Due to existing inequalities and disadvantages, micro-finance has been hailed as an effective poverty alleviation and developmental tool for African communities, particularly for female recipients. Components of micro-finance include micro-credit, micro-savings and micro-insurance services. The provision of microfinance enables aspiring female entrepreneurs to increase their income or expand their businesses.

Furthermore, the gender gaps in income, asset ownership and education mean that women are the least likely to access credit from formal institutions. Without assets to hold as collateral, women are unable to get traditional loans. Low levels of education and the gender wage gap, along with high household spending burdens, reduces women’s capacity to save their income for either investment or emergencies.

The NEPAD Spanish Fund for African Women Empowerment provided disbursements to projects which provided seed capital for the establishment of small and micro businesses; provided micro finance at low interest rates to female entrepreneurs with viable business plans; facilitated collaboration with local micro-financing projects and private banks; provided training on the efficient utilisation of micro-finance; promoted the establishment of rural savings and loans associations and the development of new micro-finance delivery systems for female entrepreneurs. The outcomes of these projects are consistent with the Millennium Development Goals (MDGs) in Africa, and subsequent Sustainable Development Goals (SDGs) which consider gender equity, equality and women’s economic empowerment as pre-conditions for sustainable growth.

Key lessons learned from the projects:

1. Implement policy interventions that promote an enabling environment for women to access micro-credit
2. Address cultural and religious dynamics with respect to issues relating to loans
3. Improve literacy and numeracy competencies among women to ensure effective use, peer-monitoring and accountability of the micro-credit

Implement policy interventions that promote an enabling environment for women to access micro-credit

Future micro-credit projects should prioritise advocacy efforts that lobby for change in governmental policies regarding the provision of and access to micro-credit for African women. An example of this was the project undertaken by the Centre for African Women and Economic Empowerment (CAWEE), which promoted women’s entrepreneurship and economic empowerment through organising consultative forums, which addressed the challenges faced by Ethiopian women entrepreneurs. Policy ideas and workable recommendations were developed by members of parliament, women’s associations, local and international NGOs as well as by academics. ENAT Bank, which focuses on providing financial products and services to aspiring business women, was established as a direct result of the forums. This has benefitted thousands of Ethiopian women. An important component of the success of this project was the collaboration with various stakeholders to ensure that solutions were feasible, viable and effective.

Another illustration of policy intervention that promotes women’s access to micro-credit was the project undertaken by the Kenyan Centre for Land, Economy and Rights of Women (CLEAR). The group oversaw three pilot projects, one of which centred on the Bar K’Obala women’s group in Kenya. The women’s group was given access to micro-credit from the Kenyan Equity Bank’s micro-credit programme, thus allowing for members of the group to buy critical inputs to their farming initiatives. CLEAR’s work is anchored in influencing policy, research, advocacy and networking and capacity building on women’s land rights. The key insight gained by CLEAR from the Bar K’Obala women’s group, was the importance of policy changes and reform in providing economic empowerment to women through micro-credit. These policy changes embody necessary aspects of sustainable change, in that they enable women to improve their own circumstances and give women the ability to make their own financial decisions.

Address cultural and religious dynamics with respect to issues relating to loans

It is important to factor in cultural and religious dynamics when initiating micro-credit projects. There is a need to apply Islamic financial principles and banking practices in an accommodative manner when undertaking micro-finance projects in predominantly Muslim countries. For example, the Women’s Rights Awareness Programme (WRAP) found it critical to address cultural and religious practices with respect to issues of employment, loan savings and bank interest in rural communities in Kenya. WRAP held Q&A sessions to address concerns that Muslim communities had, as the individuals believed that “earning savings” from interest was unjust according to their religious norms. Ensuring sufficient consideration of religious and cultural norms improves the efficiency and effectiveness of projects, whilst also maintaining the principle of intersectionality. These considerations are particularly important in financial spheres, due to the close relationship between finances and family dynamics, which are further informed by culture and religion.

Improve literacy and numeracy competencies among women to ensure effective use, peer-monitoring and accountability of the micro-credit

The structure, efficient use and management of micro-credit financing are crucial to ensuring optimal use of the finances provided. Without an improvement in the competencies of the beneficiaries of micro-credit, and effective accountability practices implemented by the providers of credit, little benefit would be experienced by the impoverished women. An example of this was the project undertaken by the Ministry of Education, Science and Technology (MEST) in Sierra Leone, which provided low-interest micro-loans to 350 economically deprived women. To be eligible for funding, the women had to submit viable micro enterprise proposals and successfully complete literacy and numeracy training. The availability of such training programmes ensured that the micro-credit projects were pro-poor and that these interventions were both accessible to and effectively used by those who were most in need of them.

Furthermore, The Gambian Women’s Finance Association (GAWFA) micro-credit/loan scheme benefitted 10,231 women in The Gambia by assisting in creating jobs and financial returns to the beneficiaries. Of these, 1,545 women were trained in entrepreneurship and business skills and 375 women were trained on GAWFA’s Mobile Banking Technology platform to perform financial transactions and operations in a more transparent and accountable manner. Both interventions assisted in increasing both the competencies of the beneficiaries and the oversight mechanisms which ensured the success of the initiative.

Increase linkages among the banking sector, private sector, and micro-finance

The collaboration between NGOs, the private sector and the public sector is critical to the development and growth of micro-finance initiatives. A large component of this is the base support and educational initiatives provided by NGOs and the public sector, which help to reduce the risk on the private sector when distributing credit to African women. A successful implementation of these principles was achieved by the Kenyan Women’s Rights Awareness Program (WRAP) project where 251 women from four poverty-stricken, informal settlements in Nairobi were provided with micro-loans to start their own businesses. The success of this micro-finance project motivated a local bank (Equity Bank) to open accounts specifically aimed at ambitious businesswomen who want to expand their businesses.

Another implementation of this concept included consultative forums held by CAWEE in Addis Ababa, Ethiopia, which helped to facilitate the provision of micro-finance to female entrepreneurs and small business owners. Policy ideas and workable recommendations were developed by members of parliament, women’s associations, local and international NGOs as well as by academics. As a direct result of these forums, ENAT Bank was formed. The bank focused on providing financial products and services to aspiring business women. This has led to the economic empowerment and emancipation of thousands of Ethiopian women.