Challenges Faced by Women Entrepreneurs in Nigeria

They generally take out smaller loans and diligently repay them at a faster rate than their male counterparts.

However, despite having a better track record and being more trustworthy, new research has indeed verified that women are either less likely to receive funding or they receive smaller amounts when they do.

According to a study of the funding landscape for women-owned businesses in Nigeria by Moniepoint, the loan default rate for women was 2.5 times lower than for men, showing how efficient lending to women-owned businesses can be.

The report, which seeks to highlight the challenges faced by women-owned businesses and women entrepreneurs in Nigeria, revealed that women rely on personal funds and savings for their businesses.

Data from the report confirmed that 40.2% of women use their personal funds and savings to run or start their businesses, while 16.7% secure access to loans via financial institutions.

A closer look at the source of their “external funding” shows that a greater number of them access this from family and friends, either as loans or cash gifts.

The International Finance Corporation (IFC) defines women-owned businesses as firms with >51% female ownership. These are mostly led by female entrepreneurs that participate in total entrepreneurial activities, who take risks involved in uniquely combining resources, to take advantage of the opportunities identified in their immediate environment through production of goods and services.

When asked about the ease of accessing funding for their business, more than half of the women who were interviewed for the report confessed to finding it fairly difficult to raise money for their business. The women who started with personal savings rated the difficulty of accessing funding even higher, based on data from the report.

“Barring a few exceptions, such as family businesses or trust funds, it’s difficult to scale businesses with funds from personal savings or family and friends. Formal investment sets businesses up for faster growth and expansion. Sadly, not having the right documentation and collateral makes it difficult for small businesses to scale. However, the funding gap between women and men-owned businesses persists regardless of size, education level, industry and financial status,” the report stated.

An analysis of Moniepoint’s credit data also revealed that most women in the beauty and personal care industry find it hard to get external funding and have to rely on their savings to kickstart their businesses.