Banks in sub-Saharan Africa are increasing their focus on gender balance in lending with majority of the institutions reporting better loan performance among female-led firms.
- •According to Finance in Africa 2024 report by EIB, the share of banks with a gender strategy was 72 per cent, with another 17 per cent planning to introduce one, which is broadly in line with findings from the 2023 survey.
- •Two-thirds of banks have financial services or products specifically targeting women.
- •There is evidence that loan size differs between genders: 59 per cent of banks reported no difference in the size of loans to women and men, but 38 per cent of banks stated that loans to female-led businesses are smaller than those to male-led firms.
“Banks continue to report better loan performance among female-led firms, with nearly 70 per cent of banks observing lower rates of non-performing loans for these businesses. This again highlights the advantage of lending to women.”
The EIB survey, which polled 51 banks in sub-Saharan Africa in February and March 2024, highlights improvements in the African financial sector as well as constraints for the region’s economic growth.
The analysis shows that among sub-Saharan African banks, 77 per cent of survey respondents report that current economic conditions are their main concern, followed by asset quality (53 per cent of banks). Concerns about funding also persist, with about one-third of banks citing lack of capital and the cost or availability of funding as a problem.
“While we see some signs of improvement, the high cost of finance remains a source of concern,” said EIB Chief Economist Debora Revoltella. “As we navigate the dual challenges of climate change and the digital transformation, the role of multilateral development bank lending is even more relevant in supporting sustainable growth on the continent.”
The Fintech Boom
Fintech companies in Africa have nearly tripled in number since 2020, improving access to finance for people and businesses across the continent.
“Fintech is revolutionising the way we think about finance in Africa,” said EIB Vice-President Thomas Östros. “By leveraging technology, we can improve access to finance for millions and foster sustainable economic growth.”
Africa’s fintech sector is thriving as digital finance expands much faster than traditional banking. The number of African companies offering new products and services in the area of finance jumped to 1,263 at the start of 2024 from 450 in 2020.
Yet obstacles to finance remain a significant constraint on economic development, with private-sector credit falling from 56% of gross domestic product in 2007 to 36% in 2022. The decline hinders growth in productive economic assets, impeding industrialisation on the continent.
Increasing trade among African countries could boost development because the industrial share of intra-African exports is nearly double that of other destinations, according to the report.
The report also delves into the climate perceptions of African banks. Based on the EIB Climate Risk Scores, Africa is amongst the most exposed regions in the world to the physical risks stemming from climate change. 34 per cent of the banks in our survey report asset quality deterioration due to extreme weather events and identify SMEs as the most affected borrowers.
