Across African markets, women-owned businesses are overlooked by financial institutions for multiple reasons, including products, processes and operating models that are not designed around how many women entrepreneurs run and grow their businesses. One of the most persistent barriers is perceived creditworthiness. Lenders often lack the information they traditionally rely on to assess these businesses. Women are less likely to hold titled property or other assets accepted as collateral, and are more likely to run informal, cash-based businesses that leave little structured credit history.

IFC data across 183 client financial institutions from 2024 highlighted that women-owned SME loans made up just 19% of SME portfolio volume and were 28% smaller on average. Despite these differences, their longer-term repayment performance was comparable to the overall portfolio, with 90-day NPL rates of 3.6% and 3.8%, respectively. This points to a gap between how women-owned businesses are assessed and the risk they ultimately demonstrate: they receive smaller loans, despite comparable repayment performance. That information gap is precisely what makes alternative data worth taking seriously……

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This article is part of a series of thought leadership pieces for Women In, an initiative of the Africa Financial Summit. Dalberg is a knowledge partner of Women In. Also read this article on how banks can better serve women-owned SMEs.