Often, big challenges need innovative solutions, and that is certainly the case with the business funding landscape for women entrepreneurs in Africa. So, it was interesting to read of a highly innovative approach to solving this challenge in Ethiopia, where the country has seen a dramatic transformation of the funding environment for women entrepreneurs in the country. Drawing on International Development Association (IDA) funding and expertise since 2012, Ethiopia has loaned over $2 million to growth-oriented women entrepreneurs per month, and supporting over 10,000 women with loans and business training to date. In tandem, several hundred women participate in the project’s cutting-edge entrepreneurship training program each month, which draws lessons from modern cognitive psychology and equips participants not only with business skills in the traditional sense, but also with the ability to ‘think like an entrepreneur.’ In addition, a partnership between the World Bank Group’s Finance & Markets Global Practice and the Gender Innovation Lab, The Women Entrepreneurship Development Project (WEDP) is introducing innovative credit technologies to lenders, such as psychometric tests which can predict the ability of a borrower to repay a loan and reduce the need for collateral. This technology allows entrepreneurs who do not have collateral, a common challenge for many women entrepreneurs in Africa, to take an interactive test on a tablet computer which predicts their likelihood to repay. If they score highly, they can borrow without traditional collateral. The current rate of repayment of loans by women entrepreneurs going through this approach stands at 99.4%. So it seems that taking an innovative approach to providing finance for Africa’s women entrepreneurs is paying off.

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