UK and FSD Africa launch N3.75bn fund for Nigerian women-led businesses

The UK Government and FSD Africa have announced a joint initiative targeting N3.75 billion in domestic investment to finance businesses led by women in Nigeria. The programme is designed to address the persistent funding gap that restricts the expansion of small enterprises, particularly those owned by women. Backed by a $335,000 grant from FSD Africa, which is financed by the UK Government via the British High Commission in Nigeria, the initiative is designed to secure funding from regional investors to assist 15 female-led small and expanding firms throughout a three-year timeframe.

Funds will be directed via the RiTA Investment Network, a body created by Rising Tide Africa, a continent-wide collective of female angel investors. The main purpose of this collective is to link female business owners with wealthy individuals, angel financiers, and family offices. According to the initiative's promoters, this intervention is necessary because small businesses in Nigeria face significant difficulties accessing formal financing. Women-owned enterprises are particularly affected, often struggling to meet conventional lending requirements despite their potential to create jobs and stimulate economic growth.

Background

Data cited by the initiative highlights the scale of the financial challenge in Nigeria. Small businesses in the country face a financing gap estimated at approximately N13 trillion. Furthermore, 19 out of every 20 small businesses are unable to access formal finance. Female business owners face distinct extra hurdles; despite controlling roughly 40 per cent of the nation’s small enterprises, they are said to be denied credit at a rate more than three times higher than that of men.

Those driving the programme explain that such denials often stem from women’s inability to offer assets like land as security for bank borrowing, instead of a shortage of promising business prospects. Paul Healey, who leads Green Growth and Private Sector Development at the British High Commission, said the alliance is focused on improving women business owners’ ability to obtain investment. He noted that while many women are building successful businesses, they still face barriers to the investment required for growth. According to Healey, the joint effort involving the UK Government, FSD Africa, and Rising Tide Africa intends to build stronger ties between companies and financiers, thus enabling firms to grow and boost the Nigerian economy.

Juliet Munro, Director for Early-Stage Finance at FSD Africa, emphasised that Nigeria possesses substantial private wealth capable of supporting growing businesses. Nevertheless, she pointed out that there are not enough efficient pathways to link local financiers with companies requiring funds. Munro highlighted that women angel investors in Rising Tide Africa have demonstrated a willingness to back women-led businesses with their own funds for years. The RiTA Investment Network is intended to provide the structure and instruments necessary to grow this capital in naira and at scale.

Why it matters

A key feature of this initiative is its focus on naira-denominated financing. This strategy is meant to lower the currency exchange dangers tied to dollar-denominated borrowing, which creates major difficulties for firms earning income in the national currency. In order to draw in local funding, the platform will function using expert credit evaluation. The collective will mainly use revenue-based financing, a structure in which loan repayments fluctuate based on the company’s sales performance. This model is specifically designed for profitable enterprises that lack conventional collateral and wish to avoid surrendering ownership stakes to investors. By addressing the collateral requirement and aligning repayments with business performance, the initiative aims to make financing more accessible and sustainable for women-led small businesses.

The move is significant for the broader economic landscape in Nigeria, where women-owned enterprises play a crucial role in job generation and economic stimulation. By leveraging domestic wealth and innovative financial instruments, the programme seeks to bridge the gap between available capital and the businesses that need it, potentially setting a precedent for future investments in the women-led sector.