Uniting to see women empowered: how technology and blended finance collaborations can advance gender-lens investing
What a way to start with International Women’s Day of Melanin Kapital, starting the day at Kempinski Hotel for a breakfast organized by USAID-KIM and the East African Venture Capital Association (EAVCA) gathering the financial actors in Kenya supporting gender equality and women empowerment through access to finance. For our team present at the event in Nairobi led by our CFO, Stella Kariuki, and our Tuungane Program Manager, Caroline Karanja, it was a fantastic opportunity to meet the USAID team led by Lucy Mitei and Mugure Kamau with other passionate women in the industry, from entrepreneurs, to business support advisors and from banks to investment funds.
This event was the perfect opportunity to talk about the best practices of gender lens investing and share more about our collaboration with Absa Bank Kenya on our Tuungane 2X program focusing on capacitating and financing up to 600 women-focus enterprises in Kenya, following the 2X criteria. By leveraging on the fintech technology of the Melanin Kapital MSME financing marketplace, the credit capacity of Absa Kenya and its guarantee partnership with the African Guarantee Fund, our ambition is to Break the Biases when it comes to financing women and in particular to break the following barriers:
- Lack of access to finance for business growth,
- Lack of collateral,
- Lack of credit-readiness.
Ultimately, The Tuungane 2X Let’s Unite To See Her Empowered Program, aims at reducing the risk of financing Women MSMEs for Absa Bank Kenya by focusing on providing:
1. Financial online education for MSMEs to understand the expectations of the bank and other investors. This will help in reducing the lack of understanding of financial terminologies, the credit processes and the role of credit bureaus, which can place women at a disadvantage.
2. Investment readiness capacity building, supporting MSMEs to document the activities of the business through Melanin Kapital MSME financing marketplace, including an accounting module which will help entrepreneurs to translate their banking statements directly into financial statements on a real time basis.
3. An integrated auditing and rating system to adapt the risk assessment methodology to those businesses.
4. A partnership intervention with the African Guarantee Fund to support women-led entrepreneurs that do not have access to collaterals by provision of partial credit guarantee to Absa Kenya.
After 3-month of piloting this program for 350 women-focused businesses, we are looking forward to move to the next steps to grant our entrepreneurs with access to the capital they need to become successful entrepreneurs!
Why is it crucial for us to advance the gender-lens investing agenda in Africa?
As a woman-owned business ourselves, at Melanin Kapital, the topic of gender equality is central to our vision of financing the Africa We Want. And thanks to the guidance of Jessica Espinoza and the 2X Challenge Criteria Initiative, we could ensure that, we as an organisations and our MSMEs beneficiaries could advance the agenda and contribute in solving the 3 key challenges towards gender inequality:
- The funding gender gap
- The gender labour gap
- The underserved women market
According to the World Economic Forum, the funding gap for women entrepreneurs is still one of the most significant and persistent problems in entrepreneurship in the World in general and on the African continent in particular, where the African Development Bank has estimated the entire funding gender gap at USD 42 billion[1]. Just on the innovation space alone, female-led start-ups, or those with at least one female founder, receive a disproportionately small percentage of the flow of global venture capital. In 2019, only 11% of seed-funding capital in emerging markets went to companies with a woman on their founding team, as well as only 5% of all later-stage funding. This is the case despite overwhelming evidence that investing in gender-diverse teams leads to stronger business outcomes[2]. Further analysis suggested that the gender make-up of the founding team is strongly influencing the disparity in capital raised, indicating a potential bias in investor decision-making, in other words, a higher perceived risk of investing in female-led startups.
Besides the lack of access to financial resources, women still face tremendous challenges to access the job market. According to the 2015 study on How Advancing Women’s Equality Can Add $12 Trillion To Global Growth by McKinsey Global Institute, closing the gender labour gap could add USD 28 trillion, or 26%, to annual global GDP by 2025. Although women account for half the world’s working-age population, they do not achieve their full economic potential and only generate 37% of GDP. According to the report, in the event of a full-potential scenario, where women would participate in the world of work to an identical extent as men — erasing the current gaps in labor-force participation rates, hours worked, and representation within each sector (which affects their productivity) — there could be an addition of value created amounting to USD 28 trillion to annual GDP in 2025[3].
Finally, women consumers remain also wrongly underserved by the market. Yet, the female economy represents a market more than twice the size of India and China combined. Globally, women consumers control about USD 20 trillion in annual consumer spending, and that figure could climb as high as USD 28 trillion in the next five years. Given those numbers, it would be counter-intuitive to ignore or underestimate the female consumer, however, women still feel vastly underserved, according to the Harvard Business Review. Few companies have responded to their needs for time-saving solutions or for products and services designed specifically for them[4].
By supporting women-focused MSMEs through the Tuungane 2X program na Absa, Melanin Kapital aims to contribute in closing those gaps by equipping entrepreneurs with the necessary financial skills and access to funding opportunities that can enable them to be successful.
Our ambition: empowering the next generation of Women-led African Multinationals
As a woman CEO myself, I am truly convinced that it is by enabling and growing women-led companies towards success that we can see more amazing Role Models in Africa inspiring millions of other young women aspiring to become leaders one day.
Last October, we had the amazing opportunity to have the Kenyan award-winning entrepreneur and billionaire Dr. Esther Muchemi as a Keynote Speaker during the opening ceremony of the Tuungane 2X Program, who inspired and motivated the 350 entrepreneurs of the program, eager to hear everything about her story starting from a single shop to a massive conglomerate, the Samchi Group. Born in Kenya and trained as an accountant, Esther started Samchi from scratch until it grew into 10 companies: Samchi Telecommunications Limited, Jumbo Communications Limited, Forward Airtime Limited, Mergut Limited, Samchi Credit Limited (a microfinance institution), Samchi Heights Limited (a real estate development company, After 40 Hotel Limited, El-Roi Plaza (a shopping arcade), Heavenly Wings Limited (a restaurant) and Space International Limited.
Having the opportunity to receive the mentorship of Dr. Esther and read more about her journey through her book has been a real inspiration for me that will continue to fuel me in growing my business. Interestingly enough, Dr. Esther Muchemi has been banking with Absa since the beginning of her entrepreneurial journey. It is by giving a chance to the young Esther Muchemi that Absa can today promote the success story of the CEO Dr. Esther Muchemi, head of one of the most powerful conglomerates in Kenya. So yes, for institutions and investors, taking the risk with MSMEs in their growing steps does pay off.
I am a strong believer that empowering an African woman entrepreneur, is not simply growing a company, it is creating the role models that will empower dozens, hundreds, even thousands of other African women that will dare start their own journey thanks to this inspiration!
Now, what is next?
The road towards closing the gender finance gap is long indeed. But, we hope at Melanin Kapital to be at the forefront to contribute to the gender-lens financing agenda, by providing the technology infrastructure and the right blended finance collaborations enabling more women to build and grow their business to become the role model of our daughters.
As Kofi Annan once said ‘there is no tool for development more effective than the empowerment of women’, now it seems that more and more financiers tend to agree with him and act towards gender equality. It has become clear that building today the Africa we want tomorrow cannot not be achieved without empowering women and ensuring that we all get access to equal opportunities. So, let’s unite towards this vision, let’s unite to see her empowered!
Happy International Women’s day everyone !
Article written by: Mélanie Keïta Mariam
Article edited by: Ian Minjire Kibira
Sources
[1] Quartz, February 2021, retrieved from: https://qz.com/africa/1969926/investors-are-finally-taking-africas-female-founders-seriously/
[2] World Economic Forum, January 2021, retrieved from: https://www.weforum.org/agenda/2021/01/gender-finance-gap-startups-accelerators-entrepreneurs/
[3] McKinsey, 2015, How Advancing Women’s Equality Can Add $12 Trillion To Global Growth
[4] Harvard Business Review, 2009, The female Economy, retrieved from: https://hbr.org/2009/09/the-female-economy
