NIGERIA – UK’s Development Finance Institution (DFI) CDC has granted a US$100 million finance facility to First Bank of Nigeria (FirstBank), to support women-owned and led businesses and SMEs in Nigeria.
The funding demonstrates a shared mission to spur sustainable, productive, and inclusive growth in Nigeria.
The deal will support FirstBank to deliver financial solutions that help to address the challenge of limited access to capital faced by underbanked and underserved groups in the country.
As part of the new facility, a minimum of US$30 million will be allocated in the form of credit lines to women entrepreneurs.
The facility will also support FirstBank’s ‘FirstGem’ gender-focused services offering, which takes steps to promote gender inclusion by improving lending and support to female entrepreneurs.
Worldwide, women’s access to finance is disproportionately low and despite substantial progress being made, there is still a 9 percent gap between women’s and men’s access.
In sub-Saharan Africa, only 37 percent of women have a bank account, compared with 48 percent of men, a gap that has only widened over the past several years.
The figures are even worse in North Africa, where about two-thirds of the adult population remains unbanked and the gender gap for access to finance is 18 percent, the largest in the world.
The mainstream view of economists is that supply-side constraints such as high-interest rates and collateral requirements play a key role in excluding women from the formal credit market.
Credit rationing through high-interest rates disproportionately discourages women entrepreneurs from applying for loans, while lack of collateral can mean they have less access to loans than their male counterparts.
And when they do have access, women typically face more stringent loan arrangements than men.
The funding hopes to solve limited access to credit by women-owned and led businesses in Nigeria.
It will also encourage an estimated 59 million unbanked Nigerians, to participate in the country’s formal economy.
In addition to financing, CDC will also support FirstBank with a technical assistance program which will build on the Bank’s knowledge base of the women-led and women-owned businesses.
This will enable the Bank to further leverage the facility to provide vital funding to scale business growth across Nigeria’s market, increasing job creation and improving livelihoods throughout the country.
“Promoting financial inclusion is a key component for advancing sweeping productive and sustainable growth across both rural and urban areas in Nigeria,” said Nick O’Donohoe, Chief Executive of CDC Group.
The facility’s target to increase financial inclusion and opportunities for women qualifies this facility under the 2x Challenge – a commitment by the development finance institutions (DFIs) of the G7 to mobilize capital to support increased economic empowerment for women in emerging economies.
The US$100 million commitment aligns with the UN’s Sustainable Development Goal 5 Gender Equality and Goal 8 Decent Work and Economic Growth.
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