021. There was a sizable decreasein COVID-19businesssupport and government grantsasa means to financecompany activitiesinQ12022comparedwith2021.
FINANCING
SOURCES OF
DidYouUseAnyoftheFollowingSourcesofFinancingtoFundYourCompany’sActivities? 44% 49% 13% 12% 5% 9% 9% 9% 11% 4% 5% 4% 2% 1% 45% 39% 3% 5% 6% 7% 8% 8% 4% 4% 4% 3% 3% RetainedCompanyEarnings Owner’sCapital COVID-19Business-SupportProgram/s FamilyandFriends GovernmentGrants BankLoans BankOverdrafts VentureCapitalorBusinessAngels NewPartners Equity/ShareIssue AssetSales TradeCredit LeasingorHire-Purchase Other 60% 50% 40% 30% 20% 10% 0% Q12022 2021 0% 6
SEEKING EXTERNAL FINANCING The Lionesses BusinessConfidence Surveyaddresses the external financingplans of Africa’sleading businesswomen overthe nextsix monthsand how confidentthey feel inthe willingness of financialinstitutionstoprovide these funds.Acrossregions,there iswidespreadinterestinsecuringexternal financing; 66% reporttheyanticipate lookingforitinthenearfuture(upfrom61%in2021). Moreofthe Lionesses (50%) anticipatethat financialinstitutionswillbewilling to provideloansorcredittotheirbusinessinthenextsixmonthsthanlackconfidencein their willingness toprovide funds (27%),while 22% wereneutral.Lionesses inEast Africareportthe greatestconfidence inthewillingness of financialinstitutionsto provide funds.Comparedwith2021, moreLionesses in2022anticipate seeking funds andtheyexpressmoreconfidenceintheirabilitytosecurethem. WillYouBeLookingforAnyExternalSourcesofFinancingtoFundYourCompany’sActivitiesintheNext SixMonths? 66% 12% 21% 70% 60% 50% 40% 30% 20% 10% 0% Yes Unsure No HowConfidentDoYouFeelintheWillingnessofFinancialInstitutionstoProvideYourCompanywithLoans orCreditintheNextSixMonths? 20% 30% 22% 18% 9% 30% 20% 10% 0% Very Confident Confident Neutral Unconfident Very Unconfident 7
DIGITAL
The Lionesses BusinessConfidence Surveydemonstratesthe importanceofdigital transformationtoAfrica’sleadingwomenentrepreneursinthetimeofCOVID-19.91% regarddigital transformationtobeimportant totheir company (69%reported“very important”and22%“important”),andonly1%regarditasinconsequential.
Despite the overwhelmingrecognition ofthe importanceofdigital transformationto theircompanies,onlytwo-thirdsexpressconfidenceintheircompanies’currentdigital capabilities.LionessesinNorthAfricaweretheleastconfident,withonlyhalfreporting theyare“confident”or“veryconfident”intheircapabilities.
TRANSFORMATION
HowImportantIsDigitalTransformationtoYourCompanyasaResultofCOVID-19? 69% 22% 8% 1% 0% 80% 60% 40% 20% 0% Very Important Important Neutral Unimportant Very Unimportant HowConfidentAreYouinYourCompany’sCurrentDigitalCapabilitiestoMeetYourNeeds? 23% 44% 21% 11% 0% 60% 40% 20% 0% Very Confident Confident Neutral Unconfident Very Unconfident 8
Leading women entrepreneurs alsoreportedonhow theyplantochangespendingon digital technology, withthe vastmajorityanticipating anincreaseinspending(85% reportedplans toincreasespending; 50% “alittle” and 35% “alot”). Lionesses inEast Africaweresignificantlymorelikelyto reportplans toincreasedigital spendingthan Lionesses inother regions,with92% reporting plans toincreasedigital spendingand 42% reporting plans toincreasespending“alot.”Lionesses who reportlow confidence intheir digital capabilitiesweremorelikelytoreportplans toincrease spendingondigitaltechnology“alot.”
HowDoYouPlantoChangeSpendingonDigitalTechnologyovertheNextSixMonths,Comparedwiththe PreviousSixMonths? 35% 50% 14% 0% 1% 70% 60% 50% 40% 30% 20% 10% 0% IncreaseaLot IncreaseaLittle NoChange DecreaseaLittle DecreaseaLot DIGITAL SPENDING PLANS 9
STATE
Lionesses wereasked tocompare the state oftheir companies now toa yearago and totheir expectationsfor their companies a yearfromnow.There was widespread optimism. A majority(72%) considerthe state oftheircompany to bebetter now than ayearagoandonly15%consideredtheircompaniestobeworseoff(anet-positiveof 57%). Looking ahead,the vastmajority(93%) anticipate their companies willbebetter off a yearfromnow,withonly2%anticipatingthattheir companies willbeworse off (a sizablenet-positiveof91%).
THEIR COMPANIES
OF
ThinkingAbouttheOverallStateofYourCompanyNow*ComparedtoaYearAgo(First-Quarter2021)*, WouldYouSayYourBusinessNowis... 45% 27% 12% 12% 3% 1% 80% 60% 40% 20% 0% MuchBetterOff ThanaYearAgo Somewhat BetterOffThan aYearAgo AbouttheSame asaYearAgo Somewhat WorseOffThan aYearAgo MuchWorseOff ThanaYearAgo Unsure ThinkingAhead*OneYearFromNow(First-Quarter2023)*DoYouAnticipateThattheOverallStateofYour BusinessWillBe... 30% 3% 2% 0% 2% 60% 50% 40% 30% 20% 10% 0% MuchBetter OffThanNow Somewhat BetterOff ThanNow Aboutthe SameasNow Somewhat WorseOff ThanNow MuchWorse offThanNow Unsure 63% 10
LIONESS INSIGHTS
Lionesses wereasked anopen-endedquestiontosolicit their insightsabout the most important challengesfacingtheir businesses.
Lionesses share several commonchallenges. Theysay thataccessto financetohelp growtheir businessisthwarting their growthplans.Accesstohuman capital isalsoa concern,withmanyreporting challengesinhiringappropriately skilled staff. Inflation has resultedinrisinginput costs and isleading tounanticipated changes inconsumer behavior, and manyhavebeenadversely affectedbyunstableglobalmarket conditionsand bysupply-chaininterruptions.
“Achallenge is finding capital to supportthe business, consideringthatmajorclientsrequirecreditlines.” —Mozambique “Findingpeoplewiththerequiredskillsetstofillsomespecific roleswithinthecompany,andhiringpeoplewhoarecommitted andopentogowingwiththecompany.” —Nigeria What do you think is the most important challenge facing your company in 2022? 11
CONCLUSION
Lionesses continuetoshowsigns ofrecoveryfromthe impacts ofthe pandemic. Two-thirdshaveeitherreturned orexpecttoreturn topre-COVID-19businesslevels beforethe end of2022, onlya small share reportthattheyare unlikelyto recover to pre-COVID businesslevelsorare unsurewhentheywillrecover.A majorityof Lionesses say theyeithermet orexceededtheir own expectationsfor sales revenues forthefirstquarterof2022andnearlythree-quartersreportthatthestateoftheir companyisbettertodaythanayearprior.
Accessto financeremains a dominantconcern.Lionesses financed their companies’ activitiesthrough 2021and into first-quarter2022largely bytapping internal sources of financing(mostly retainedearnings and personalcapital). There was a sizable drop offinaccesstoCOVID-19businesssupportprogramsandothergovernmentgrantsin the firstquarter of2022comparedwiththe previousyear. Two-thirds ofthe Lionesses anticipatelookingforexternalfinancingsoonbutonlyahalfhaveconfidenceinthe willingness of financialinstitutionstoprovide the loans orcredittheywillneed(thisisa largerpercent thanin2021, suggestingmodestbut growing confidence insecuring fundsfromfinancialinstitutions).
Lionesses continuetoregarddigital transformation asbeing essential totheir company,withmostreporting itas“important” or“very important.”While two-thirds haveconfidence intheir companies’current digital capabilities, themajorityreport plans toincreasespendingondigital technology. Their technology spendingplans wereverysimilartothosereportedin2021.
Looking ahead,the Lionesses are optimisticabout the nearfuture:93% expectthe state oftheir businessestobe“much betteroff thannow”or“better off thannow”, withinayear.
Open-endedresponses yielded threedominantthemes related tothe challengesthey face. The mostreportedchallenge isaccessto finance, which Lionesses needtogrow their businesses. Instability inthe domesticand globalmarkets isanother common concern,withmanyexperiencingthe complexityofnavigatingsupplychain interruptions and risinginput costs and notingthat customerbehaviorisunpredictable asinflationcreepsup. Finally,manyreportongoing challengeswith finding appropriatelyskilledpeopletofillkeypositions.
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ABOUT THE COLLABORATORS
NewYorkUniversity
The Marron Institute of Urban Management at New York Universityisaprovostialinstitute thatoperatesasathink-dotank. The lnstitute’smandate is impact. It invests in faculty and practice scholars who conduct on-the-ground research and programming,workingalongside practitioners and the publics they serve to gain insights and test new approaches with the potentialtodramaticallyimprove thequalityoflifeincitiesacross theglobe.TheInstitutebringsa multidisciplinary approach, with expertise in the natural and socialsciences,engineering,and governance.Throughinnovation, experimentation, and data analysis, the Institute promotes responsivedecision-makinginall sectors. The Institute addresses critical challenges in service deliveryanddevelopmentacross sixcontinents.
Forfurtherinformationaboutthe Marron Institute, visit www.marroninstitute.nyu.edu
LionessesofAfrica
LionessDataistheresearchunit of Lionesses of Africa Public Benefit Corporation, a social enterprise advancing Africa’s women entrepreneurs. Lioness Datatapsintoagrowingnetwork of over 1.5 million women entrepreneurs across Africa for actionable insights that help investors, policymakers, and development agencies make faster and better data-driven decisions. Lionesses of Africa buildsanddeliversdevelopment programmes, business tools, community platforms, digital media, networking events and information resources that women entrepreneurs need— connectingthemwithkeyglobal marketsforgrowth.Lionessesof Africa’scommunity stretches across54Africancountriesand thousands of users in the Diaspora in Europe and North America.
AfricanDevelopmentBank
African Development Bank’s AFAWAProgramme is a panAfrican initiative to bridge the $42 billion financing gap facing womeninAfrica.AFAWAfinance leverages the Bank’s financial instrumentstotransformAfrica’s bankingandfinanciallandscape, creatingincentivesforlendingto women in business. AFAWA’s technical assistance includes advisory services to financial institutionstoensuresuccessful implementation of their product portfolios for women and strengthens the capacity of women entrepreneurs through training to enhance business productivityandgrowth.AFAWA engages with governments and other stakeholders in Africa, in an enabling environment, to support legal, policy,and regulatory reforms and strike down the structural barriers impedingwomeninbusiness.
For further information about LionessesofAfrica,visit www.lionessesofafrica.com
For further information about African Development Bank, visit www.afdb.org/en
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