Facilitating access to finance to women in Ethiopia

“Changing trash into cash”. This is the slogan of Kuuli Pilaastiki enterprise, a recycling company funded by the chemist and female entrepreneur Selamawit Tomas.

The company, the only recycling factory in this region of Ethiopia, turns raw recycled plastic bought from other enterprises’ wastes and from local collectors, into products for multiple purposes, especially agriculture and seeding, that are sold in a shop in Hawassa.

 

Women Entrepreneurship Development Program

Selamawit is one of the women that received a huge support from the Women Entrepreneurship Development Program (WEDP).

The aim of the project is to facilitate access to financial services for female growth oriented entrepreneurs by providing working capital and investment finance through a dedicated line of credit. The initiative offers tailoring financial instruments and tries to develop the entrepreneurial and technical skills of the participants, through short trainings, and supporting cluster, technology and product development for their businesses.

 

Fill the gender gap in access to finance

The project is inspired by the persistence gap that exists between women and men in the access to the finance system in Ethiopia.

Women entrepreneurs, in fact, face higher barriers than men, especially in providing collateral. Cultural barriers are still very strong in the finance access and this is the reason often most assets accepted by lenders are registered to men.

Ethiopia is among the most under banked countries in Sub-Saharan Africa (2010 Doing Business), and access to finance is listed as the most severe hindrance by entrepreneurs themselves.

The credit information system has been expanded from coverage of a mere 0.2% of the adult population in 2018 to more than 5.0% in 2020. Despite this, the current system shows a low coverage compared to the total of the Ethiopian adult population. In particular, this affects the ability of marginal segments to access finance. In fact, these segments remain invisible to credit, as their data cannot be acquired and used by the current credit information system.

According to the World Bank Group’s latest Global Findex report, more than 1 billion women still do not use or have access to the financial system. The International Finance Corporation (IFC) has estimated that worldwide, a 300 dollars billion gap in financing exists for formal, women-owned small businesses, and more than 70 percent of women-owned small and medium enterprises have inadequate or no access to financial services.

Women represent more than half Africa’s combined population, but only generates one third of the continent’s collective Gross Domestic Product (GDP).

This reality reinforces the urge to involve more women to contribute to the continent’s long-term economic growth and health by providing them access to financial services, which will unlock many growth and development opportunities for Africa. Moreover, Micro and Small Enterprises (MSEs) will have to play a major role during the transformation of the Ethiopian economy.

Thanks to the WEDP, Selamawit could ask for two loans for creating her business and she repaid the two amounts within the agreed term of three years.

Before participating in the WEDP she had 11 employees, now she accounts 50 employees: 20 permanent staff, 30 occasional staff.

At the end of June, a total of 4833 people have been registered to the Women Entrepreneurship Development Program.

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