The critical role of trade in fostering economic growth and poverty reduction, especially in emerging markets, faces setbacks due to the pervasive gender bias that impedes the financial backing of women-owned ventures, thereby hindering their ability to participate fully in international trade.
This is based on a recent report by the International Finance Corporation (IFC), seen by Nairametrics.
Despite the significant contribution of trade to job creation, particularly for micro, small, and medium enterprises (MSMEs), women-owned businesses encounter disproportionate challenges in accessing financing from banks.
This gender disparity stems from the perception that women-led ventures are inherently riskier, resulting in reluctance from financial institutions to extend credit to them.
A part of the report states below.
In Nigeria, for instance, most women-owned MSMEs operate within the agriculture and wholesale/retail sectors.
However, despite their prevalence in these sectors, access to trade finance remains insufficient, with financial institutions often exhibiting reluctance to underwrite the risks associated with these industries.
Additionally, societal perceptions and biases play a significant role in limiting women’s access to finance.
Women are often perceived as riskier borrowers, with credit providers questioning their commitment to business ventures due to their assumed primary responsibility for household obligations. These misconceptions further exacerbate the hurdles faced by women-owned businesses in accessing essential financial support.
Nevertheless, these perceptions are not necessarily grounded in empirical evidence. Recent studies have shown that women entrepreneurs demonstrate a higher propensity to repay their loans compared to their male counterparts, debunking the notion of inherent riskiness associated with women-led ventures, the IFC stated.
There is a growing recognition of the untapped potential of women entrepreneurs and the need to address the systemic barriers they face. Initiatives aimed at promoting gender-inclusive financing and fostering supportive ecosystems for women-led ventures are crucial in unlocking their full economic potential.
