IFC finds that gender bias is a barrier to financial support for women entrepreneurs

The critical role of trade in fostering economic growth and poverty reduction, especially in emerging markets, faces setbacks due to pervasive gender bias hindering the financial backing of women-owned ventures, as reported by the International Finance Corporation (IFC).

Despite the significant contribution of trade to job creation, women-owned businesses encounter challenges in accessing financing from banks. The perception that women-led ventures are riskier leads to reluctance from financial institutions to extend credit to them.

The IFC report highlighted various barriers faced by women entrepreneurs in accessing trade finance, including gender bias, limited networks, information disparities, high interest rates, and bureaucratic processes. These challenges are further exacerbated by societal perceptions and biases that limit women’s access to finance.

In Nigeria, women-owned MSMEs in the agriculture and wholesale/retail sectors struggle to access trade finance due to inherent risks such as weather conditions, climate variations, and fluctuating commodity prices. Financial institutions perceive these ventures as high risk and often require collateral assets that women entrepreneurs may struggle to provide.

Despite misconceptions about the riskiness of women-led ventures, recent studies have shown that women entrepreneurs demonstrate a higher propensity to repay their loans compared to men. Initiatives aimed at promoting gender-inclusive financing and fostering supportive ecosystems for women-led ventures are crucial in unlocking their full economic potential.

Addressing systemic barriers and biases against women entrepreneurs is essential for promoting inclusive economic growth and empowering women to fully participate in international trade.