Gender bias obstructs women entrepreneurs’ ability to access trade finance

Women-owned Micro, Small and Medium Enterprises (MSMEs) are facing significant challenges in accessing trade finance due to gender bias, according to a recent report by the International Finance Corporation (IFC). The global development institution highlighted that despite women-owned ventures playing a crucial role in sectors like agriculture and retail in countries like Nigeria, they are struggling to secure trade finance from banks.

The IFC revealed that women-led businesses are often perceived as riskier, leading to reluctance from financial institutions to extend credit. Factors such as incomplete records, small business size, and lack of collateral further exacerbate the challenges faced by women entrepreneurs, resulting in stringent loan requirements and frequent rejections.

Moreover, societal misconceptions about the repayment capabilities of women entrepreneurs persist, despite evidence showing that women are more likely to repay loans than their counterparts. The report emphasized the need for gender-disaggregated data analysis to better understand the financial behaviors and challenges faced by men and women in accessing credit.

Henrietta Bankole-Olusina, vice president of economic inclusion at RPA, stressed the importance of addressing the gender gap in financial inclusion. Bunmi Lawson, managing director of EdFin Microfinance Bank, echoed the sentiment, emphasizing the need for policymakers and financial service providers to collaborate in addressing the underlying drivers of financial and gender gaps.

Efforts to boost financial and economic inclusion for women-owned MSMEs must go beyond product innovation and focus on addressing issues such as lack of income, education, and trust in financial institutions. With concerted efforts from all stakeholders, there is hope for bridging the gender gap in access to trade finance and promoting the growth of women-owned enterprises in emerging markets.