In Nigeria, women-owned businesses face greater difficulty in securing funding compared to businesses owned by men. Despite their significant contributions to the country’s economy, women entrepreneurs struggle to obtain the capital needed to start, run, and grow their businesses.
A recent study conducted by Moniepoint found that only 16.7% of these women are able to access loans from financial institutions, leaving the vast majority, 83.3%, dependent on personal funds, family, and friends for their business capital. Moreover, there is a 32% disparity in financing for women-owned businesses in Nigeria.
Beyond the numbers, this difference highlights the daily struggles of many women who lack access to funding or are offered smaller loan amounts than they require.
Consequently, they often rely on personal savings and informal loans, which, while helpful, are often insufficient to support significant business expansion. In fact, 40.2% of female entrepreneurs primarily depend on individual funds and savings for their capital.
While self-financing can be considered a sign of commendable resilience and resourcefulness, it also emphasizes the systemic barriers that prevent these women from accessing more substantial and sustainable funding sources.
Overreliance on personal funds not only creates financial pressure but also constrains these businesses’ ability to grow.
When encountering obstacles, many Nigerian women seek external funding from family and friends, often receiving loans or financial assistance to maintain their businesses.
Relying on informal sources of capital highlights a fundamental issue within Nigeria’s financial system—the exclusion of women from formal financial opportunities.
This exclusion is not only due to societal limitations and unconscious bias in the financial system but is also perpetuated by strict collateral requirements and the absence of financial products tailored to the needs of women entrepreneurs.
The lack of adequate access to capital makes it less likely for women-owned businesses to expand, innovate, or compete effectively in the market. This not only hampers individual business growth but also restricts Nigeria’s overall economic potential, where women-owned businesses play a crucial role.
While fintech companies like Moniepoint claim to be reducing this disparity by providing data-driven, accessible lending solutions customized for women entrepreneurs, there is still much work to be done.
Addressing the 32% financing gap and empowering women-owned businesses will require a joint effort from traditional financial institutions, policymakers, and the broader business community to establish more inclusive, accessible, and equitable financial systems.
