Small Business

A new kind of debt relief

Written by Kara Aaserud

When the Royal Bank of Canada approved Joanne Thomas Yaccato’s startup loan in 1993, she was more than pleasantly surprised—she was stunned. “I assumed banks discriminated against women,” she says. “I fully expected to run into a headwind.” But her joy turned to disillusionment the instant she thanked the bank’s credit-risk manager for the approval.

“He said, ‘No problem. That’s quite a nice little hobby you’ve got going for yourself’,” recalls Thomas Yaccato. “Had I been a man, I don’t think for a second the word ‘hobby’ would have left his lips.”

Such “unconscious bias” drove the president of the Thomas Yaccato Group to focus her Toronto-based consultancy on breaking down the gender barriers that exist within big businesses. It’s also what led her this year to accept a contract with Washington, D.C.-based International Finance Corp. (IFC), the private-sector arm of the World Bank. Her job: to persuade African bankers to recognize female entrepreneurs, not only as an economic force but as lucrative clients, too.

The task is daunting. In Nigeria, for instance, the IFC estimates that women own 25% to 30% of registered businesses, but only 10% to 15% of those owners have access to bank credit. To address the gap, in 2004 IFC launched the Gender Entrepreneurship Markets (GEM) initiative. Thomas Yaccato is heading up GEM’s educational component, showing bankers how lending to women entrepreneurs is both profitable and sustainable. “Without that business case,” she says, “this thing tends to get framed in altruism. And that’s not the way to talk to bankers.”

On her first trip to Africa in March, she discovered that while staff at Nigeria’s Access Bank were unaware of the power of the women’s market, they weren’t afraid to admit it. “I asked them, ‘If everybody came out of the gate equal and women and men were 50% partners in home care and child rearing and had equal access to education and business opportunities, how many people here think women’s businesses would stay small?’ Not a single hand went up.”

The GEM program also supplies capital, but it’s avoiding the handouts that engender donor dependence. Rather, IFC lends money to banks under regular commercial terms, which the banks then lend to women entrepreneurs. So far, GEM has granted dedicated lines of credit totalling US$40 million to banks in Uganda, Tanzania and Nigeria, and wants to extend another US$100 million over the next five years. “We’re incentivizing the banks [to enter the women’s market],” says Zouera Youssoufou, finance officer with GEM. “This is just for them to get started and see how it’s done. At the end of the day, they’re going to have to commit their own capital to really do this.”

And why wouldn’t they? “As the number of wealthy women around the globe continues to grow at twice the rate of men,” explains Thomas Yaccato, “becoming the bank of choice for women entrepreneurs is a pretty savvy business strategy.”

Originally appeared on