The African Development Bank (AfDB) is providing US$3mn in financing for Sierra Leonean women-owned businesses in the agriculture, energy, manufacturing and services sectors.
The AfDB’s board of directors has approved a line of credit of US$3mn (synthetic local currency equivalent) to Union Trust Bank Sierra Leone (UTB), a provider of finance for indigenous micro, small and medium-sized enterprises.
As part of the facility, the AfDB will also provide US$320,000 for technical assistance support and an additional US$300,000 to subsidise the cost of a synthetic swap associated with converting the facility proceeds into local currency for ease of lending to local businesses.
In a statement, the AfDB says the facility will boost the access to finance under competitive terms and longer tenors than typically available in Sierra Leone. Most of the funding is expected to be channelled towards women and rural dwellers.
“The project will enhance private sector development, by demonstrating the viability of investing in growth-oriented SMEs. The facility will also support financial inclusion, gender and social benefits as well as fiscal impacts,” it says.
The strategy to fund women-led businesses is often referred to as gender lens investing and is becoming increasingly popular amongst investors.
According to the World Bank, 70% of women-owned SMEs in emerging markets are underserved by financial institutions. There are many reasons for this gender funding gap. For example, in many African countries, women are less likely to own assets and they often lack the requisite network and knowledge of how to access finance.
It is the first credit line the AfDB has extended to UTB and comes at a crucial time for the country as it seeks to recover from the deadly Ebola epidemic, as well as rebuild the areas damaged by the devastating floods and mudslides that occurred in and around Sierra Leone’s capital, Freetown, in August.