30 April 2024

Helping Women-led MSMEs Access Finance: Lessons from Zimbabwe

An interview with Rachael Moshosho, Deputy Director, Financial Inclusion & Supervision of Microfinance Institutions, Reserve Bank of Zimbabwe


What challenges do women-led small businesses face in Zimbabwe?

They face multiple challenges, starting with a lack of funding. Women here typically don’t possess assets or collateral. Our laws, religions, and politics are laid on patriarchal foundations, meaning men own almost all the assets.

There is no structured way to mentor women into business and as a result, they lack business knowledge to ensure the sustainability and growth of their businesses. A low level of financial literacy among women also means they lack awareness of what financial products (especially digital financial services) are available to them and how to use them.

A big challenge is that women must multitask; their roles as mothers and wives leave them insufficient time to manage their businesses.

Finally, most women-owned businesses are informal and lack credit histories. Banks generally don’t want to lend to them as they may feel unsure whether they will still exist the next day. Women-owned businesses are often stereotyped by the financial sector and therefore financially excluded.

Why is it so vital that we support women-led MSMEs?

Women-owned MSMEs (which account for the majority of MSMEs in developing countries) play a vital role in employment creation, entrepreneurship, and poverty alleviation – ultimately contributing to economic development and stability. Women, at a household level, are leaders. They are financial managers, trying to allocate scarce resources to the family, to ensure its welfare. We need to tap into this natural ability of women, because families build into communities, and communities build into a nation.

Studies have shown that women commit at least 90 percent of their income to their families’ education, health, and welfare. Their positive impact on families, communities, and wider economy, makes women MSMEs critical to achieving the Sustainable Development Goals. This is why they must be adequately equipped with finance.

How can we close the gender gap in access to finance?

Knowledge is power. We need information on the current status of women in a particular jurisdiction. This information can be collected through FinScope surveys and include, for instance:

– What challenges do women business owners face?
– What are their financial inclusion levels?
– What types of products and services can meet their needs?

We need to collect gender-disaggregated data to facilitate evidence-based financial inclusion policy – both on the demand and the supply side. This is the only way to create adequate structures that can facilitate the financial inclusion of women-led MSMEs.

Women are good at repaying their loans, but they lack the required collateral that formal conventional banking institutions require. Women may however have moveable assets like sewing machines, goats, or cattle. Finding mechanisms for them to employ those assets – like credit reference systems, MSME guarantees, or collateral registries – can go a long way to closing the gender gap.

What has the Reserve Bank of Zimbabwe done to improve access to finance for women-led MSMEs?

A lot! We’ve embarked on an extensive financial literacy program for women, in collaboration with other financial inclusion stakeholders. We’ve also established a robust credit infrastructure: a credit reference system with a collateral registry, where women and women-led MSMEs can pledge movable assets in order to access banking products. We have managed to get banking institutions’ buy-in to use the system. 

We have established an MSME guarantee so that there’s some form of risk sharing between the bank that is offering a loan, and the MSME guarantee company. This has helped banks to feel confident about lending to a sector that is generally considered risky.

The Reserve Bank of Zimbabwe also developed an evidence-based National Financial Inclusion Strategy (NFIS) prioritizing women and women-led MSMEs financial inclusion. As part of the first phase of out NFIS (NFIS I 2016-2020) we set up empowerment facilities – a seed fund that banks can access to lend to this target market. And now that the banks have discovered that women-led MSMEs repay their loans, banks are using their own funds to lend to them. They have downscaled to offer them microfinance products.

Finally, we’d like to thank the Swedish International Development Cooperation Agency and AFI for their support in developing a demand-side survey which provided the data needed to inform many of the Reserve Bank’s WMSME financial inclusion initiatives.

What advice would you give AFI members looking to financially include women-led MSMEs?

You need government buy-in and funding, because this is a national issue, not a Central Bank issue. You need to put the right governance structures in place for National Financial Inclusion Strategy initiatives.

You need to take the issue of collaboration with other stakeholders very seriously, whether from the financial services sector, the telecom sector, or development partners. You also need buy-in at the local level from community leaders, because that’s where it all starts.

Finally, you need extensive financial literacy programs that are age-appropriate. We need to catch these women while they’re young! So that as they grow up, they become entrepreneurs, contributing meaningfully to the economy.



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