“Building Linkages to Break Barriers”

11th to 15th August 2014

Nairobi, Kenya

The Bureau of the Chairperson of the African Union Commission in partnership with the UNDP Regional Service Centre for Africa has designed a new regional Programme focusing on “Building an Enabling Environment for Women’s Economic Empowerment and Political Participation in Africa.”

The programme seeks to respond to Africa’s development priorities and challenges in line with the African Union Women’s Decade (2010-2020) and UNDP Strategic Plan and Gender Equality Strategy. The African Union’s Agenda for the African Women’s Decade (2010-2020) is based on ten priority themes and the first and main theme focuses on “Fighting Poverty and Promoting Economic Empowerment of Women and Entrepreneurship.”

This Initiative by the African Union Commission Chairperson seeks not only to enhance leadership participation of women in public and private institutions both at national and regional levels as one of the major outputs, but also to train women on needed skills and resources to compete in markets, as well as fair and equal access to economic institutions. To have the power and agency to benefit from economic activities, women need to have the ability to make and act on decisions and control resources and profits. During the implementation of this project, it will be of central importance to address the underlying factors that contribute to women’s economic disempowerment. That is identifying resources needed to provide the building blocks for women to draw from, to succeed economically or exercise their power and agency. These will include: human capital (e.g. education, skills, training); financial capital (e.g. loans, saving); social capital (e.g. networks, mentors) and physical capital (e.g. land, machinery).

It is in this regard that the Program in Partnership with the Department of Trade and Industry at the African Union is organizing an African Women Business Linkages Forum to further highlight and provide networking opportunities for African women in business. The theme of the Business Linkages Forum is “Building Linkages to Break Barriers.”

Background

Women in the business sector face many challenges. Female owned enterprises are less likely to register their businesses, and they perceive tax rates and customs as greater constraints to business growth compared to men. Discriminative practices in the inheritance and ownership of land and other properties pose fundamental constraints to women entrepreneurs, especially as they restrict their access to formal financing mechanism.

Access to finance is rated as the single-biggest constraint that is preventing women from growing their businesses. Even though, microfinance is a great poverty reduction tool, it offers only limited support for women who wish to grow their enterprises beyond the micro level. Women business owners who have grown the maximum from micro-finance institutions have great difficulties obtaining loans from commercial banks. Gender-based discriminatory barriers associated with, financial resources, and business-related services pose serious problems for women entrepreneurs. For instance, because women rarely have fixed assets, which are important for use as collateral in accessing financial services in the formal banking sector, their main recourse has been micro-credit institutions as well as private informal sources such as, money lenders and family members, most of which tend to be unsustainable and detrimental to their economic advancement. Such considerations point to the need for women to organize themselves in business and trade associations for collective action to circumvent or challenge the discriminatory barriers they currently face. At present, many entrepreneurs are isolated in micro-businesses and do not belong to the larger networks, such as chambers of commerce, which themselves tend to be male dominated and discriminatory.

Women entrepreneurs often have less experience than men dealing with complicated procedures, including financial arrangements, and little information about sources of help. Surveys of financial literacy find that women have less understanding and confidence in making financial decisions than do men (OECD, 2005a). Yet women are disadvantaged in accessing financial information and resources because they are less likely to be able to afford these services and are not linked to mainstream business networks. Women also have more problems obtaining business credit in all countries. This is despite evidence that women demonstrate high loan repayment rates as well as default rates significantly lower than those of men. Banks and financial institutions traditionally have little experience in lending to women and may have a bias against them as poor credit risks.

The female credit crunch is particularly severe in poorer countries due to the disadvantaged position of women and their lack of legal rights; most banks require that borrowers be wage earners or property owners who can provide acceptable collateral.This forum will be a timely opportunity for women to network, discover sources of funding, share experiences and build new partnerships to enhance their entrepreneurial capacities. These experiences will focus on addressing some of the challenges faced by women in business and providing a platform for peer learning from successful businesswomen that have overcome these challenges.