The Problem

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Access to capital continues to be the number one barrier faced by African WSMBs (The World Bank, 2013) with the gender financing gap as measured by the 2017 IFC MSME Finance Report standing at $42 billion for SMEs in sub-Saharan Africa (SSA). Consequently, women entrepreneurs hardly scale their businesses – they own over a third of the very small and small SMEs, however, this percentage reduces drastically for medium-sized SMEs to 19% (IFC 2017)

The missing middle dilemma – businesses that are “often classified as too big or unsuitable for microfinance, too risky for banks and too small for private equity” are often left out of financing opportunities

Underrepresentation of women in decision making roles in the financial sector and the allocation of capital to women fund mangers affects the allocation of capital. IFC’s 2019 Gender Diversity Study puts women’s representation in decision making roles at an average of 24% across banks and 11% in the private equity industry in emerging markets. As a result, only 2.2% of all venture capital goes to women entrepreneurs while only 9.9% of that amount is deployed to women owned businesses in emerging markets (Intellecap 2019) and when taking into account the stage of business, only 11% of seed funding capital in emerging markets goes to companies with a woman on their founding team, 5% for later stage funding (IFC 2019).

The Solution

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Customized and alternative products for the missing middle including the application of alternative credit risk assessment process that takes into account women’s limited access to collateral to increase access to risk capital for early growth stage women businesses

Provision of post-investment technical assistance alongside investment capital to drive value creation and impact outcomes

The allocation of more capital to women fund managers, increasing female representation in capital-allocation decision making roles and channeling capital to women owned businesses – Female deal partners invest in almost twice as many female-led businesses as male deal partners according to IFC’s 2019 Gender Diversity Study and fund managers with diverse leadership teams, including female partners, tend to have a more diversified portfolio of investees.

Our theory of change

“Through innovative and bespoke mezzanine investment capital, tailored and gender-forward technical assistance, and advocacy in favour of gender lens investing, Afrishela Fund will create a positive impact for women in the form of job creation, increased leadership and greater income equality. Ultimately this will lead to improved economic and social well-being in African communities and contribute to greater mainstreaming of gender lens investing in Africa.

“This will be achieved along 3 impact pathways: Women entrepreneurs and their growing businesses (that will support business growth and leadership), Gender-forward business practices (that will support the empowerment of Women & youth in investees’ market, workforce and value chains) and Gender lens investing in sub-Saharan Africa (that will support greater representation of African female fund managers and the increased mainstreaming of gender lens investment).