How to support financial inclusion in your supply chain

Financial inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society.

Its old news that #supplychain cannot operate without financing. However, data analysis continues to show that women and other special groups in the supply chain still face unique challenges tied to financial inclusion which prevent them from fully participating in the supply chain. For example, women are usually given higher interests on loans, and face higher chances of rejection when they apply for financial facilities.

Therefore, even as we wait for the world to evolve towards more inclusive financial policies, supply chain leaders have a duty to perform for women and youth-owned businesses, in order to improve their participation in supply chain through improved financial access.

If you are asking, what exactly can I do to help? There are three key steps: One is awareness, the second is understanding the terms and finally, leveraging your reputation to support the special groups in your supply chain to access funding.

Awareness. Take time to understand (research if you must) funding options which the special groups in your supply chain can leverage.?MasterCard funding through Equity Bank, the Women Enterprise Fund, I am also aware that UBA bank has a funding that targets startups, and so on. Begin by understanding that the nature of financing available and the terms for access to the finances (e.g. is this a Purchase order finance, invoice discounting, Working capital finance etc) and the requirements for access ?

The second assignment is understanding the terms of the different funding options (The term sheet).?Once you are aware of the requirements, engage the institutions – contact them, talk to them. In your conversations, explain the goals you are working towards. For example, I have a supply base of 500 and 10 per cent of this is women-owned businesses who require affordable working capital financing. The banks will ultimately want to know what these organisations are, the nature of engagement with you, and what their performance has been like. The banks need assurance that they will perform and therefore you will meet your obligation to settle the invoices as they fall due.

Leverage your reputation as an organisation to support the women. The credibility of the purchase order is a function of the reputation of your organisation. The banks will rely on how sound your organisation is and reputation for paying on time.

Finally, ‘just start’. Even where you have just one supplier that requires such support, Start and then grow your base. You will expand and extend the level of inclusion based on your learnings and as you network with others who at a higher level of maturity in building an inclusive supply chain. Organisations such as IFC (through the Source 2 Equal programme), are great partners to lean on as you define and refine your strategy for building an inclusive supply chain.

I would like to end with a quote by Sri Mulyani Indrawati, Minister of Finance of Indonesia, former head of the World Bank Group. “Financial inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society.”