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Why Investing in Women-Led Businesses in Africa is a Smart and Impactful Choice

When it comes to investing, there are many factors to consider. From market trends to financial projections and risk management, the list goes on. However, one element that should not be overlooked is the gender of the business leaders.

In Africa, women-led businesses are a growing force that offers a unique opportunity for investors to make a difference while also generating profits. The continent takes the lead in global female entrepreneurship, with women constituting 58% of self-employment across the continent, as reported by the OECD and World Economic Forum.

“The growth of women-led businesses in Africa is not only a matter of gender equality, but also a matter of economic growth and development. By investing in these businesses, we can unlock their full potential and create a better future for all, ” says Amina J. Mohammed, Deputy Secretary-General of the United Nations.

However, women-led businesses in Africa face significant challenges, such as limited access to finance, markets, and networks. Only 5% of women-led businesses in sub-Saharan Africa have access to formal finance, compared to 11% of male-led businesses.

Closing the gender gap in entrepreneurship could lead to a 6% increase in GDP in Africa, according to the International Finance Corporation.

“Women-led businesses are a critical part of the African economy, and they have the potential to drive sustainable and inclusive growth,” says Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa.

“Investors who recognize this potential and support these businesses will not only achieve financial returns, but also contribute to a more equitable and prosperous Africa.”

What are the Benefits of Investing in Women-Led Businesses in Africa?

  • High Potential for Growth: According to a report by McKinsey, women-led businesses in Africa have the potential to generate up to $300 billion in additional GDP by 2025. This is due to various factors, including the untapped market potential, the increasing number of educated and entrepreneurial women, and the rising demand for gender-inclusive products and services.
  • Strong Social Impact: Women-led businesses tend to prioritize social impact alongside financial returns. By investing in these businesses, investors can support the economic empowerment of women, promote gender equality, and contribute to the development of local communities. Additionally, studies have shown that when women earn income, they are more likely to invest it back into their families and communities, leading to a multiplier effect.
  • Better Business Performance: Research has found that women-led businesses tend to outperform their male-led counterparts in various aspects, such as revenue growth, return on investment, and innovation. This is attributed to factors such as better risk management, more diverse perspectives, and a greater focus on collaboration and long-term sustainability.

If you are interested in exploring more ways to invest in women-led businesses in Africa, here are a few resources to visit:

  • Graça Machel Trust’s Women Creating Wealth (WCW): An entrepreneurship program impacting over 2000 women entrepreneurs in Malawi, Zambia, Tanzania, South Africa, Kenya, Senegal and Uganda.
  • She Invests Africa: A platform that connects women-led businesses with investors and provides training and support.
  • ImpactHER: An organization that supports African women entrepreneurs with access to capital, networks, and training.
  • Invest2Impact: A program that focuses on increasing access to finance for women-led businesses in East and West Africa.
Lynn Brown
Lynn Brown
Lynn is a content marketer that focuses on brand storytelling through digital platforms. Skilled in a background of web development, search engine optimization and content production, Lynn is excited to utilize over 10 years’ experience in digital marketing to help grow the ecosystems that support Africa’s very young entrepreneurs to ensure their success.

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