Specific features of trade finance amplify the difficulties faced by women-led businesses and their ability to participate in trade, according to a new report released by IFC. The report, Banking on Women Who Trade Across Borders, examines the challenges women entrepreneurs face in accessing trade finance and provides solutions to alleviate them.
To better understand the challenges, IFC conducted interviews with women entrepreneurs and financial institutions across Africa and Latin America.
“IFC is committed to reducing the trade finance gender gap and helping women-owned businesses thrive,” said Mohamed Gouled, Vice President, Industries, IFC. “To improve access to trade finance for women-led businesses, we need to understand better the challenges surrounding their access to trade finance. This study is the first attempt to bring greater clarity to that subject.”
The exchange of goods and services between entities in different countries often involves a complex set of transactions, multiple institutions, as well as financial intermediaries. To add to the complexities of cross-border trade, SMEs and specifically women-owned or led SMEs in emerging markets experience various levels of difficulty in getting financing from banks.
Accessing trade financing also presents greater challenges for women because they operate informally, so they are excluded from public records which are used by financial institutions to assess customers before extending trade financing. They often lack sufficient collateral, as they generally own fewer assets; and on average they tend to be smaller and younger, which means that they have shorter credit histories.
This report provides potential solutions for relevant stakeholders, both in the private and public sectors. We believe this is a necessary first step to increase the significant economic potential for women-owned businesses through international trade.
“In conjunction with the release of this report, I am pleased to announce the launch of IFC’s Women in Trade Network,” said Nathalie Louat, Global Director Trade and Supply Chain Finance, IFC. “This Network, comprised of female leaders in the global trade finance market, will focus on finding ways to reduce the barriers women face in accessing trade finance and support them to participate fully in trade-related activities.”