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According to data from the World Bank, the number of people with bank accounts increased by 1.2 billion in 2011. However, in sub-Sahara African only 37% of women have a bank account compared with 48% of men. This gender gap in financial access is even worse in North Africa at 18%.

Some experts say that this gap is the result of collateral requirements and high interest rates. These factors often discourage women entrepreneurs from applying for loans. Others say that women entrepreneurs do not even consider applying for loans because of risk aversion, low financial literary and fear of failure.

Sometimes, it is women entrepreneurs’ own self-perception that causes the gender gap in financial access. Evidence from 47 African countries showed that African women entrepreneurs tend to self-select out of the credit market because of their perception that their applications would be denied. The findings from the same study found three phenomena that can serve as the basis to close the gender gap.

The findings reveal that women entrepreneurs are not discouraged by the complex application process and unfavorable loan and credit terms. Their self-selection out of the credit market is not related to the perceived creditworthiness of their firms and this self-selection persists even in the absence of discriminatory lending practices.

To close the gender gap, African decision-makers should work to improve the financial literacy of girls and women. Having appropriate financial skills and knowledge can help improve women entrepreneurs’ engagement in the credit market. Another way is to introduce products such as loans that accept movable and smaller assets as collateral. Giving African women entrepreneurs greater access to working capital can help them grow their businesses, which in turn can help pave a road toward a better future for everyone in Africa.

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