Moniepoint Reveals 40.2% of Nigerian Women Fund Businesses with Personal Savings

A recent report by Moniepoint, a leading financial services provider in Nigeria, has revealed that 40.2% of Nigerian women rely on personal funds and savings to run their businesses. This statistic highlights the ongoing challenge of accessing formal financing options for female entrepreneurs in the country, despite their significant contributions to Nigeria’s economy.

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As entrepreneurship continues to rise across Nigeria, the role of women in driving economic growth is becoming increasingly important. However, the heavy reliance on personal funds and savings underscores the difficulties many women face in securing external financing, which is crucial for scaling businesses, investing in new opportunities, and creating jobs.

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The Growing Role of Women in Nigeria’s Business Landscape

In recent years, Nigeria has seen a remarkable surge in female entrepreneurship. Women are breaking barriers in traditionally male-dominated industries, starting businesses across various sectors, including agriculture, fashion, retail, technology, and manufacturing. According to the Global Entrepreneurship Monitor (GEM), Nigeria has one of the highest rates of female entrepreneurship in the world.

This growth in female-led businesses is not only a sign of changing cultural norms but also reflects the resilience and ingenuity of Nigerian women. Many are turning to entrepreneurship to address societal challenges such as poverty, unemployment, and gender inequality. By doing so, they are creating jobs, generating income, and contributing to the country’s economic development.

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However, despite their entrepreneurial drive, women in Nigeria continue to face significant barriers when it comes to accessing formal financial support. The Moniepoint report sheds light on the extent of this challenge, revealing that nearly half of Nigerian women rely solely on personal funds and savings to run their businesses. This is indicative of the broader financial exclusion that affects women across the country.

Challenges Facing Female Entrepreneurs in Nigeria

There are several reasons why Nigerian women find it difficult to access external financing for their businesses:

1. Lack of Access to Credit
Access to credit remains one of the biggest challenges for female entrepreneurs in Nigeria. Traditional financial institutions often require collateral, such as property or other assets, to secure loans. Many women, particularly those from lower-income backgrounds or rural areas, do not have the necessary collateral to qualify for loans. As a result, they are excluded from formal lending systems and have no choice but to rely on personal savings.

2. Limited Financial Literacy
Another factor contributing to the financial exclusion of Nigerian women is the lack of financial literacy. Many women, especially those in rural areas, have limited knowledge of how to navigate the formal financial system. They may not be aware of the various financial products and services available to them, or they may struggle to meet the documentation and credit history requirements set by banks.

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3. Cultural and Social Barriers
Cultural norms and gender roles can also play a role in limiting women’s access to finance. In some communities, women are still expected to prioritize household responsibilities over career ambitions, making it difficult for them to pursue entrepreneurial endeavors. Additionally, some financial institutions may harbor biases against lending to women, particularly in male-dominated sectors, further limiting their opportunities.

4. High Interest Rates
For women who are able to access loans, the high cost of borrowing can be a significant barrier. Nigeria has one of the highest interest rates in sub-Saharan Africa, making it difficult for small business owners to afford loans. Women who are already operating on thin profit margins may find it challenging to take on debt at such high rates, making personal savings a more attractive, albeit limited, option.

The Impact of Relying on Personal Funds

While relying on personal funds and savings allows many women to start and sustain their businesses, it comes with its own set of challenges. For one, using personal savings limits the amount of capital available to grow the business. Entrepreneurs who rely on their own funds may find it difficult to invest in expanding their operations, hiring additional staff, or purchasing necessary equipment. This can stunt the growth of female-led businesses, limiting their potential impact on the broader economy.

Additionally, relying on personal funds can create financial strain for women entrepreneurs. Many women are forced to dip into their personal or family savings, which can compromise their financial security. This is particularly concerning in cases where the business faces unexpected challenges, such as market downturns or disruptions caused by external factors like the COVID-19 pandemic. Without access to external financing, women may have few options to keep their businesses afloat during tough times.

The Role of Fintech and Digital Finance

The findings from the Moniepoint report highlight the need for innovative solutions to address the financing gap faced by Nigerian women. One of the most promising avenues for improving access to finance is through fintech and digital financial services. Companies like Moniepoint are already working to bridge this gap by providing digital payment solutions and financial services tailored to the needs of small business owners, including women.

Digital lending platforms and mobile banking services can help women bypass the traditional barriers to credit, such as collateral requirements and high interest rates. By using alternative credit scoring methods, such as analyzing transaction histories or social data, fintech companies can offer loans to women who may not qualify for traditional bank loans. These digital platforms can also make it easier for women to open bank accounts, save money, and access financial products that can help them grow their businesses.

Government and Private Sector Initiatives

In addition to fintech, there are several government and private sector initiatives aimed at improving access to finance for female entrepreneurs. Programs such as the Central Bank of Nigeria’s (CBN) Micro, Small, and Medium Enterprises Development Fund (MSMEDF) and the Nigerian government’s Women Empowerment Fund (WEF) offer funding and support specifically for women-owned businesses.

Private sector initiatives, including partnerships between financial institutions and non-governmental organizations (NGOs), have also emerged to provide women with the resources and mentorship they need to succeed in business. By combining financial support with capacity-building programs, these initiatives can help women overcome the challenges of running a business and expand their opportunities for growth.

Conclusion

The Moniepoint report, which reveals that 40.2% of Nigerian women rely on personal funds and savings to run their businesses, serves as a stark reminder of the financial exclusion that many female entrepreneurs continue to face. While personal savings can help women start and sustain their businesses, access to external financing is crucial for long-term growth and success.

Fintech solutions, government initiatives, and private sector partnerships hold the key to breaking down the barriers to finance for Nigerian women. By providing more flexible and accessible financial products, these initiatives can empower women to grow their businesses, create jobs, and contribute to the broader economic development of Nigeria.