To celebrate the Women’s Month, we are shining the spotlight on different women within our network.
We’ll be sharing the amazing work they are doing and what inspires them to do it.
we’d like to introduce you to Judith Otala.
Judith Otala is an Investment Associate at CoLABS, Gray Matters Capital.
We recently learned that Judith is conducting research for her thesis on a topic that we’re super passionate about: closing the financing gap for early stage women entrepreneurs in sub-Saharan Africa.
This is a topic that is close to our heart, so we asked Judith to tell us more!
why can’t we access financing?
At the end of 2019, Judith Otala enrolled in a MSc Program in Entrepreneurship Financing at UIC Barcelona and one thing stood out almost immediately: She was the only African in the program.
Instead of being self-conscious about this, she decided to fully own it and use her experience to do work that would benefit her home.
“At about the same time, I spoke to a friend who was interviewing female entrepreneurs about their fundraising experiences, including the challenges they face and how successful their efforts had been,” Judith said. “I was curious about this and started doing my own research.”
She learned that while there were a number of programs supporting women entrepreneurs in Africa, there wasn’t much data to show the actual impact of these programs.
“For example, I read about a program African Development Bank (AfDB) run in Kenya and Cameroon providing collateral to women entrepreneurs.”
Despite having the right intentions, the program had one glitch: they used Commercial Banks to deliver the program.
These banks had no incentive to serve this market segment. Instead of distributing financing to the women entrepreneuers, 90% of the money was returned to the AFdB.
there was clearly a problem.
In addition to using the wrong implementation partners, Judith was curious to know what other challenges DFIs were facing in getting money to women entrepreneurs.
This became the focus of her thesis.
“It is important to get this right. Even the investment funds that want to invest in women-led businesses will depend on DFIs to unlock that capital.”
culture and mindset
However, it’s not a one-sided problem.
As women, we don’t always know about these programs targeting us. If we do hear about them, we often immediately assume we don’t qualify.
Women are constantly being told we can’t build high growth businesses. So we have started to believe it.
When a funding opportunity comes up, we disqualify ourselves.
Classic impostor syndrome tendencies.
Programs supporting female entrepreneurs, specifically those in the early stages of their business, need to provide support to dismantle these negative ideologies in addition to providing financial or business training.
The negative ideologies that we hold towards ourselves, and those held in the industry affect us in more ways than we realize.
Negative perceptions towards women-led businesses affect our ability to attract investment.
Most investment funds don’t invest in women-led businesses because they don’t believe they will make financial returns.
You need to show them a pipeline of good female-led businesses with potential to earn them financial returns in order to convince them to focus more on this group of entrepreneurs.
“This isn’t a problem for just DFIs. Different players need to be willing to understand cultural contexts as well as mind-sets that need to be addressed in order for us to see a pipeline of growth minded women-led businesses.”
other findings on financing women-led businesses
Although she is still carrying out the research, she has made a few interesting discoveries already:
- Women entrepreneurs are automatically thought to be running small mom-and-pop shops. Most of the reports that have been done around gender and entrepreneurship focus specifically on micro entrepreneurs. Yet, the research shows that the women who have built businesses in male-dominated spaces are doing just as well as the men. Sometimes even better.
- Micro loans provided to women by microfinance institutions don’t do a lot to get women out of poverty. Instead, they are kept in a constant poverty loop. The money they receive is often too little to make a positive impact on their business, and yet they still have to pay it back. So it’s a never ending cycle of poverty. Micro-finance institutions have started working on different initiatives to still provide micro loans while providing more support to the women receiving them.
desired outcomes of the research
Judith hopes that her research will help us understand why there is still a gender financial gap.
She also wants to explore the interventions that can help close this gap. The current solutions aren’t working well and there must be another way.
“I hope my findings can be used by funders and DFIs to rethink the way they provide funding. For them to think more critically about gender and understand how to implement this in their work.”
Ultimately, Judith wants to show that women-led businesses can give financial returns. And she wants to show that there is a pipeline of high growth women entrepreneurs.
because, you and I know, they do exist.
Support Judith Otala in this ongoing research by filling out this survey on women entrepreneurs in East Africa!