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Covid-19 wreaks havoc on women-led businesses

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Webinar discussions show that the coronavirus pandemic is hitting women the hardest, with women-led Small and Medium-sized Enterprises (SMEs) at greater risk of closure

Women-owned SMEs are facing challenges as a result of Covid-19. Photo/WB

Women-led businesses are more vulnerable to closure than those led by men in the era of the novel coronavirus due to women’s limited access to finance, shifts in consumer behaviour, and the increase in women’s household care responsibilities as a result of extended lockdowns.

All across the continent, the coronavirus pandemic is wreaking economic havoc and hitting women the hardest, with women-led Small and Medium-sized Enterprises(SMEs) facing closure as they tend to be smaller and on average, operate in lower profit margin, service-based industries.

These and other important findings of a new policy brief highlighting policy solutions to support women-led businesses in Africa in a post-Covid-19 world, were released during a webinar organised Wednesday July 15 by the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme, working with UN Women and ImpactHER.

“The compilation and analysis of real time data is crucial as Africa responds to the pandemic. The surveying of women-led businesses from across sectors and industries provides an opportunity to have targeted interventions aimed at keeping these vital contributors to African economies afloat,” said Esther Dassanou, AFAWA Coordinator.

The brief, titled ‘Transformative policy solutions to support women-led businesses in Africa in a post-Covid-19 world,” contained results of an ImpactHER survey of more than 1,300 women-owned SMEs in 30 African countries on the impact of coronavirus on their businesses. More than 200 participants joined in the virtual webinar, which was moderated by UN Women’s Elena Ruiz, Women’s Economic Empowerment Regional Policy Adviser for West and Central Africa.

Women-owned businesses at risk of closure due to Covid-19. Photo/WB

“The policy brief and the discussion have put on the table strategies that work for women entrepreneurs in the region. We hope this will contribute to make sure that women entrepreneurs and women-led businesses are at the centre of Covid-19 recovery plans, and to help governments and other actors build a post-Covid economy that challenges, rather than reproduces, gender inequalities,” Ruiz noted.

Panellists shared perspectives from government, private and banking sectors on how women-led businesses in tourism, trade, retail, hospitality, education, personal care and similar sectors have suffered as result of the pandemic, and offered recommendations for immediate, short- and medium-term solutions to mitigate the impact on women-led businesses.

They also showcased solutions in action, such as the African Development Bank’s recent approval of a loan of Euros 264m to help support the Moroccan government to mitigate the health and socio-economic crisis brought on by the pandemic. Parts of these funds will go towards mobilising financial resources for women-owned enterprises whose cashflow has deteriorated due to declining activity.

Morocco has been funded upwards of $622m to cushion SMEs to mitigate COVID-19 challenges. Photo/Africa inc. Magazine

Through Bank Al-Maghrib, women-owned SMEs will have access to guarantees that cover 95 per cent of the credit amount and enables banks to rapidly put together exceptional overdrafts to finance the target companies’ operating capital needs.

“The fight against the pandemic requires public and private sector involvement to enhance women entrepreneurs’ ability to bounce back from the crisis. Efforts such as the one in Morocco as well as Tunisia and Ghana, should be replicated throughout the continent,” Dassanou said.

The discussions also showed how Coronavirus not only potentially exacerbates already existing inequalities between men and women, but has led to other hurdles for women, including limited access to finance, key networks, information, skills gaps, as well as limited control over assets that they can leverage to obtain financing.

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