Basic rights and Equality

Fostering gender-equitable economies through development financing in Africa

6 min


Tonny Odokonyero

Progress towards gender-equitable economies remains slow in Africa, and women are disproportionately affected by inequality. This not only harms women’s welfare but national economies too. This blog explores the role of Development Finance Institutions in supporting the economic empowerment of women and, in turn, economies across Africa.

The stark reality is that Africa is still far from attaining gender-equitable economies in all aspects. An extensive range of gender disparities remains.

For example, women have less access to financial products and services than men. Based on recent global Findex data on financial inclusion, sub-Saharan Africa has a 12-percentage point gender gap. Double-digit gap countries in the region outweigh single-digit gap countries, a situation that is persistent (Figure 1). Indeed, the financial inclusion gender gap here is twice as large as the average for developing economies, and three times larger than the global average.

                    Source: computed by Author (Tonny Odokonyero) using Global Findex data.

Other prevailing gender imbalances on important issues in Africa include the gender pay gap (30%), Information and communications technology (ICT) gender gap (23%), mobile access gender disparity (8%) and low female labor force participation rates (i.e. they are in employment or seeking employment) – a long-standing challenge that sees Africa lose out on the productive potential of half of its effective workforce.

Another disparity is disproportionate physical asset ownership – e.g. of agricultural land. Women own just 5% of land in Uganda, 6% in Kenya, 3% in Malawi. The list goes on. On entrepreneurship, several African countries still experience vast underrepresentation of women, apart from a few that have made headway like Botswana, Ghana, and Uganda based on the index of women entrepreneurs.

The benefits of gender-equitable economies

Strides towards gender-equitable economies undoubtedly translate into tangible economic benefits. Some of the key manifestations of a gender-equitable economy that matter a great deal in development are female economic participation and financial inclusion.

Why Africa and the whole world should care, and the facts about how gender equality matters in the development agenda, are clearly articulated in contemporary development economics texts. I draw attention to a few. Gender equality, including the financial inclusion of women, is central to stimulating societal solidarity, competition, economic growth, and economic development.

Female financial inclusion, for instance, empowers women economically. Savings, credit, and investments in women’s skills, education, and businesses enable women’s economic security. Financial inclusion also improves female labor force participation, boosting the economic value of the workforce overall.

The International Monetary Fund (IMF) has shown that gender equality goes hand-in-hand with a country’s economic and financial stability. It is a stimulant for entrepreneurship, private sector performance, economic growth, and income inequality reduction.

What are development banks doing to support women in Africa?

Some of the 86 African member Development Finance Institutions (DFIs) in the Association of African DFIs (AADFI) are promoting women’s economic empowerment and the gender equality agenda, given their importance to economic growth and development.

The DFIs, under AADFI, have committed to mainstreaming gender equality in development finance. Consequently, under the patronage of the African Development Bank (AfDB), the Affirmative Finance Action for Women in Africa – a pan-African solution – was instituted to address the financing gap confronting women’s SMEs on the continent. This $500 million guarantee fund supports women-owned enterprises and commits to bridging a huge financing gap of $42 billion faced by women entrepreneurs in Africa. Its approach is to de-risk lending to women to ease access to capital through guarantees. Other gender lens-related initiatives by the AfDB include the African Women in Business Initiative and Women’s Entrepreneurship Financing Gap Fund.

In addition to the AfDB, the leading DFI in advocating for gender lens investing in the continent, a few African national DFIs are also delivering on the commitment. Except for the few, DFIs under the AADFI do not have a clear-cut gender lens investing agenda. Among the few, the Development Bank of Southern Africa has established a gender mainstreaming program to source infrastructure financing for women-owned enterprises. In Mauritius, the Development Bank of Mauritius designed a women’s credit initiative dubbed the “’Women Entrepreneur Loan Scheme’’, under its SME lending facility with interest rates as low as 0.5% – 3% p.a. depending on the loan amount.

In the East African region, the Uganda Development Bank (UDB) is a notable national DFI among the few in the continent that are explicitly contributing to a gender-equitable economy through a gender lens investing initiative. The salient one is UDB’s ‘’Women Prosper Loans’’ – a specialized intervention delivered through women’s acceleration and asset acquisition facilities, tailored to provide women-owned/led enterprises with affordable credit for increased women’s participation in the economy and inclusive socio-economic development.

Huge tasks ahead

In spite of the DFIs and other efforts, achieving gender-equitable economies remains a great challenge in Africa. Progress remains slow, and inequalities are pronounced. Policy and development interventions can only reverse this through requisite investments and ensuring that Africa walks the talk of gender equality.

Against all the odds, women are emerging as drivers of the global economy. An author in The Economist once said, “nations that fail women fail”, and another with a similar story in the Harvard Business Review opined that ‘’it would be foolish to ignore the female economy”, given women’s great potential to drive the world economy.

It is apparent that the female economy is a large emerging market with great potential for sub-Saharan Africa as well. Female entrepreneurs and consumers can turnaround African economies remarkably if harnessed. Research data show that women entrepreneurs contributed between US$250 billion and US$300 billion to African economic growth in 2016, or about 13% of the continent’s GDP. This sends a strong message to Africa: policies need to pay more heed to gender-equitable economies.  

The task that remains stems from the reality that Africa, and the world at large, is not on track to achieve gender-equitable economies, including the 2030 agenda for sustainable development on gender equality and women empowerment. Recent Sustainable Development Goal (SDG) data affirm that achieving the 2030 agenda target for all the gender equality indicators is impossible at the current rate of progress. Based on the SDG projection data, it will take between 140 and 300 years to achieve key gender equality results. Huge tasks, therefore, lie ahead for Africa and the world over. In addition to other policy interventions, gender-responsive investments by DFIs are key in these efforts to increase opportunities for women’s economic participation.

A major task ahead is also to think unconventionally about how to approach women’s development issues in Africa. Fostering gender-equitable economies through development financing requires African DFIs to defy the status quo – to provide new solutions with a clear development lens.

Here, African DFIs ought to be intentional in situating African women in Africa’s growth agenda, beyond solutions delivered by other development agencies.

Other agencies mostly deliver solutions that lack a transformative lens for African women. A major reason for failure to transform women and local economies, as suggested by research, is that their priorities are largely driven by purse-strings than what is more preferable locally. Their responses primarily focus on ensuring that poor women earn some income by engaging them in economic activities that are largely of subsistence and less productive in nature – e.g. artisanal business activities and small-scale subsistence farming. This approach has been unsuccessful in transforming African women economically because it lacks a development rationale – the main motivation is women’s welfare upkeep. To create resilient and sustainable gender-equitable economies in Africa, new solutions must desist from this invisible barrier to women’s economic transformation.

Tonny Odokonyero
Research Economist, UDB and PhD candidate, University of Pretoria