Microfinance Banks (MFBs) target clients that are mostly economically disadvantaged, low-income earners, and the unbanked and under-served people at the bottom of the pyramid, such as women folks. In recognition of this, the Central Bank of Nigeria (CBN) developed the Microfinance Banks regulatory framework in 2005, as amended to date, which outlines the basic policy thrust for the introduction of MFBs in Nigeria. The policy, in part, is aimed at making financial services accessible to a more significant segment of the potentially productive population of the country that has little or no access to financial services, eradicating poverty, and eliminating gender disparity by improving women’s access to financial services.

Women Economic Activity

Statistics have shown that there are over 500 million economically active microenterprises and small-scale businesses (Women’s World Bank 1995). The women population constitutes a large percentage of these economically active microenterprises and small businesses.

Unfortunately, the majority of them do not have access to adequate financial services. As a policy thrust of the 2005 CBN document, established Microfinance Banks have adopted policies and developed products suitable to meet these economic demands.  In response, microfinance banks have adopted the women’s inclusive empowerment approach from a short to long-term perspective, which is included in their social empowerment services programs; this includes capacity building and financial literacy for women’s development.

Developing countries, including part of Sub-Saharan Africa (SSA), have large populations of poor people (Beegle & Christiansen, 2019) and the highest share of unbanked households (CGAP, 2018; Elsafi, 2020), which has implications for policymakers, practitioners and the lending institutions. This concern by policymakers was aptly echoed by the United Nations (UN) when the Sustainable Development Goals (SDGs) were adopted in 2015 as a universal call to action to end poverty, among other objectives.

Corporate Social Responsibility

In Nigeria, women entrepreneurs are financially empowered through access to easily accessible micro-credits and savings facilities. Additionally, the introduction of Social Corporate Responsibilities (CSR) by microfinance banks that focus on women’s empowerment and community development through financial inclusion is a step in the right direction. In the 1990s, this led to the creation of associations such as the Country Women’s Association of Nigeria (COWAN), Rahama Women’s Cooperative Society in Bauchi, and Women’s Development Initiative in Kano, to mention but a few. Microfinance and NGOs began to explore diverse ways of partnering with formal financial institutions such as commercial banks. The partnership aimed to increase operational and economic sustainability through deposit services for micro and SME women clientele.

Women Empowerment and Financial Literacy

Microfinance banks are here to unlock the gap and positively impact the demands of financially excluded segments of the communities, particularly women, which in turn leads to a gigantic soar in the nation’s GDP. As of today, many MFBs have designed different products to satisfy the needs of these segments in the ecosystem. Microfinance institutions have recognized the unique challenges faced by women entrepreneurs and have developed targeted solutions to address them. Microfinance offers smaller loan amounts that are suitable for micro and small enterprises and encourage a savings culture among women. Moreover, MFBs often require less collateral and offer flexible repayment conditions, making it more feasible for women entrepreneurs to access funds.

For instance, DDMFB (DavoDani) Ltd has different products on offer, from which their clientele is massively benefiting today. Products ranging from Savings to granting of loans and other financial literacy services are being offered to the micro, small, and medium enterprises (MSMEs) in more excellent dimensions at the Bank, which includes the women and the poorest of the poor who are very excited about the empowerment programs. DavoDani Microfinance Bank is firmly rooted in its promise to take as many active poor MSMEs out of poverty as possible and grant them financial freedom. Poised to be an exceptional leader in the provision of microfinance and other financial services on a sustainable basis to assist our clients achieves financial freedom as captured in its vision statement.

Generally, through socio-economic growth and financial inclusion, women who were once relegated to low-paying jobs and domestic duties with little or no income are now business owners and community leaders.

Women Empowerment and Economic Growth

The impact of microfinance on women entrepreneurs transcends individual success stories. As women-owned businesses thrive, they contribute significantly to local economies. Job creation, increased economic activity, and improved livelihoods are some of the outcomes that emanate from the empowerment of women entrepreneurs.

One such success story is from a woman in Lagos, supported by DavoDani MFB Ltd., who received micro-loans to grow her food-processing business. With the capital provided, this woman was able to purchase better equipment, increase production, and diversify her product offerings. The loans also came with financial literacy training, which helped her manage her cash flow, save more, and eventually hire more workers from her community. This impact extended beyond individual empowerment to fostering job creation and improving the local economy.

Therefore, microfinance banks uplift them and create more robust and resilient communities and vibrant economies of scale. The financial inclusion gains through women’s empowerment have a ripple effect on their children and immediate families, minimizing unemployment and bettering the community at large. This socio-economic shift brings women to the forefront of economic activities, just as they are appreciated, recognized, and valued.

Challenges and Progress

The journey to excellence is a never-ending cycle. While microfinance has achieved remarkable success in empowering women entrepreneurs and reducing gender inequality and financial marginalization, the challenges confronting the overall success and efficiency of women entrepreneurs are enormous. Cultural barriers, limited access to technology, and unequal distribution of resources continue to hinder progress. To overcome these challenges, collaborations between microfinance institutions, governments, NGOs, and women’s associations are essential, with the right adoption of strategic approaches.