Table VIII.1: Selected Examples of DFIs’ Support to Women-Owned MSMEs in Africa

Table VIII.1: Selected Examples of DFIs’ Support to Women-Owned MSMEs in Africa

Country (Year) Program Implementing DFI Purpose Instruments Outreach Malawi (2008) Gender Entrepreneurship Markets Program Kenya (2006) Term Loans for Women

Nigeria (2009) Gender Empowerment Program IFC (through NBS Bank) Provide financing

AfDB (through Commercial Bank of Africa) IFC (through Access Bank) Training and financing

Training and financing Debt n.a.

Debt n.a.

Debt More than 680 women have received training and 550 women entrepreneurs received a total of USD 37 million. Non-performing loans were 1%. More than 1,562 bank accounts were opened and deposits increased by USD10 million.

Uganda (2007) Ugandan Women Entrepreneurs IFC (through DFCU Uganda) Training, networking and financing

Kenya (2006), Cameroon (2007), Tanzania and Zambia. Growth Oriented Women Entrepreneurs (GOWE)

Kenya (2002) USAID’s Development Credit Authority (DCA)

Tanzania (2007) Women Entrepreneurs Finance Program AfDB (jointly with the International Labor Organization (ILO)) Capacity building and financing

USAID (through KCB Bank and other financial institutions) IFC and Canadian International Development Agency(through Exim Bank) Training and financing

Training and financing Debt 300 SME women entrepreneurs received USD 16.1 million. 400 women business owners received training to enhance their finance and business management skills. Over 1,800 new accounts were opened as a result of the program.

Debt and Guarantee AfDB has guaranteed 47 loans amounting to USD 1,75 million and trained 600 women entrepreneurs on managing their businesses.

Debt More than USD 1.6 million have been lent to 350 women entrepreneurs.

Debt USD 1 million was committed targeting 30,000 women.

Source: Adapted from IFC (2011b).

3، Conclusion and Policy Recommendations

The above analysis highlights that DFIs are becoming increasingly one of the key players in fostering financial inclusion in Africa. By providing a broad range of financial services that goes beyond microcredit, DFIs are enhancing financial inclusion at both the households and SMEs levels. Their interventions through equity investments are also proving that not only debt but also equity finance may be material in successfully promoting access to finance; indeed, equity finance goes beyond the mere provision of capital by encouraging greater transparency and accountability. DFIs have started to exploit the great potential of mobile banking services and payment systems for financial inclusion as well. These have significantly enhanced the reach of financial services and have contributed to reducing costs thus making finance available and affordable to a considerable share of the financially excluded.

Notwithstanding these achievements, DFIs fall short from fully addressing a number of issues. First, one of the core principles according to which DFIs operate is additionality, which means that DFIs should focus their investments on those countries, sectors, or business segments that private investors consider too risky or not commercially viable. However, evidence suggests that DFIs tend to direct the bulk of their investments towards just few developing regions that are not those where financial exclusion is most severe, such as Africa. Therefore, DFIs should further increase their efforts in targeting African countries where a very small share of adults have an account at a formal financial institution, where SMEs are significantly constrained in accessing finance, and where payment systems and credit bureaus are the least developed globally. The analysis shows also that greater collaboration between DFIs is needed to create synergies and avoid duplication of efforts.

Second, although many DFIs provide technical assistance and advisory services along with their investments to foster financial inclusion for households, SMEs as well as financial infrastructure development, capacity-building initiatives or related commitments are still relatively limited. This constrains the effectiveness of DFIs’ actions, since evidence suggests that combining funding with the provision of capacity building is essential to ensure the success and sustainability of financial inclusion projects. Indeed, capacity-building is crucial for building up skills needed by financial institutions to serve households and SMEs more efficiently. Also, capital-building skills enable end-users of financial services to efficiently manage their finance and develop successful businesses. For this reason, DFIs should dedicate more of their resources and expertise to promoting capacity building activities. In order to ensure the effectiveness and sustainability of such initiatives, it is important that DFIs first identify the existing weaknesses through diagnostic exercises and then develop coherent and integrated training policies.

Finally, DFIs have been unable so far to develop a harmonized and fully transparent reporting system of their interventions. Data on DFIs activities are indispensable to track progress on financial inclusion, assess DFIs’ achievements, compare results across different DFIs, and

inform on issues that should be prioritized. Regarding the measurement of project outcomes, DFIs have started tracking the outreach of their financial inclusion interventions which may provide a better idea of the extent of their impacts. However, more information is needed on the development and poverty impacts as well as on the additionality and catalytic effects of DFIs’ financial inclusion projects.

Notes

1. The donor database includes 12 projects supported by the CGAP and 34 projects supported by the First initiative, 2 groups that were launched by donors (including DFIs) to support financial sector development and inclusion in developing countries. These projects are excluded from the analysis as the latter focuses on initiatives directly funded by DFIs. 2. European DFIs include: BIO, CDC, COFIDES (Coopérative Financière pour le Développement de l’Economie Solidaire Nord Sud), DEG, Finnfund (Finnish Fund for Industrial Cooperation), FMOIFU (Investment Fund for Developing Countries), Norfund (Norwegian Investment Fund for Developing Countries), OeEB (Development Bank of Austria), Proparco, BMISBI (Belgian Corporation for International Investment), SIFEM (Swiss Investment Fund for Emerging Markets), SIMEST (Società Italiana per le Imprese all’Estero), SOFID (Sociedade para o Financiamento do Desenvolvimento), Swedfund (Sweden’s development finance institution). 3. As of December 2010, debt represented 57% of direct investments realized by the 10 DFIs reporting to the CGAP funder survey in 2011 declining from 63% as of December 2008.

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