Digital Solutions for Empowering Women-led Businesses and Facilitating the Transition to the Formal Sector

It is observed that specific segments of the Mauritian population, namely women and youths, were more severely impacted as a result of the pandemic. Between May to December 2020, the number of women engaged in informal work dropped by 11.9% while more men gained employment within the informal sector. The COVID-19 pandemic has further accentuated the bias towards greater women engaged in informality within the country.

In assessing the drivers of the informal sector, we find that women face a range of additional hurdles preventing them from gaining formal employment or formalising their businesses. One of the issues facing many women entrepreneurs relates to accessing finance and credit. Several researchers have documented the gap that women led MSMEs encounter when accessing finance, highlighting that they are either underserved or unserved. Women also encounter other challenges such as higher collateral requirements or additional documentary procedures that further hinder their access to finance.

Digital solutions hold the key to ensuring the creditworthiness of women and improving their access to finance. Mobile money can empower women in the informal sector, giving them greater control over their financial lives and reducing contacts with suppliers or clients, and reducing the need for physical movements. Moreover, the digitalisation of financial records can also be used as a way of ascertaining creditworthiness, showing cash flow, enterprise performance or savings history. Combined with the use of gender-sensitive indicators, this Paper explores the digital solutions that can offer an important way of mitigating both the financing gap and the level of informality faced by women entrepreneurs.

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