Women-owned businesses in Nigeria account for a significant share of the country's entrepreneurial ecosystem, yet they continue to face structural barriers to accessing finance needed for growth and expansion. According to Sophia Ukoni, Lead of Market Research at Moniepoint Inc., women own one in three businesses in Nigeria, making up 33% of the country's MSMEs and 35% of informal businesses. This significant presence in the entrepreneurial landscape highlights the importance of addressing the financing gap faced by women-owned businesses.
Women-owned businesses in Nigeria demonstrate a significant capacity for job creation, with 39% of women-owned informal businesses employing staff, compared to 36% of male-owned businesses. Ukoni highlighted that women lead in several segments of the informal economy, particularly in businesses linked to everyday consumption, such as food, hospitality, and trade. For instance, women own 86.8% of informal accommodation and food services businesses and account for 55.9% of participants in wholesale and retail trade.
Despite their economic contributions, women in Nigeria remain disadvantaged in access to financial services. Data from EFInA shows that only 45% of Nigerian women have access to financial services, compared to 56% of men. Globally, women-owned MSMEs face an estimated $1.9 trillion unmet financing need. The barriers to accessing finance include unconscious bias among lenders, fewer women in financial leadership, limitations on asset ownership, and inadequate awareness of funding opportunities.
The disparity in access to finance is particularly pronounced in the size of loans accessed by women-owned businesses. Women are only half as likely as men to obtain loans above N1 million. Additionally, 41% of women-owned informal businesses earn less than N10,000 in daily profit, compared to 34% of male-owned businesses. In contrast, only 10% of women-owned businesses earn more than N50,000 in daily profit, compared to 16% of male-owned businesses.
However, women borrowers in Nigeria record lower default rates, with defaults among women reported to be 2.5 times lower than the baseline for men. This highlights the reliability and creditworthiness of women-owned businesses. The Moniepoint research also shows that rising operating costs are eroding the ability of small businesses to save and reinvest, with 79% of informal businesses reporting increased operating costs over the previous year.
The research by Moniepoint Inc. reveals that many small businesses in Nigeria are struggling to save and reinvest due to rising operating costs. While 65% of informal businesses recorded revenue growth, only 47% recorded an increase in profits. Most businesses save less than N50,000 monthly, and 42% of informal businesses would run out of savings in less than a month if their income stopped.
To address the financing constraints faced by women-owned businesses, Moniepoint has restructured its lending model to reflect the way small businesses operate. The fintech company uses transaction data generated by businesses on its platform to assess their creditworthiness, rather than relying solely on conventional collateral and extensive paperwork. This approach aims to provide more accessible and inclusive financing options for women-owned businesses in Nigeria.
Key points
- Women-owned businesses in Nigeria face a significant financing gap, despite lower loan default rates and a strong tendency to create jobs.
- Women in Nigeria have limited access to financial services, with only 45% having access to financial services, compared to 56% of men.
- Moniepoint has restructured its lending model to provide more accessible and inclusive financing options for women-owned businesses in Nigeria.
