BoG commits to promoting gender inclusive finance with AFAWA Initiative; to bridge $42bn financing gap

The Affirmative Finance Action for Women in Africa (AFAWA) Finance Series has been launched in Ghana with the aim of promoting gender-inclusive finance in Africa. The event, which will run for three days, provides a unique platform for stakeholders to discuss pertinent issues regarding access to finance for women entrepreneurs in Africa, a key socio-economic challenge in these times.

In a speech delivered on behalf of Governor Ernest Addison, the Bank of Ghana expressed its full support for the initiative, applauding the efforts of the African Development Bank (AfDB) to promote more access to finance for women-owned businesses through a number of interventions, including the AFAWA initiative. The initiative aims to close the US$42 billion access to finance gap for women-empowered businesses in Africa over the next five to six years by working with partner financial institutions and through innovative financing instruments to provide capacity building and policy dialogue to support appropriate legal and regulatory reforms.

This initiative is crucial given the adverse shocks that have constrained access to finance in Africa, not only for governments but also for firms, particularly small and medium-sized enterprises (SMEs), the majority of which tend to be owned by women. Access to finance for all economic actors remains a key policy challenge in Africa, including women and youth, and policymakers continue to explore new interventions to address existing gaps.

According to the World Bank’s Global Findex Report 2021, 61 percent of the adult male population has access to finance, compared with 49 percent of females in Sub-Saharan Africa. Although the gender gap in access to finance reduced from 9 percent to 6 percent in 2021, some 745 million women are still left without access to financial services in the developing world.

In Sub-Saharan Africa, the gender gap in access to finance, according to the World Bank Findex report of 2021, is at 12 percent, higher than the average of 6 percent for the developing world. In Ghana, the gap as of 2021 had widened to 11 percent, compared with 9 percent that had persisted since 2017, although the percentage of women accessing finance had increased from 27 percent in 2011 to 63 percent in 2021.

Despite the critical role of women in economic development, access to finance has been a major constraint for women-owned businesses. With an estimated US$42 billion financing shortfall for African women-owned businesses across all value chains, women entrepreneurs encounter various obstacles when accessing finance. This translates into constrained overall economic growth and resilience, and lost opportunities for all.

In light of this, the partnership between AFAWA, the African Guarantee Fund (AGF), and the Ghana Association of Banks holds great potential to equip women-owned businesses to spearhead the development of the single Africa market under the African Continental Free Trade Agreement and help expand the economy and create more jobs for the youthful population.

The Bank of Ghana, in addition to providing the enabling regulatory environment to promote financial stability, is fully committed to promoting inclusive finance and gender-inclusive finance particularly. As a member of the Alliance for Financial Inclusion, the Bank of Ghana has made commitments under the Denarau Action Plan on Gender Inclusive Finance to advance gender-inclusive finance with emphasis on promoting women’s access, usage, and quality of financial services and products.

The Bank of Ghana continues to strengthen critical credit market infrastructure, such as its credit bureau-based credit reporting system and its Collateral Registry, to help facilitate lending to MSMEs and women-owned businesses. The partnership between AFAWA, the AGF, and the Ghana Association of Banks is therefore timely and urgent, as part of efforts to help the economy recover from the current macroeconomic challenges, and make it more resilient going forward.