Against all Odds

Rose needs financing to grow her banana business!  

Rose Okello is a matoke farmer and a single mother who lives in a village close to Mbarara, a city in southern Uganda. Matoke is a type of banana used for cooking and the most important staple food in Uganda. As opposed to other crops, matoke can be grown all year round, but still, Rose’s income fluctuates depending on how much she is able to harvest and sell. To make sure she can pay for her family’s food, her children’s school fees and other expenses on time, Rose uses several financial services: She has an account at a local financial cooperative, uses mobile money for payments, she saves with a women’s savings group in her village and has managed to get a loan from a local microfinance institution to buy manure for her banana trees.

Having managed to get a loan is what differentiates her from many other women (and men!) engaged in the agri-food value chain. The sector provides for a large share of employment (on average 50% in Sub-Saharan Africa). Numbers are even higher for women: on average 79% of economically active women work in agriculture. However, less than 10% of commercial bank lending in SSA goes to agriculture and of that a tiny share to women. Rose has managed to be part of this tiny share—many do not!

The causes of many obstacles that affect women lie in gender-specific social norms.

Women play an important but often invisible role in the agri-food sector

Women mostly work in primary production and are often not involved in sales of crops. They are more often engaged in food crops than in cash crops, the former being considered, “women’s crops” and the latter “men’s crops”. Besides farming, women are involved in different roles, as owners, managers, or employees of agri-businesses along the value chain.  

Why is it so important to foster access to financial services for women in the agri-food sector?

Financial services can boost resilience, i.e. prepare against, and manage risks, and help recover from shocks. They can give women opportunities to invest in their future. Research shows that women invest significantly more of their income back into their families than men (approx. 90%, compared to just 30-40% by men). They invest in education, healthcare, and healthier food for their children. ​Having their own account gives women more say on their households’ finances. Accounts can enable financial independence and strengthen economic empowerment by making it easier, safer, and cheaper to receive wage payments from employers, to send remittances to family members, and to pay for goods and services.  

From a financial service provider perspective, women are less risky customers because they are more risk averse than men and thus invest in less risky ventures. A study also shows that women pay back loans at a higher rate than men. Finally, the agri-food sector is central to food security, job creation and inclusive growth. If women had access to resources to the same extent as men, yields could increase by 20-30% which could raise agricultural output in developing countries by 2.5-4%.

Why can’t women access financial services?

They face many barriers, such as the lack of collateral, access to identification, low overall and financial literacy, distance to financial institutions, agricultural production risks, extreme weather condition. Some of these barriers affect women disproportionately and some are specific to women.  

Lack of access to finance is one of the major barriers that entrepreneurs in the agri-food sector face and that it is even more the case for women.

The root causes for many barriers affecting women lie in gendered social norms. They describe how we are expected to behave because of the way we or others identify our gender and can result in obstacles for women on many different levels, including managing businesses and accessing financial services. As an example, where social interactions between unrelated men and women are prohibited or where women cannot move outside the house without a male accompanying them, or when care work is perceived as being women’s sole responsibility, it is harder if not impossible for women to participate in trainings, or to enquire about taking out a loan or opening an account.  

What can we do?

Gender norms shape behavior and they are anchored in families and communities. Understanding which of these norms are prevalent in the communities we work with is key. Programs can carry out gender norms diagnostics jointly with communities, including men and women, community leaders, religious and other authorities. As for financial institutions, a gender assessment can help understand an institution’s strengths, and areas of development in relation to gender. It is an opportunity to reflect on its readiness to promote services tailored to women and its available resources (human and financial) including internal capacities and expertise.

As an example, trainings in financial literacy or entrepreneurship, should be organized in a way that their timing, duration, and place are in line with women’s availability and possibilities, considering that women need to take care of household and childcare chores. Depending on the context, women could be trained separately and/or together with men, to avoid men feeling left aside or with fear for their role in the household and thus creating adverse effects.  

Another hint towards solutions are digital financial services. A study on M-Pesa’s impact on Kenyan women showed that from 2006-2016, 185,000 women have moved beyond subsistence farming due to the service that gave them more agency in economic decisions and allowed them to receive remittances directly into their own mobile account.

Finally, jointly developed guidelines for financial institutions on how to include women customers into their processes showed results in a cooperation between GIZ and Jaiz Bank in Nigeria. Jaiz Bank took these guidelines up, carried out an institutional gender analysis and developed a loan product for women in the rice value chain. This product features adjusted rules for proof of identity by accepting voters’ cards, remote opening of accounts at the training venue sparing women from coming to the bank and adjusted conditions on guarantees. This allowed almost 500 formerly excluded women to take out a loan in the first two years.

The Practitioners Guide "How to foster access to finance for women in the agri-food sector" has been published by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). The guide provides insights, background information and guidance for improved livelihood and greater economic and social resilience specifically for women in the agri-food sector. In particular, it addresses how access to financial services can be promoted.

Find here a background video on the GIZ Global Project "Promotion of Agricultural Finance for agri-based Enterprises in Rural Areas" (GP AgFin) with a special focus on Islamic finance for smallholder farmers and agri-based enterprises and the inclusion of women in rural areas in Nigeria.