The Fintech Revolution in Africa: Bridging the Gender Gap

A Flourishing Landscape

Kigali, the capital of Rwanda, stands as a beacon of hope in the fintech revolution sweeping across Africa. From Cairo to Cape Town, this burgeoning sector is creating wealth and opportunities, yet it grapples with a significant challenge: the underrepresentation of women. While Africa can proudly claim that the share of fintech companies founded by women is double the global average, this figure still hovers at a mere 3.2%.

Gender Disparities in Tech

Despite the broader tech sector in sub-Saharan Africa boasting a 30% female workforce, the fintech industry lags behind. This disparity raises questions about the inclusivity of a sector that has the potential to transform lives. The lack of female representation not only limits opportunities for women but also stifles innovation and diversity within the industry.

Impact on Financial Inclusion

However, the fintech sector has made strides in enhancing financial inclusion for women. It has empowered individuals and small business owners, enabling them to formalize their finances and expand their operations. In Rwanda, for instance, fintech platforms contributed to a remarkable 27% increase in women’s access to financial services between 2012 and 2016. Similarly, Kenya’s mobile banking revolution saw financial inclusion soar from just 26% in 2006 to an impressive 84% by 2021.

The Ongoing Challenge

Despite these advancements, significant gaps remain. As of 2020, only 37% of women in sub-Saharan Africa had a bank account, compared to 48% of men. This disparity persists even in Rwanda, a country recognized for its commitment to gender equality. While Rwanda has achieved notable milestones, such as electing a female-majority parliament in 2008, over three-quarters of Rwandan women still lack access to basic banking services.

The Credit Gap

The inability to access financial services places women entrepreneurs at a distinct disadvantage. According to the World Bank, women-owned small and medium-sized enterprises (SMEs) in Africa face a staggering $42 billion credit gap. This limitation stifles their growth potential and hinders job creation, perpetuating cycles of poverty and inequality.

Innovative Solutions

Fintech companies have the opportunity to bridge this gap through flexible and innovative solutions. Traditional credit assessments often rely on financial history, which many women lack. However, fintech firms can leverage alternative data sources—such as mobile phone usage and social media activity—to create more accurate assessments of creditworthiness. This approach must be balanced with robust privacy measures to ensure trust between lenders and borrowers.

Overcoming Documentation Barriers

Another significant barrier to financial inclusion, particularly in rural areas, is the lack of documentation required to open bank accounts. Fintech companies can address this challenge by utilizing mobile technology and digital identity verification methods, such as biometric authentication. This allows women to access financial services without the traditional hurdles of government-issued IDs or proof of address.

Tailored Financial Products

Moreover, fintech can develop products specifically designed for those typically excluded from the formal financial system. For instance, Ensibuuko, a Ugandan company, has created a digital credit system tailored for farmers—an area where many African women are actively engaged. Such initiatives can significantly contribute to closing the gender gap in financial services.

The Importance of Inclusion

For the fintech industry to thrive and continue expanding financial inclusion, it must not only serve women but also include them in its ranks. Women investors are more likely to support women-owned businesses, and female professionals may be better positioned to design services that meet the needs of women clients.

The Power of Representation

Research indicates that women are better served by institutions where women hold leadership roles. This principle applies across various sectors, including fintech. A recent article in Nature highlighted that the absence of women in policymaking and budgeting decisions in healthcare leads to underfunding of issues affecting women. The same logic holds true for fintech.

Supporting Women’s Leadership

The challenge now lies in fostering women’s participation and leadership within the fintech sector. Whether in boardrooms or on farms, women must play a pivotal role in shaping the future of African finance. By empowering women in fintech, the industry can unlock new opportunities for growth and innovation, ultimately benefiting the entire ecosystem.

Nick Barigye, CEO of Rwanda Finance Limited and former managing partner of Karisimbi Business Partners, emphasizes the importance of this movement. As the fintech landscape evolves, the inclusion of women will be crucial in driving sustainable growth and ensuring that the benefits of financial technology reach all corners of society.