E-Financial
Importance of Financing Women-Owned MSMEs in Global Supply Chain
By Omokehinde Adebanjo
There is significant evidence that women are the glue that hold their families, communities and even local economies together all over the world.
What I find enlightening is that this impact is particularly keenly felt in emerging economies such as those in Africa, where women are drivers of growth and widespread financial inclusion – which has been a key message coming out at the Women’s World Banking Making Finance Work for Women conference here in Dar Es Salaam.
In fact, we have done research into this trend through our Mastercard Index of Women’s Entrepreneurship (MIWE) and found that female entrepreneurs in developing countries are driven by resilience, determination and the desire to provide for their families.
Although the research was focused on only select markets initially, we learnt that women in these markets typically tap into local business opportunities that are not dependent on knowledge or innovation alone, effectively allowing them to avoid substantial financial, regulatory or technical constraints.
According to the index East Africa, specifically, shines in this area: the Index showed that Uganda has the highest percentage of female business owners in any of the 54 countries surveyed worldwide, with 34.8 percent of businesses in the country owned by women.
What’s more, Uganda’s women boast a 100 percent entrepreneurial activity rate, 93.9 percent labour participation rate and 90.5 percent borrowing or saving rate for the purposes of opening a business.
Uganda’s neighbour, Tanzania – where many of us are currently gathered for the Making Finance Work for Women Summit – is also making notable strides in this area, with dedicated programmes like the UN Joint Programme on Youth Employment helping many of the country’s young women entrepreneurs hone their own skills and capabilities as well as generate employment opportunities for other young people.
Likewise, the Kenyan Government has made provision for 33 percent of Government jobs and procurement opportunities to be accessed by women.
If we look at Nigeria, we also notice a high percentage of female entrepreneurship, with as many as 41 percent of the country’s women acting as entrepreneurs.
This is notably higher than many developed countries like the USA where only 10 percent of women are entrepreneurs and France where a tiny three percent of women are entrepreneurs.
These examples serve to illustrate the sheer value of women entrepreneurs, and why it is critical to finance women-owned businesses and micro, small or medium-sized enterprises (MSMEs) in supply chains – and in Africa, in particular – in order to truly be able to generate the economic growth that is necessary at local, national and global levels.
Collective Action Required To Support Women Entrepreneurs
Only through collective action can we hope to help bring vital cogs of development into formalised business processes as well as strengthen the overall ecosystem of vibrant and resilient women entrepreneurs.
This has been a key focus area for us at Mastercard for many years now, not only at a global level but across the African continent, which we recognise as a breeding ground for smart and innovative female entrepreneurs.
In this vein, we have partnered and collaborated with organisations from across the spectrum of the public and private sectors to broadly empower the continent’s women and provide them with the knowledge and tools necessary to start and sustainably grow their own businesses.
That included joining forces with African Women and Beyond (AWAB) in Kenya to launch the Africa Women Leadership Network (AWLN) last year to bring together like-minded women from various business sectors to tackle challenges facing women in East Africa, and more broadly across the continent.
In Nigeria, which is also a key growth market, we are starting to focus more on women empowerment. This includes our partnership with Mercy Corps to provide 2,500 girls with access to financial tools and entrepreneurship training.
Last year, together with UN Women, we signed a Memorandum of Understanding to bring more women into the formal financial fold and empower them through financial literacy training.
More than just enabling the country’s women to participate in formal financial activities through identity documents, we additionally partnered with the Youth for Technology Foundation to provide women entrepreneurs with the support and training they require to start and continue running their businesses.
Through the experience gained in the course of much of this work, we have noticed and learnt the importance of digitising operations and processes as a way of supporting women entrepreneurs. Practical examples of where we have introduced digital solutions that have considerably assisted women business owners of Micro, Small and Medium enterprises include Masterpass QR and 2KUZE.
Masterpass QR is our person-to-merchant, mobile-driven payment ecosystem that is in the process of being rolled out in 33 markets across Africa.
It addresses challenges with the acceptance of electronic payments for MSMEs without the need for expensive point-of-sale (POS) infrastructure. These women merchants can effectively accept fast and secure payments for their goods through their smart or feature phones.
The 2KUZE solution was introduced specifically to streamline the value chain for farmers in Kenya and Tanzania, where agriculture is the economic backbone.
It connects farmers, buyers and agents through both feature and smartphones and facilitates the entire transaction, removing the need for the country’s farmers to walk long distances to sell their produce at markets. As women play a critical role in the agricultural sector in these countries, it is a solution that has assisted them in running their businesses more efficiently.
Ultimately, what we can see is that when women are empowered through entrepreneurship and technology, they are able to make significant contributions to their economies. This makes it critical for us across industries and both the public and private sectors to band together and continue providing the financial and non-financial support these inspirational women require.
Nigerians have more trust in Bitcoin-based systems than in traditional alternatives such as banks and government, a new report by Elastos, an open-source blockchain website, has stated.
According to its inaugural BIT Index (Bitcoin; Innovation & Trust), emerging markets are driving the adoption of Bitcoin, with Nigeria and the UAE leading the charge.
The report revealed that 66 per cent of Nigerian respondents and 35 per cent from Brazil had more confidence in Bitcoin-based systems than alternatives like banks or national governments, compared to just 16 per cent in Germany and 21 per cent in the UK.
The survey also revealed that 20 per cent of Nigerian consumers use Bitcoin to conduct transactions at least once a day, while 67 per cent would have more trust in Bitcoin to protect their life savings than traditional services like banks, local governments, and cash.
According to the platform, the research was compiled from online interviews conducted with 1,407 self-defined ‘tech savvy’ respondents in Brazil, Germany, Nigeria, South Korea, the UAE, the UK, and the US.
It stated that the interviews were completed by a third party, a registered market research company, between March 30 and April 4, 2024.
“When it comes to ensuring the integrity of online transactions, emerging market respondents also revealed their relative confidence in Bitcoin compared to alternatives,” it indicated.
According to the report, 66 per cent of Nigerian respondents and 35 per cent of Brazil have more confidence in Bitcoin-based systems than alternatives, such as banks or national governments, compared to figures of just 16 per cent (Germany) and 21 per cent (UK) who feel the same.
Meanwhile, Jonathan Hargreaves, Elastos’ global head, Business Development & ESG, described the BIT Index’s inaugural findings as indicative of the role the ‘global south’ was playing in the adoption of decentralised currencies such as Bitcoin.
“The BIT Index offers a fascinating and sobering insight into the industry. The fact that over two-thirds of Nigerian consumers and a third of their counterparts from the UAE and Brazil would feel more confident entrusting their life savings to Bitcoin rather than traditional financial instruments speaks volumes about the protagonism these regions are already playing.
“In many instances, the driving factor is the absence of viable, accessible alternatives to, for instance, conduct cross-border transactions or mitigate the impact of inflation,” he said.
According to Chainalysis, a cryptocurrency research firm, Nigeria’s crypto transaction volume grew year-over-year to $56.7bn in 2023.
It stated that the country’s crypto economy continued to grow despite market turmoil in the space.
On the contrary, the government has been taking strong measures to restrict and clamp down on cryptocurrency exchanges and platforms operating in the country.
Central Bank of Nigeria (CBN) has awarded the country’s second Payment Terminal Service Aggregator (PTSA) license to Unified Payments, Nigeria’s premier financial technology company, following a rigorous and transparent process,
The move is targeted at enforcing existing requirement that all transactions from point-of-sale channels in Nigeria must go through a licensed Payment Terminal Service Aggregator (PTSA).
The CBN is enforcing the laws to clamp down on financial crimes and other market misconducts and it aligns with the CBN’s objectives to fully track all electronic transactions in Nigeria, given the propensity of using such transactions to fund insecurity, violent crimes, banditry, kidnapping as well as other vices.
According to one analyst, “By awarding a second PTSA license, the apex bank has proactively responded to industry operators who had expressed serious concerns about channelling all transactions through a single aggregator, the Nigeria Interbank Settlement System PLC (NIBBS), as has been the case for some years.
“With the new policy direction, payments service providers would henceforth route all transactions through either of the two licensed Companies.”
Other financial analysts and industry players have commended the Central Bank, affirming that “the move can be a massive step in the right direction. They also commended the open, transparent, and inclusive manner via which the selection process was managed, and the license awarded.
“The selection process, which lasted for months, began with an invitation for qualified organisations within the payment industry to submit an Expression of Interest document, alongside other requisite documentation and additional capital requirement of N1 billion.”
The new management of CBN decided not to give the license out without going through an open process – and for the first time in licensing a payment service provider – the apex bank went through a public bid process outlined in its publication of Friday, January 5, 2024, in different national newspapers. At the end of the process, Unified Payments emerged as the most preferred service provider.
Unified Payment Services Limited, also called Unified Payments or UP, is a shared service provider within Nigeria’s financial technology sector owned by a consortium of Nigerian banks. For over 26 years, the firm has provided payment technology to banks and other industry operators. The first and only non-bank entity that is a principal member and licensed acquirer of all of American Express, Mastercard, Visa, UnionPay and Payattitude. Unified Payments facilitates both local and international transactions.
Formerly known as ValuCard Nigeria Plc, Unified Payments led the way to introduce POS payments in Nigeria under its card scheme known as ValuCard which is the first payment card to be issued in Nigeria. The company later transformed into a scheme-neutral and option-neutral service provider enabling transactions under different schemes.
The company has continued to provide leading payment technologies and services, enabling different operators to leverage its capabilities and licenses, enabling prompt and seamless transactions.
Among the shareholders of Unified Payments are First Bank, Access Bank, United Bank for Africa (UBA), Guaranty Trust Bank Plc, Zenith Bank and Fidelity Bank. Other shareholders are Citibank Nigeria Limited, Ecobank of Nigeria Plc, First City Monument Bank Plc, Keystone Bank Ltd, Polaris Bank Ltd, Stanbic IBTC Bank Plc, Sterling Bank Plc and Wema Bank Plc.
Chartered Institute of Bankers of Nigeria, CIBN, has expressed support for the ongoing banking recapitalization exercise saying it will empower banks to lend more to the economy.
CIBN President, Dr. Ken Opara stated this yesterday while speaking at the annual lecture of the institute in Lagos, with the theme “Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity.”
Okpara noted that the volume of credit to the real sector activities namely agriculture, manufacturing and services is low compared to their critical role in driving economic growth.
Consequently, he called for more credit to the real sector, saying, “I propose that we consider offering more credit to these key sectors and particularly the agriculture sector. It is for this reason that the Recapitalization exercise is a welcome development.
“The recently announced upward review of the Minimum Capital Requirements of Nigeria by the Central Bank of Nigeria would further empower banks to extend more credit to the economy’s productive sectors.”
To address these factors impeding credit to the real sector, Okpara suggested that, “The government needs to improve further the ease of doing business and infrastructural development, such as power, roads, rail networks, etc.
“Setting up industrial centres where these companies can co-habit and share common infrastructure. Harmonize and reduce the various taxes and levies, including locating them in a single hub.
“Banks need to be deliberate in de-risking these companies via Capacity building programmes, and Advisory services.
Specialised Financial Institutions can be created in addition to the Bank of Industry (BOI), especially credit guarantee agencies and risk-sharing institutions, to further facilitate the deepening of credit as practiced in countries such as China which significantly transformed its economy.
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