Notes and Acknowledgments: - Grameen Foundation



-8286758255000USAID W-GDP Women’s Employment for Economic Recovery (WEER) ProjectFinancial Ecosystem Gap Analysis-Summary FindingsApril 2021Contents: TOC \o "1-1" \h \z \t "Table,2" Notes and Acknowledgments: PAGEREF _Toc70516936 \h 4About Grameen Foundation PAGEREF _Toc70516937 \h 41. Introduction and Background on the USAID WEER Project PAGEREF _Toc70516938 \h 52. Purpose of the Financial Ecosystem Gap Analysis PAGEREF _Toc70516939 \h 53. Research Methodology PAGEREF _Toc70516940 \h 64. The Potential of Women Entrepreneurs as a Market Segment for Financial Services PAGEREF _Toc70516941 \h 65. High Potential Market Sectors and Value Chains for Women Entrepreneurs PAGEREF _Toc70516942 \h 76. Women’s Current Access and Usage of Financial Services in Eswatini PAGEREF _Toc70516943 \h 77. Where Women Entrepreneurs in Eswatini Access Finance for Business PAGEREF _Toc70516944 \h 8Table 1: Where Women Entrepreneurs Access Startup Capital PAGEREF _Toc70516945 \h 9Table 2: Where Women Entrepreneurs Access Working Capital PAGEREF _Toc70516946 \h 9Table 3: Financial Products Women Entrepreneurs Are Currently Using PAGEREF _Toc70516947 \h 108. General Barriers to Financial Access PAGEREF _Toc70516948 \h 109. Women Entrepreneurs’ Challenges, Pain Points and Recommendation for Improvement of Existing Financial Services PAGEREF _Toc70516949 \h 13Table 4: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement MFI Loans PAGEREF _Toc70516950 \h 14Table 5: Benefits MFI Loans PAGEREF _Toc70516951 \h 15Table 6: Challenges MFI Loans PAGEREF _Toc70516952 \h 15Table 7: Recommendations for Improvement MFI Loans PAGEREF _Toc70516953 \h 16Table 8: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Bank Loans PAGEREF _Toc70516954 \h 16Table 8: Bank Loans PAGEREF _Toc70516955 \h 16Table 9: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Agriculture Loans PAGEREF _Toc70516956 \h 17Table 9: Agriculture Loans PAGEREF _Toc70516957 \h 17Table 10: Recommendations for Improvement Agriculture Loans PAGEREF _Toc70516958 \h 17Table 11: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Savings Group Loans PAGEREF _Toc70516959 \h 18Table 11: Savings Group Loans PAGEREF _Toc70516960 \h 18Table 12: Benefits Savings Group Loans PAGEREF _Toc70516961 \h 19Table 13: Challenges Savings Group Loans PAGEREF _Toc70516962 \h 20Table 14: Recommendations for Improvement Savings Group Loans PAGEREF _Toc70516963 \h 20Table 15: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Mobile Money PAGEREF _Toc70516964 \h 21Table 15: Mobile Money PAGEREF _Toc70516965 \h 21Table 16: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Bank Accounts PAGEREF _Toc70516966 \h 21Table 16: Bank Accounts PAGEREF _Toc70516967 \h 21Table 17: Barriers to Accessing a Bank Account PAGEREF _Toc70516968 \h 2210. Recommendations for Financial Service Providers PAGEREF _Toc70516969 \h 23Table 18: Financial Products Women Would User if They Were Available and Affordable PAGEREF _Toc70516970 \h 2311. Summary Key Takeaways and Notes PAGEREF _Toc70516971 \h 26Notes and Acknowledgments: Grameen Foundation USA (Grameen) completed the following Financial Ecosystem Gap Analysis as part of our work under the USAID W-GDP Women’s Economic Recovery and Employment (WEER) Project. The Gap Analysis report was completed by Bindi Jhaveri and Samkelo Sukati from Grameen, and we could not have done this without the time and support of key informants at the Government of Eswatini Centre for Financial Inclusion, Central Bank of Eswatini, Financial Services Regulatory Authority as well as the many financial institutions and mobile network operators who took the time to share information about their products, strategies towards reaching women entrepreneur clients, and challenges.The authors would also like to thank Sipho Kunene and Mbuso Dlamini at Activquest Ltd., Joseph Capito, Bobbi Gray and Alfred Yeboah from Grameen Foundation for their support with research design, data collection and analysis. Finally, Grameen Foundation is very thankful for the support and partnership of Susan Marx and the American Bar Association Rule of Law Initiative team on the USAID WEER Project. center168021About Grameen FoundationGrameen Foundation USA (Grameen) was founded in 1997, inspired by the work of Nobel Laureate Professor Muhammad Yunus, founder of Grameen Bank and a global leader in the fight against poverty. Grameen is a global nonprofit that is dedicated to enabling the poor, especially women, to create a world without poverty and hunger. Grameen collaborates with a range of local partners—financial institutions, agribusinesses, technology companies, health care and other service providers—to create breakthrough solutions that enhance agricultural livelihoods, support small enterprise growth, and foster resilience among rural households and communities. Grameen is headquartered in Washington, D.C., with offices and programs in Asia, Africa, and Latin America. For more information, please visit .USAID Women’s Employment for Economic Recovery (WEER) ProjectFinancial Ecosystem Gap Analysis Summary FindingsIntroduction and Background on the USAID WEER ProjectThe USAID W-GDP Women’s Employment for Economic Recovery (WEER) Project is a three-year project implemented by the American Bar Association Rule of Law Initiative (ABA ROLI) in partnership with Grameen Foundation USA and Kwakha Indvodza (KI), to increase women’s participation in the Eswatini economy both as small business owners and as salaried workers. The project works across three main focus areas: Addressing laws that limit Swati women’s full and equal participation in the economy; Increasing women’s access to finance to start and grow businesses; Engaging male champions of women’s rights to address gender beliefs and practices that limit women's ability to participate in the economy and allow gender-based violence Key project activities under these focus areas include:Legal Reform: Work with a coalition of Eswatini CSO and private sector partners to advocate for legal reforms promoting womens participation in economic activitiesFinancial Ecosystem Gap Analysis: Analyse women in Eswatini’s needs and desires for financial products serving women entrepreneurs; the products currently being offered by banks, MFIs, and mobile network operators; and identify the gaps where new products are needed or existing products could be scaled up. DFS Innovation Prize: Establish an Innovation Prize to provide financial and technical support to financial institutions and mobile network operators to pilot or scale financial products and services that meet the needs of women entrepreneurs, especially smallholder farmers.Corporate Gender Training: Support private sector companies to improve gender, diversity and inclusion, and workplace harassment practicesPurpose of the Financial Ecosystem Gap AnalysisAs described above, the goal of this Financial Ecosystem Gap Analysis is to identify the types of financial products that could best serve and drive the economic growth of women entrepreneurs; gaps in the market for financial products serving women entrepreneurs, and use this information to inform the types of financial products and services that will be funded through our DFS Innovation Prize. Therefore, financial service providers planning to apply for the Innovation Prize should use the information contained in this Gap Analysis to inform the goals and design of their Innovation Prize applications. The Gap Analysis also looks at the challenges and pain points women entrepreneurs experience with existing financial products, and their recommendations for improvement. Research MethodologyThe Gap Analysis was completed using a mixed methods market systems analysis looking at the supply-side, demand-side, and regulatory barriers and facilitators to women entrepreneurs’ access and usage of financial products for business. The specific data collection approaches used included:Desk research of existing assessments, government and NGO documents; Key informant interviews with government and financial institutions; and Individual surveys of 84 women entrepreneurs and 35 husbands of women entrepreneurs across the four regions of the country to understand women’s business profiles, needs for financial products, uptake of existing financial services, and views/challenges/pain points with the financial products they currently use or have used in the past. The participants for the women entrepreneurs and spouses of women entrepreneurs’ survey were selected using a stratified random sampling approach in which women were randomly selected from a sampling frame of participants provided by local financial service provider (FSP) Imbita Trust. Survey participants were distributed equally across the four regions of the country, and 75% of respondents surveyed were rural. Snowball sampling was used to build the sample of spouses of interview respondents. Spouse marital status was solicited from the sampled women small business owners, out of which a total sample of 28 spouses was drawn.The Potential of Women Entrepreneurs as a Market Segment for Financial ServicesWomen make up 52% of the adult population in Eswatini (71% rural), and a full 72% of adult women (roughly 310,404 women) are self-employed, making women entrepreneurs in Eswatini a huge untapped market segment for financial service providers, as well as an economic engine of growth for the nation. High Potential Market Sectors and Value Chains for Women Entrepreneurs6191251144270High Potential Value Chains for Women EntrepreneursBeefLeatherDairyGoatPig/PorkIndigenous ChickenBeekeeping/ApiaryHorticulture (Vegetable Gardening)00High Potential Value Chains for Women EntrepreneursBeefLeatherDairyGoatPig/PorkIndigenous ChickenBeekeeping/ApiaryHorticulture (Vegetable Gardening)Financial products that are tailored for the highest-potential sectors of the Eswatini economy are most likely to have an impact on local women entrepreneurs’ lives. Up to date, the Government of Eswatini (GOE) Ministry of Agriculture, European Union and other stakeholders have identified the following value chains and business sectors with high potential to generate growth for women’s businesses:This is not an exhaustive list, and the GOE is in the process of developing an official list of priority value chains, but these are a good starting point. Women’s Current Access and Usage of Financial Services in EswatiniFinancial inclusion has grown significantly in Eswatini over the past decade, and this growth has been largely fueled by the mobile money sector. The 2019 Finmark/GOE State of Financial Inclusion survey and 2014 Making Access Possible (MAP) Swaziland Financial Diagnostic Report notes that:87% of adult women are currently financially included Formal Bank Accounts: 49% of women currently have a formal bank account, and 79% of women have either a bank of MM account. 60.7% of the women entrepreneurs surveyed by WEER have a bank account Savings: 65% of women in Eswatini currently save in some form or another. 26% of savers have formal savings accounts at banks, while 47% save in non-bank formal products like mobile money and cooperatives. 88% of women entrepreneurs surveyed by the WEE project save in a community savings group/self-help group/merry-go-round.Mobile Money Accounts: 71% of people in Eswatini overall have a MM account. 95% of women have access to a mobile phone. 84% of people in Eswatini live within a 30-minute walk to a mobile money agent so they have the opportunity to transact. Uses of Mobile Money: 64% of MM users in Eswatini primarily use Person to Person (P2P) payments, while 20% of users also use MM to save. Credit: While there has been an increase in access and usage of other financial products, access to credit is still extremely low in Eswatini. Only 8% of people have borrowed from a bank. Of those who credit, only 12% borrowed from a formal financial institution (including banks, SACCOs, and MFIs) while 14% of people borrowed from informal sources, including savings groups, shop credit and moneylenders. Just 1% of women entrepreneurs surveyed by WEER have borrowed money from the bank, whereas the vast majority borrows from MFIs and savings groups. Where Women Entrepreneurs in Eswatini Access Finance for BusinessWomen Entrepreneurs Have Insufficient Access to Credit for Business Growth: The GOE SME Financial Inclusion Roadmap found that only 23% of high impact enterprises and 6% of medium and low impact enterprises have borrowed money from the bank, and cites limited access to finance as the main constraint to Swati business growth. Desk research and interviews with the GOE Centre for Financial Inclusion, Financial Services Regulatory Authority and Central Bank supported the conclusion that women do not have sufficient access to credit to start and grow businesses. They all noted that women face difficulty accessing anything beyond micro-loans and this prevents them from starting or growing significant businesses. One key informant from CFI noted, “It is not easy for a female business owner to access a loan, which is why they stay micro...because they mostly start those businesses using [their] own savings or a loan or from stokvels.”MFIs, Savings Groups, and Agricultural Finance Providers Are Women Entrepreneurs’ Main Source of Credit: 39% of respondents surveyed by the USAID WEER project have taken agriculture loans in the past five years and 48% have taken savings group loans. Where Women Entrepreneurs Access Startup Capital for their Businesses: Just 1% of women entrepreneurs surveyed by WEER accessed loans for business startup from banks. 29% accessed startup loans from an MFI, and 15% accessed loans from savings groups. Most women used their own savings or loans from friends and family to some extent to finance their business. 54% of husbands surveyed by WEER reported providing funds to their wives for business startup capital. Table 1: Where Women Entrepreneurs Access Startup Capitalcenter00Where Women Entrepreneurs Access Working Capital for their Business: Just 2% of respondents accessed bank loans for working capital. 17% relied on savings group loans for working capital while 65% got funds from their friends and family and 54% from their own savings. Table 2: Where Women Entrepreneurs Access Working Capital8667751714500The Role of Husbands in Financing Women’s Businesses: Husbands play a key role in financing women’s businesses, as well as assenting to their wives to take out loans. Of those surveyed, 54% of spouses of women entrepreneurs reported contributing funds to their wives business startup capital. Another 53% reported that their wife borrows money from them to repay their loans ‘always’ or ‘frequently’. A total of 86% of women entrepreneurs surveyed consult their husbands before taking a loan. It is clear that it is essential to involve men as champions of women’s financial access and usage--and that men would have to lend less money to their wives businesses if women had better financial access. How Women Entrepreneurs Spend their Business Income: Of those surveyed, 69% of women entrepreneurs reported saving their daily business income in a bank, savings group or other place; or re-investing the earnings into their business. Only 26% reported spending their daily earnings while 5% gave them to their husband8667752381250Table 3: Financial Products Women Entrepreneurs Are Currently UsingGeneral Barriers to Financial AccessGap Analysis desk research and KIIs revealed the following general barriers to women’s financial access and adoption:Barriers to accessing loans include:Lack of Women-centered financial products and services: In key informant interviews, the Government of Eswatini Centre for Financial Inclusion (CFI), Central Bank of Eswatini (CBE) and Financial Services Regulatory Authority (FSRA) all noted there are no tailored products for women from financial institutions, and historically banks in particular have not focused on women clients. They noted that historically there seems to have been an unwillingness of FIs and mobile network operators (MNOs) to invest in the underserved women segment, but this seems to be improving now.Financial Service Providers Do Not Target Micro, Small and Medium Enterprise Segment: Similar to their disinterest in women clients, several key informants noted that many financial institutions in Eswatini focus nearly entirely on large businesses and salaried workers, and have not demonstrated interest in working with or developing products for micro, small and medium enterprises. This despite the enormous untapped market segment that micro small and medium enterprise owners represent.High Fees: Women entrepreneurs surveyed by WEER, as well as the CFI, noted that women are price-sensitive and high interest rates or fees limit their willingness to take up products. High Documentation Requirements: Key informants at CFI and the FSRA, and many of the women entrepreneurs surveyed, said that high documentation requirements (ID, proof of salaried employment, cash flow analysis, and complicated loan applications) prevent them from accessing loans. Surveyed women entrepreneurs called these documentation requirements ‘cumbersome’; while FSRA stated that “Documentation requirements especially when applying for a loan are one of the most prevalent barriers that inhibit women from financial inclusion.”Lack of information/awareness related to available financial products: CFI and the FSRA noted that women’s lack of awareness about available financial products and national financial inclusion programs limit women’s uptake of financial products and their ability to understand them. In line with these findings, just 12% of women entrepreneurs surveyed by WEER reported participating in a financial literacy training in the last year.?National Financial Inclusion Initiatives Are Uncoordinated: The CFI and CBE both noted that each government body has their own financial inclusion initiatives but these are often not well coordinated and focused on shared objectives. At the same time, women are not necessarily a focus segment for national initiatives and there are no specific targeting campaigns to increase uptake of women clients. As a result, women tend to be left behind by national financial inclusion initiatives.Challenges with Savings Groups: Savings groups are widespread in Eswatini, used by 83% of women entrepreneurs surveyed under WEER. Women find many benefits of savings group loans, including quick loan approval processes, it is easy to qualify for loans, flexible repayment options, no collateral requirements and being able to access services near their home. But both the FSRA and savings group members themselves noted that weak capacity of many savings groups leads to inefficiencies and group conflict, and makes the savings groups less effective than they should be. The Department of Cooperatives is mandated with supporting and supervising savings groups in Eswatini, but according to key informants, they do not have sufficient staff, and find it difficult to adequately supervise all the groups in the country. At the same time, the FSRA notes that despite the fact that women are borrowing and repaying loans in many savings groups, they remain unable to translate this successful repayment into a formal credit history that could pave the way to formal financial inclusion. Weak Entrepreneurial Skills, Low Confidence and Risk-Taking Behavior Limits the Ability of Women to Translate Finance into Business Growth. Desk research and several key informants noted that many women tend to have weaker entrepreneurial (business) skills and lower business confidence than their male counterparts, due to historical inequities and social norms that limit them from taking a risk-taking leadership role. The 2017 Finscope survey highlights a number of contributing factors such as a) the lack of a coordinated and integrated approach to business development support (BDS) across Eswatini, leading to variations in quality and skills training.; b) limited awareness of the BDS services available; c) a one-size-fits-all program offering that does not address the different needs of micro/small vs. medium enterprises. As noted by the SME Financial Inclusion Roadmap, many small and micro-level enterprise require training on more basic skills to start and manage a business, such as recordkeeping, legal and accounting services. On the positive side, these challenges have solutions that can be readily implemented especially since the GOE cites mainstreaming women and youth into SME business development programs as a key goal in Eswatini’s SME Financial Inclusion Roadmap. Clearly it is not that Eswatini women are incapable of developing skills in business management, but rather that the ecosystem is not aligned to facilitate skills transfer. Fear of Formal Financial Products: There remains among women entrepreneurs a reluctance to take formal loans because of unfamiliarity with new financial service providers, fear of default and similar issues. All of these considerations limit the number of women who are currently taking loans, which, in some cases could be addressed through financial education on the use, terms and conditions and repayment plans of various financial products. Long Loan Processes: Finally, long loan approval and disbursement processes often discourages women’s uptake of loans, especially if they are seeking a quick working capital loan for immediate business activities (like taking goods to market). Women Entrepreneurs’ Challenges, Pain Points and Recommendation for Improvement of Existing Financial ServicesThe Gap Analysis also analyzed the benefits, challenges, pain points that women entrepreneurs experienced with their current financial products, as well as their recommendations for improvements of existing products. These are summarized below by product. MFI LoansTable 4: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement MFI LoansTable 4: MFI LoansAdvantages and Uses of MFI Loans: Expanding/funding my business-94% of respondentsLow interest rates-34%It is easy for me to qualify for MFI loans-30%I am able to receive a loan very quickly after I apply-28%Flexible repayment options-28%Challenges: 45% of MFI loan borrowers reported no challenges with their loansLong distances to MFI branches- 37% of WEER respondents have never taken an MFI loan before despite the clear opportunities to do so as members of Imbita Trust. The number one reason why people have not taken loans is long distances to the MFI branch(cited by 71% of WEER survey respondents)High Interest rates-reported by 26% of respondents Difficult Collateral Requirements- reported by 19% of respondents Recommendations for Improvement:Women entrepreneurs surveyed by WEER recommended the following changes to improve access and uptake of MFI loans. Lower Interest Rates- 36% of WEER survey respondents recommended lowering interest ratesIncrease Loan Size- 26% recommended increasing loan sizes.Adjust Collateral Requirements-Most interestingly, 19% of respondents requested modified collateral requirements indicating that collateral is a key barrier to women’s usage of loans. 8667753333750Table 5: Benefits MFI Loans619125392684000Table 6: Challenges MFI Loans-405765252730Table 7: Recommendations for Improvement MFI LoansBank LoansTable 8: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Bank LoansTable 8: Bank LoansAdvantages and Uses of Bank Loans: Over 96% of WEER respondents have not taken a bank loan for business in the past 5 years. Of those that have, the main benefit was seen as expanding/funding their business.Expanding/Funding My Business-96%Challenges/Barriers to Access: When asked why they do not take bank loans, respondents reported the following challenges:High Bank Fees-56% women entrepreneursDifficult Collateral Requirements-20% of surveyed women entrepreneurs do not meet the collateral requirementsBank Loan Terms Do not Meet Women Entrepreneurs’ Needs-16%Documentation Requirements-15% do not meet the documentation requirementsRecommendations for Improvement:Of those women entrepreneurs that have taken bank loans before, the recommendations for improvement were:Introduce mobile money loan disbursement/repayment-25%Change collateral requirements-25%Change guarantor requirements-25%Lower fees-25%Agriculture Loans Table 9: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Agriculture LoansTable 9: Agriculture LoansAdvantages and Uses of Ag Loans: Agricultural loan users experienced the following benefits from their agriculture loans:Able to expand my farm or agri-business- 93% Loan application was easy to complete-36% Received loan quickly-36%Challenges: The primary reasons respondents noted for not taking agriculture loans were not knowing how to access them, and not needing them (likely because they do not operate an agricultural business) I have no idea how to access an agriculture loan-41%I have no need for an ag loan-37%High fees/interest rates-20%The primary pain points experienced by users of agricultural loans were:High interest rates- 27% High collateral requirements-27% Consequences of default-21% Recommendations for Improvement:Of those women entrepreneurs that have taken bank loans before, the recommendations for improvement were:Lower Interest Rates--55% Modify Collateral Requirements-36%Adjust Loan Size-33%Lower Fees-27%Table 10: Recommendations for Improvement Agriculture Loanscenter00Savings Group LoansTable 11: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Savings Group LoansTable 11: Savings Group LoansAdvantages and Uses of Savings Group Loans: Savings group loan borrowers reported a great deal of benefits and strengths to their loans. Top benefits included:Expanding or funding their business: 85% of respondentsMore flexible repayment options: Savings groups offer more flexible repayment options than MFI or bank loans, including deferral of late loans and being able to use household assets to repay loans when cash is not available.-50% of respondentsNearby: Savings groups are near people’s homes so it is easy to request and repay the loan without the time and cost of travelling to banks or MFI branches-48% of respondentsChallenges: Users of savings group loans also indicated the following serious challenges with savings group loans: Loan size not right-43%Group conflict-38%Loan length not right-25%Other members of group default or repay late-28%Issues around group conflict are in line with the savings group management issues raised by FSRA earlier. Recommendations for Improvement:When asked how to make savings group loans better, respondents recommended: Change loan sizes-48%Introduce mobile money loan disbursement and repayment-30%Change the loan length-28%Lower interest rates-23%The suggestions on how to improve savings group loans were notable, because savings group members should be able to make these changes themselves if they feel they are necessary (since rules and loan terms in savings groups are set by the group themselves). Therefore, it is important to understand the underlying constraints to loan size, length, etc. and find ways to address these underlying factors.60007542672000Table 12: Benefits Savings Group Loans42100522021800Table 13: Challenges Savings Group Loans889635577900800Table 14: Recommendations for Improvement Savings Group LoansMobile Money (MM):Table 15: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Mobile MoneyTable 15: Mobile MoneyAdvantages and Uses of MM Loans: 99% of WEER survey respondents hold MM accounts (they are required to have one for their Imbita groups)Easy to open an account-81%Flexibility-64%Low fees-51%MM agents are located nearby so I can easily access services-44%There are a wide variety of services on the MM platform-37%Reduced travel needed-33%Challenges: 47% of respondents reported no challenges with mobile money High Fees-51% Lack of loan products on the MM platform: 11% The above indicates that there is a fairly high level of satisfaction with MM services, and there is an unmet demand for mobile loans. Recommendations for Improvement:When asked how to make MM better, respondents suggested:Lower MM fees-58%Ensure MM agents are open longer hours-39%Bank Accounts: Table 16: Women Entrepreneurs Perception of Benefits, Challenges, Pain Points and Recommendations for Improvement Bank AccountsTable 16: Bank AccountsAdvantages and Uses of Formal Bank Accounts:61% of WEER survey respondents have a formal bank account. The benefits and uses they experiences from their bank accounts include:Safe place to save money-94%The account gives me access to the bank loans and other products-27%I can easily receive payments from donor/employer—37%Challenges: The primary reasons women entrepreneurs do not open bank accounts are expensive bank fees, and no perceived need for an account. Bank fees are too expensive-58%I do not have enough money to need a bank account-49%I have no need for a bank account-21%I do not have enough money to need a bank account-21%Similarly, the main challenges account holders feel with their accounts are expensive bank fees and unexplained fees. Bank fees are too high-59%Bank is subtracting money from my account-53%Notably, only 15% of women surveyed mentioned distance to bank branches as a barrier to account opening; and only 18% of women mentioned distance as a pain point when using their account. Recommendations for Improvement:When asked how to make MM better, respondents suggested:Lower MM fees-58%Ensure MM agents are open longer hours-39%Table 17: Barriers to Accessing a Bank Account0146304Recommendations for Financial Service ProvidersProvide women entrepreneurs with affordable and accessible business, agriculture, and education loans: Out of all the financial products in the market today, the top products needed by women entrepreneurs are business, agriculture, and education loans. As presented in the table below, 90% of women entrepreneur survey respondents stated they would take up a business loan if it was affordable and they met the documentation requirements. 67% would use an agriculture loan, and another 63% would use an education loan. Table 18: Financial Products Women Would User if They Were Available and Affordable46291521717000Leverage DFS and Mobile Money to Expand the Scale of MFI and Bank Credit: According to the 2019 State of Financial Inclusion Report, 71% of people in Eswatini already have MM accounts and MM agents are very accessible in local areas. MM addresses the price sensitivity many clients have to loan products, because it eliminates the cost of transport to access loans. MM also enables clients to access loans quickly when they need them. Finally, MM has the potential to reduce financial institutions’ costs of doing business by enabling loan disbursement and repayment without the high cost of deploying Credit Officers to rural areas. Banks, MFIs, cooperatives and other financial service providers should consider how DFS and Mobile Money can improve the scale and popularity of their services. Introduce Financial Products Tailored to Meet the Needs of Priority Women-Centered Value Chains: These include livestock (beef, leather, dairy, goat, pig/pork, indigenous chicken, and beekeeping) and horticulture (vegetable gardening) financial products.Introduce Credit Products that Address Women Entrepreneurs Needs for Short-Term Working Capital. This could include short-term loans that enable traders to purchase goods for sale, pay for transport to transport goods to market, etc. Alternative Collateral Financial Products and Solutions that Enable Women Entrepreneurs Without Formal Collateral to Access Business Loans: Of the survey respondents, 20% of potential bank borrowers, 19% of MFI borrowers, and 27% of agricultural loan borrowers cited high collateral requirements as a key barrier to their ability to access loans and/or a pain point with the product. Financial institutions should adjust these collateral requirements if they want to expand their customer base. This could include loans with alternative or flexible collateral requirements rather than land titles. Develop Alternative Credit Scoring and Loan Assessment Financial Products and Solutions that Enable Women Entrepreneurs Without Formal Credit Histories to Access Business Loans. This could include the use of alternative data like digital payment histories, cash flow analysis, or SME Scores to generated credit scores, dramatically expanding availability of loans that do not require formal credit histories, or any other innovative solution the applicant would like to offer. Leverage DFS and Digital Learning Platforms/Communication Channels to Improve the Scale and Quality of Services Provided to Savings Groups:Of the women entrepreneurs surveyed, 83% are members of a savings group, and 48% use savings groups to access credit. But these loans are 1) not large enough to catalyze business growth; 2) not available to every member due to limited loaning funds; and 3) are subject to group conflict. WEER recommends financial institutions and savings group-facilitating organizations identify solutions that increase the scale and quality of services to savings groups through digitization/DFS or any other innovative solution the applicant would like to offer; and improve the quality of the services to better meet the needs of women entrepreneurs for example by improving the functioning of savings groups or SACCOs. Financial Products and Solutions that Effectively Address Rural Women Entrepreneurs Reluctance to Adopt New and Formal Financial Products. These could include lower-risk financial products, savings group linkage and group loan products that help women transition from informal to formal financial services, strategic partnerships with trusted local actors and membership organizations with the ability to overcome rural women’s trust barriers. Introduce Interoperable Digital Platforms and More Graphic User Interfaces to Make DFS Accessible to Wider Audiences. Mobile money has the potential to expand financial services to a large portion of the population, but this potential is currently not being realized because of awareness and/or accessibility barriers. While 71% of people in Eswatini have a mobile money account according to the 2019 State of Financial Inclusion Report, only 33% are using their accounts to access services beyond airtime and P2P payments. Financial institutions should introduce innovations that make it easier for mobile money users to use financial services on the mobile money platform. This could be interoperable digital platforms that link women entrepreneurs to financial institutions; digital platforms catering to low-literacy users, etc.Use Financial Education, Women-Friendly Advertising Campaigns, and Positive Male Engagement to Increase Women’s Awareness of the DFS Products That Are Already Available: Thanks to the active support of the GOE Central Bank of Eswatini and the work of financial institutions, fintechs, and mobile network operators; a number of DFS products are currently being piloted, are in the pipeline or planning stage in Eswatini. However, WEER’s research indicates that many women are not aware of these products; and more broadly fear and suspicion of unfamiliar financial services poses a barrier to uptake. A broader financial education and/or awareness-raising campaign could increase women’s knowledge of and willingness to try DFS products. Research in many countries has shown that many rural women think formal financial services and DFS are ‘for other people, richer people’ and ‘not for them’. So a targeted women-friendly advertising campaign featuring rural women in phone or advertisements, speaking to women’s fears and questions around DFS products, etc. could increase women’s uptake of these services. FSPs should consider targeted women-centered advertising campaigns. Additionally, the Gap Analysis demonstrated that women’s husbands are both clearly involved in their decisions on whether or not to take a loan, and contributing funds to their wives’ businesses. Therefore identifying ways to engage men as positive champions of their wives financial access could catalyze uptake. However, it is important that men are engaged as positive advocates of their wives’ needs, rather than using women’s loans as an opportunity to access funds for their own needs. Despite the positive role and huge contribution that many men make in their wife’s, it has been well-documented in the financial services sector that women sometimes take loans on behalf of their husbands and these loans are less likely to be repaid. In addition finance can lead to theft and GBV. Through our partner Kwakha Indvodza, USAID WEER is providing gender trainings and technical assistance to financial institutions and other private sector companies, and interested financial institutions can also request this support through our Innovation Prize RFA Question and Answer forum. Needs-Appropriate Business Skills Training Bundled With Finance: Women entrepreneurs with strong business skills are more likely to repay their loans on time and grow their businesses. Applicants could propose highly relevant and needs-appropriate business skills training provided with business loans; and this training should be able to be delivered cost-effectively at scale and sustainably, potentially through digital platforms, Interactive Voice Response (IVR), SMS, or by agents who live near the clients, or any other innovative solution the applicant would like to offer. Summary Key Takeaways and NotesOverall financial inclusion (use of one or more financial products) has grown rapidly in Eswatini over the past ten years, but access to credit is still extremely low compared to other countries in Africa. Only 8% of people in Eswatini have taken a loan from a formal bank, and only 7% of entrepreneurs have accessed a loan from a formal bank. Women entrepreneurs are a huge untapped market segment for financial institutions in Eswatini, with over 800,000 women entrepreneurs in the country and most of these lacking accessing to credit. Projects like USAID WEER, and guarantee funds like CFI’s FINCLUDE fund are working to support financial institutions by de-risking credit provision to this important market segment.Women entrepreneurs themselves have stated they have a strong demand for formal loans for business. 90% of women entrepreneurs surveyed by WEER stated they would take up a business loan if it was available and accessible, and 67% would use an agriculture loan.Key barriers to women entrepreneurs’ access and uptake of credit include:High collateral requirements and high documentation requirements for bank and some MFI and agriculture loansGroup conflict/weak management capacity, inadequate loan sizes and inadequate loan lengths for savings group loansFinancial institutions should design financial products that address these issues if they want to successfully reach the untapped women entrepreneur market segment. Mobile money is also growing very rapidly in Eswatini, and has the potential to address the access to credit gap, while cutting costs for financial institutions. 71% of people in Eswatini currently have mobile money accounts and 95% of women have access to a mobile phone.Microfinance institutions, finance trusts, development finance institutions, and savings groups are providing vital services to underserved women entrepreneurs, but the reach and quality of these services is limited. Digital financial services (digitization of loan origination, disbursement and repayment) and digital learning or meeting tools (digitized savings group recordkeeping, support supervision, and financial literacy training) have the potential to address these gaps in the reach (number of women entrepreneurs served) and quality (performance of savings groups and microfinance loan performance) of these services. Financial literacy, digital financial literacy and increasing women’s awareness of available financial products is key to helping women entrepreneurs to use new services. ................
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