Africa’s women entrepreneurs face an estimated $42 billion financing gap, according to the African Development Bank Group’s Affirmative Finance Action for Women in Africa. The figure is often presented as evidence that more money must be directed to women-owned businesses.
That is true, but the experiences collected in the new Financing Business Growth playbook suggest that the problem is broader than the volume of capital available. It also concerns how financial institutions assess businesses, how financing products are structured and whether entrepreneurs have the systems required to demonstrate that their companies are ready for investment.
Structural barriers remain
AFAWA says women-owned businesses continue to face structural obstacles that limit their ability to secure capital, scale operations and compete in formal markets. These barriers include financial systems and products that do not adequately respond to the circumstances of women-led enterprises.
Collateral requirements are a recurring concern in the entrepreneurs’ accounts. A business may have customers, revenue and growth potential while still lacking the conventional assets that lenders expect as security.
Paula De Morais, founder of Angola’s Fundação Ana Carolina, argues that financing decisions should also consider credibility, resilience, consistency and long-term community impact. Her point highlights a central policy question: how can lenders assess business quality without ignoring risk or relying almost entirely on traditional collateral?
Business readiness also matters
The playbook does not place responsibility only on banks and investors. Its case studies also show that some businesses approach funders without reliable records, clear growth plans or sufficient evidence of demand.
Across 25 profiles, founders describe the importance of disciplined bookkeeping, customer traction, defined internal roles, strong governance and measurable performance. These are not bureaucratic requirements added by financiers. They are the systems that allow both the entrepreneur and the funder to understand whether new capital can be used productively and repaid or generate returns.
The implication is that closing the financing gap requires both capital and capacity. More funding without stronger business systems could increase risk, while stronger businesses without suitable financial products may remain unable to scale.
The type of capital is as important as the amount
The entrepreneurs featured in the publication used different combinations of personal savings, grants, bank finance, supplier credit, customer advances, reinvested revenue, equity, debt and patient capital.
This variety matters because businesses do not all need the same product. A company purchasing equipment may require longer repayment terms than a retailer financing short-term inventory. An early-stage innovation may need patient capital, while an established company with predictable sales may be able to use conventional debt.
A financing system that offers capital on terms disconnected from the business cycle can create pressure rather than growth. The playbook therefore reinforces the importance of matching the instrument, timing and repayment structure to the company’s actual needs.
What financial institutions can change
AFAWA’s approach combines financing, technical assistance and policy engagement. It works with financial institutions to support gender-responsive products and strengthen institutional capacity while also seeking a more enabling environment for women entrepreneurs.
Based on the entrepreneurs’ experiences, this could include assessment methods that give greater weight to verified cash flow, customer demand, contracts, repayment history, operational consistency and measurable impact. It could also involve products with repayment schedules aligned to the operating realities of different sectors.
These changes would not remove the need for rigorous credit assessment. They would broaden the evidence used to evaluate whether a business is investable.
Closing the gap requires an ecosystem
The $42 billion figure represents more than missing loans or investments. It reflects the interaction between financial institutions, business support organisations, policymakers and entrepreneurs.
Progress will depend on more suitable financial products, stronger business records, earlier access to financial advice, better investor preparation and policy frameworks that allow viable women-led enterprises to compete for capital on credible terms.
The financing gap will therefore not be closed by a single fund or programme. It will narrow when more businesses can demonstrate readiness and more financial institutions are equipped to recognise and finance that readiness.
Sources and References
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