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Why Women Entrepreneurs Struggle To Fund Their Start-Ups

Women entrepreneurs and funding

The Nigerian economy must emphasise innovation regardless of gender to live up to its potential as a global giant. In 2018, women made up less than one-quarter of entrepreneurs within the formal sector. Until today, women remain an untapped economic resource. Now, it is important to note that an ‘invisible wall’ exists between women entrepreneurs and funding opportunities. This wall is one of the major causes of the gender disparity we observe among Nigerian entrepreneurs.

See Also: 35 Booming business ideas and step-by-step guides to start them.

Entrepreneur Demographics in Nigeria

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

In present-day Nigeria, approximately 40% of women are entrepreneurs, one of the highest rates in the world. However, while women own nearly 50% of micro-businesses in the informal sector of the economy, they own only 20% of businesses in the formal sector.

Businesses in the informal sector, the so-called ‘low-value’ enterprises, are often necessity-driven, borne from a lack of access to high-quality jobs or alternative sources of income. These informal sector entrepreneurs are the roasted corn and groundnut sellers who peddle their wares at street corners and in slow-moving traffic.

‘High-value’ businesses in the formal sector, on the other hand, are the information technology start-ups, the fashion houses, and the financial service companies. These formal SMEs (small and medium-sized enterprises) are opportunity-driven. They provide highly-paid services and display remarkable innovation. They are also predominantly male-owned.

According to the founder of Mobihealth, Dr. Funmi Adewara, “It is 6x harder to secure funding than it is for our male counterparts due to cultural and societal barriers that limit a woman’s access to financial capital. And this, she stresses, “Is despite research showing that women deliver more revenue growth, financial efficiency and value in the long-term than male-led businesses.”

If you’ve ever wondered at the gender gaps in entrepreneurship, a large cause of it is lack of funding. It’s difficult for women entrepreneurs to access funding for their businesses.

Here are some of the main reasons why women entrepreneurs in Nigeria struggle to fund their start-ups.

Reasons Women Entrepreneurs Have a Harder Time Finding Funding

Investors Tend To Support Their ‘People’

For any start-up, male or female-owned, it’s a tough world out there. Nigerian investors and venture capitalists are notoriously risk-averse, and many small-business owners who apply for loans are unsuccessful according to a report by Techpoint.

However, it is well known that investors tend to support people with whom they already have some kind of relationship. These are usually people with whom they have done business in the past; friends from university, proteges of old colleagues, or friends of friends.

In order to avoid risk, investors throw their weight behind those who are most familiar. This is the catch-22: the vast majority of players in the Nigerian business and political spheres are male, which means that women will have a much harder time finding an ‘in’ into the industry. This, in turn, means that the majority of players will remain male. And the cycle continues.

One way to remedy the situation is to build a network of female investors who will support and invest in up and coming women entrepreneurs. These investors should offer educational workshops, teaching women how to pitch and sell their ideas to increase their chances of finding sponsors. Also, an increased number of government grants for female business owners should be put in place.

See also: 14 Sources Of Business Funding Opportunities For Entrepreneurs In Nigeria

Deliberate Bias

Furthermore, Nigerian society is liable to mindless adherence to gender roles. Men are perceived to be the breadwinners and innovators. Women are expected to be the subservient wives and mothers, responsible for household chores and child-rearing. These ideas can and have easily skewed venture capitalists’ decisions, inviting doubt as to a woman’s dedication to her business.

Research published by scholars from the Queensland University of Technology, Australia, and the University of Glamorgan, Wales, conducted through surveys and interviews, indicates that one of the greatest barriers between Nigerian women entrepreneurs and funding might be “being taken seriously by their male counterparts and [society as a whole].”

Unintentional Bias

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

As earlier explained, investors, like most human beings, are comfortable with the familiar. Due to a status quo that has maintained the male-dominated business world for centuries, the profile of a successful entrepreneur is exclusively male. In other words, when we hear the word ‘entrepreneur’, people picture a man; Aliko Dangote, or Mike Adenuga.

Additionally, there is a lack of media representation of influential women-owned businesses. This representation will challenge masculine norms. Given that many individuals harbour bias and adhere to societal norms, unconsciously or not, investors are more likely to doubt a woman’s ability to lead a company.

All hope is not lost, however. We can all learn to leave our biases behind through self-education and challenging of stereotypes. Government and organisations too could be pressed by consumers to support women with brilliant ideas if they want to continue receiving support. After all, discrimination does long-term damage to all of us. Also, increased promotion of women who are in positions of leadership would go a long way toward changing antiquated mind-sets.

See also: Richest Women Entrepreneurs In Nigeria 2019 And Their Businesses

Internalised Bias And Self-Fulfilling Prophecies

Internalised bias is another insidious barrier between women entrepreneurs and funding. When the message one receives from her society about her ability to succeed is not positive, she might unwittingly self-sabotage.

Due to a lack of confidence or a case of imposter syndrome, some female entrepreneurs seeking funding will hesitate to ask for exactly what they want. Even though investors might be willing to give it to them. Furthermore, women who do not see a strong representation of female entrepreneurs in the media or in everyday life become uninspired to try their hand at entrepreneurship.

One way to overcome this mental block is by seeking communities of female business owners who can offer both the mentorship and inspiration women need to believe in themselves. In addition, one must always make a deliberate effort to ignore negative self-talk whenever it arises. This will helps you avoid over-modesty and embrace ethical self-promotion.

See also: How women entrepreneurs can stay motivated when things get discouraging

The Gender Gap In Education

International organisations like the International Monetary Fund (IMF), the Mercy Corps, and UNESCO have identified and documented the gender gap in Nigerian education. This gender gap means that there is a large difference between the number of men and women pursuing tertiary education in the country. Additionally, there are gender disparities at the primary and secondary school levels (this varies regionally). These differences are the outcome of financial, traditional, and religious factors.

Beyond the fact that education is a human right, an uneducated nation is always a poor nation. Aisha Abubakar, the Nigerian Minister for women’s affairs and social development, was present at the Women Entrepreneurs Finance Initiative, Cote d’Ivoire in 2019. She had this to say about funding and land ownership:

“A lot of handholding needs to take place for women to access funding. We need to remove all of the barriers. Women don’t own land, women don’t own collateral. There needs to be a focus on their businesses and the development of the business. In Nigeria, land ownership is a cultural thing more than a legal thing. Women do not own land or houses. It is changing, though. Some women don’t have the capacity to understand legal arrangements. They might not understand contracts with the banks and so they just sign the contract in order to get the money. It’s only when they face problems that they are shown the small print”.

How Is This Education Gap Relevant?

Banks often demand collateral in the form of property and land, which historically, women have struggled to acquire or inherit. The gender gap in education then presents a subtle but harmful consequence when fewer women than men are able to develop innovative business ideas for the formal sector. And if they do, these women are more likely to fall into pitfalls of a lack of collateral or funding documentation while trying to bring their ideas to life.

See also: Legal Requirements For Entrepreneurs When Starting A Business


Women still face hurdles and glass ceilings in the business world. One of these is the invisible wall between women entrepreneurs and funding, which inhibits financial and personal success. However, in recent years, there has been increased support for young Nigerian entrepreneurs across the board, regardless of gender.

In 2019, the Global Entrepreneurship Index (GEI) ranked Nigeria 92nd out of 137 countries, a notable upgrade from our previous ranking of 101 out 137 in 2018. Furthermore, gender stereotypes in Nigeria seem to very slowly be changing and a more balanced society, quietly emerging.

In addition, specialised grants are available to Nigerian women entrepreneurs provided by accelerator programmes like the Greenhouse Lab and She Leads Africa amongst several others.

Beyond these small changes, we all have a role to play in equalising the opportunities for men and women entrepreneurs alike, especially if we hope to make way for a brighter, more formidable economy.

Photo Credit: Pxfuel



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