ABIDJAN — Changing the perception that loaning to women is risky for financial institutions and removing collateral requirements is key to helping women entrepreneurs in the developing world access capital, said speakers at the Women Entrepreneurs Finance Initiative, or We-Fi, West Africa Regional Summit, hosted in Côte d’Ivoire.
We-Fi, launched in 2017, aims to improve access to capital and provide technical assistance for women-owned and -led small and medium enterprises.
“We need creative vehicles to provide an alternative that allows finance institutions to loan with confidence, but without requiring significant collateral,” said U.S. Senator Chris Coons, a Democrat from Delaware, who was in attendance at the summit.
“In some countries, there are legal barriers for women to own property. In some countries, there are barriers in formation of companies entering into contracts. All of this in combination makes for greater difficulty accessing capital and being able to act on a great idea.”
One of the focuses of We-Fi is examining legal and regulatory barriers like these that can inhibit access to capital.
The World Bank Group hosts the initiative, which includes a partnership between 14 governments, eight multilateral development banks, and public and private sector partners. It hopes to leverage an initial $350 million contributed by partner governments to more than $1 billion in commercial and international financial institution finance for the efforts.
The facility was previously dubbed the “Ivanka Fund” after former World Bank President Jim Kim credited President Trump’s daughter for planting the seed for the initiative in 2017, although Ivanka Trump currently has no official role in the fund.
In 2018, the U.S. launched the Women’s Global Development and Prosperity initiative, or W-GDP. The U.S.’s role in We-Fi falls under this initiative, Ivanka Trump explained during her speech at the summit. A U.S. delegation attended the initiative’s first regional summit, including Ivanka Trump and Sen. Chris Coons, as well as Sen. Lindsey Graham, a Republican from South Carolina.
Other high-profile guests included World Bank CEO Kristalina Georgieva, as well as the presidents of the African and Islamic Development Banks, and ministers and heads of state from African nations.
Much of the discussion at the summit revolved around the need to change perceptions that women are a financial risk, which prevents many women from starting or expanding their businesses. This includes removing overly burdensome credit restrictions, collateral requirements, and reducing interest rates.
According to the World Bank, some 70% of women-owned small and medium enterprises in developing countries can’t access the capital they need. This results in a credit deficit of nearly $1.5 trillion.
The first round of $120 million in We-Fi funding was allocated in April 2018 to projects submitted by the Asian Development Bank, Islamic Development Bank, and World Bank Group. The funds were used to expand initiatives in Yemen, Mali, Nigeria, and Sri Lanka, among other countries. This first round is expected to mobilize over $1.6 billion in additional funds, according to a press release from the World Bank Group.
The initiative is only considering funding requests over $10 million, and applications for the second round of proposals closed in February.
Earlier this week, while a U.S. delegation was in Ethiopia, the Overseas Private Investment Corporation launched its 2X Africa initiative, which aims to catalyze $1 billion through a direct investment of $350 million. It is also aimed at providing access to capital for women entrepreneurs.