Bank’s interest rate discount to women drives inclusive growth

It  is common knowledge that women business owners face greater funding challenges than men, especially in sub-Saharan Africa where Nigeria features prominently. According to a recent research by Forbes, when taken at face value, it looks as if the women business owners were less qualified than the men. But a closer look at the numbers […]

It  is common knowledge that women business owners face greater funding challenges than men, especially in sub-Saharan Africa where Nigeria features prominently.

According to a recent research by Forbes, when taken at face value, it looks as if the women business owners were less qualified than the men. But a closer look at the numbers tells a very different story.

The research discovered that the lower percentages have less to do with the women’s performance, and more with their choice of industry. The highest concentration in any one industry – are retail businesses. Women are 32% more likely to be in retail than men.

Forbes posits that regardless of the owner’s gender, retailers have lower revenues, higher expenses, and lower profit margins than businesses in other industries, and therefore banks are less likely to approve their loans and credit lines.

It is therefore not surprising that Access Bank Plc became very deliberate about evolving a strategy that will address this challenge to Small and medium Enterprises (SMEs) financing in Nigeria.

Speaking with Daily Trust on the strategy, Ayodele Olojede, Head, Emerging Businesses, Access Bank said in 2018 alone, the bank granted up to N37 billion to about 8000 beneficiaries in new loans to its SMEs customers which, in fact earned it an international award.

Olojede said: “We have currently done over N22 billion in half year 2019, to about 11, 000 customers.”

This feat is by no means small when considering how the less than impressive access to finance by SMEs is in the country despite several interventions by the Central Bank of Nigeria (CBN).

What is even more heart warming is the leveraging of the recently introduced movable collateral registry by Access Bank in deploying this financing.

Studies have shown that lack of access to finance is one of the major barriers facing women entrepreneurs in marginalized communities across the country.

Some statistics suggests that 80% of women-owned businesses with credit needs are either un-served or underserved.

When a woman wants to start or grow her own business, the odds of securing a business loan are heavily stacked against her. This affects a woman who was unable to take a loan for her business because, as a woman, she did not own any land which the bank requires as collateral.

Leveraging Movable Assets for Credit Delivery in Nigeria is a very new trend.

Speaking on the urgent need for its introduction, CBN Governor Godwin Emefiele explained that Nigeria’s quest for inclusive economic growth and development would be futile if the country failed to adequately ease access to finance to MSMEs.

He said despite the fact that the MSME sector was vulnerable owing to various challenges, it remained the catalyst of economic growth in Nigeria.

The apex bank boss said a recent survey showed that about 37.5 million MSMEs operate in Nigeria, adding that the sector currently has an estimated financing gap in excess of N48tn.

He said the Secured Transactions in Movable Assets Act, 2017 allowed borrowers to seek credit from any financial institution, leveraging assets like jewellery, farm products and vehicles as collateral.

Emefiele said the decision of the apex bank to push for the establishment of the act was to enhance financial inclusion by expanding the use of other assets aside land as collateral.

He said, “As at January 31, 2019, 628 financial institutions comprising of 21 Deposit Money Banks, four Merchant Banks, one Non-Interest Bank and four Development Finance Institutions have registered on the portal.”

However, registration on the portal is not enough if it does not translate to increased lending to SMEs.

Olojede said: “We work with the type of assets that you have and we leverage the National Collateral Registry. And I make bold to say that it is only Access that is making use of the National Collateral Registry.

“We have also been able to work with partner lawyers to get non-registered businesses registered to enable them access loans.”