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Siegfried Zottel, who leads the World Bank We-Fi program in Nigeria, spoke with We-Fi about his experience helping women-led businesses access financing, and what motivated him to work in development.

Q: Can you tell us about your background and what inspired you to start working in development?

My upbringing and personal story inspired me to think about working in development. When I was an infant, I had a car accident, and my parents passed. I spent a lot of time in the hospital afterwards and then in a foster home. I was lucky enough actually to get to a foster family. They helped me catch up for a missed childhood and live up to my potential, helping me have the same opportunities as other kids with a different kind of background would have had.

I was also lucky enough to grow up in a country like Austria, a very developed social welfare state where people have free access to education and healthcare – based on the principle that the “lottery of birth” shouldn’t matter. Rather, everyone should have the same chances of success or failure, regardless of their social origins. So, I think my upbringing and personal background taught me the importance of the principle of having equal opportunities and equal chances to succeed.

The inequalities within but also among countries – especially between high and middle/low-income countries, inspired me to try to help deliver change on the ground. Because of my interest in and passion for evidence-based policy making, I previously worked for the Austrian Central Bank where I did a lot of research related to micro-level data collection and analysis of the distribution of income, consumption and wealth.

Q: Could you tell us about the We-Fi project you are leading – what’s your role and how did you get involved? What do you think are its most fascinating aspects?

I joined the World Bank more than ten years ago initially in a global unit, while for the past four years I have been working primarily in a regional unit, focusing mainly on financial inclusion, access to finance, and digital financial services related issues in countries in Africa West and Central. As part of my current work program, I’m leading the Women Entrepreneurs Finance Initiative (We-Fi) in Nigeria.

In Nigeria, as in many other countries, there is a huge gender gap in accessing basic financial products and services. When designing the We-Fi program, we decided that the focus in Nigeria should be on access to finance. The main objective is to facilitate the development of innovative credit solutions to help unlock commercial financing for women-owned small and medium-sized enterprises (WSMEs).

We-Fi’s work in Nigeria is closely coordinated with the Development Bank of Nigeria (DBN), a wholesale development finance institution, which has been one of the key implementation partners from the inception. With DBN’s support, we managed to establish a very good relationship with Access Bank, its largest partnering financial institution.

Access Bank’s Senior Management was very keen in getting our support in developing an innovative credit solution tailored to the needs of women entrepreneurs. We have worked closely with the Access Bank team on supply-side data collection, phone-based quantitative surveys as well as qualitative interviews and focus group discussions with Nigerian women entrepreneurs to identify their financial constraints, needs and preferences. These market research initiatives generated invaluable insights that helped Access Bank refine and improve its offering of credit products and ensure that they address the key challenges women entrepreneurs are facing.

Very often, the main reason women entrepreneurs cannot access finance is related to the challenge of not owning sufficient tangible forms of collateral. Through the collaboration with Access Bank and the DBN, we facilitated the development of a digital cash flow loan product that substitutes collateral requirements with business cash flow information to assess WSMEs’ creditworthiness, thereby addressing the key challenge women entrepreneurs face in the country. In Nigeria, we have also started working with other financial institutions, such as Sterling Bank, to tackle this challenge through initiatives such as credit scoring using alternative data.

Q: Women-led businesses in developing countries are facing many barriers and biases – from access to finance to social norms and legal rights. Could you name the one change that you’d like to see in Nigeria?

The one change that would make the biggest difference would be solving the “collateral challenge” that women entrepreneurs in the region face. Most women in the country do not own traditional forms of collateral – such as houses or land, which banks usually ask for when women submit loan applications. And even when women do own collateral, it’s common for the title deed to be in the name of male relatives, which is also a huge problem. I’m looking forward to seeing more financial products that do not rely on traditional forms of collateral but use substitutes or alternative sources of data as they extend credit to women entrepreneurs.

This is the one change I’d like to see moving forward – knowing, from the data we collected and promising evidence we have seen from other countries – the positive impact such innovative credit products can have on women’s ability to run and expand their business.

Q: What have you learned from your experience managing a We-Fi project? What advice would you give to other implementing partners as they design programs that support women entrepreneurs?

The first piece of advice that I’d give is that “gender-blind” products and services are part of the problem, not part of the solution. For example, the first step in achieving real change is to collect gender-disaggregated data and information about the market segment of women-led businesses. Very often, financial institutions follow gender-blind product and platform design strategies, and do not collect even basic gender-disaggregated data, such as how many female customers they have or how many of them are female-led businesses. Gathering this data helps gain a deeper understanding of the women entrepreneurs’ segment and would be the first step towards a data-driven, gender-intelligent approach to product design.

A major focus of the World Bank’s We-Fi program is to introduce cash flow-based lending products that do away with the need for collateral entirely. There is also the possibility of designing new loan products that use non-traditional forms of collateral. Other things that can really help women entrepreneurs are more flexible payment schedules matching WSMEs’ business cash flow needs and longer-term loans.

Our work in Nigeria has also shown that digital channels are a key part of closing the gender gap. Women-led companies are often smaller, making it more difficult for women entrepreneurs to spend a lot of time visiting branches. So just making the online loan application process easier can really go a long way in meeting the needs of women entrepreneurs.

In general, we should always make sure that financial offerings are complemented with a sufficient amount of capacity building – not only for WSMEs to help them increase their creditworthiness, but also for the staff of financial institutions to gain a better understanding of WSMEs’ specific needs.