This article is based on a conversation from Voices & Visions, a podcast produced through a partnership between Tutto Passa Agency and TechCabal, which explores the people and ideas shaping Africa’s innovation economy.

Carolyne Kirabo, founder and managing partner of M-Kyala Capital, a women-focused venture fund, recently met an East African woman entrepreneur who had completed eight accelerator programmes. She has been taught how to draw a business model canvas, refine her pitch, and persuade investors that her company is ready to grow.

But after eight programmes, she has still not received any investment.

“We have to be careful that, if we are going to intervene, we listen and design the solutions women are looking for,” Kirabo says. “Women are overtrained and underfunded.”

The experience points to a persistent contradiction in Africa’s gender-finance industry. Banks, development organisations, and investors have created initiatives to help women become better business owners. Many offer mentorship, financial literacy and investment training. But few provide the capital their businesses need.

The result is a cycle in which women are repeatedly prepared for funding that never comes. Each failure to raise capital is treated as evidence that they require another course, rather than a signal that investors and lenders may be unwilling—or poorly equipped—to finance them.

“Instead of staying in these generic approaches, we say, ‘Let’s just do a syllabus’,” Kirabo says. “‘Women are not getting capital because they don’t know, so let’s teach them the business model canvas’ and weird things like that. It is maybe not really solving for what is real.”

What is real is a stubborn financing shortage. According to the International Finance Corporation (IFC), the funding gap for women-owned businesses in Africa is estimated at $42 billion.

The burden of exclusion

Yet that gap has produced a large industry dedicated to preparing women for investment. It has also produced a convenient diagnosis: women-owned businesses struggle to raise money because their founders lack confidence, financial knowledge, collateral, or the ability to build investable companies.

Kirabo argues that this diagnosis has allowed the financial industry to place the burden of exclusion on women.

“There are all these things about what women don’t have,” she says. “Women don’t have collateral. Women don’t have capacity. Women don’t. I started to worry because, if this is what is being put out there, the notion is that even where capital might want to reach women, the women just don’t have the capacity to handle it.”

The solution then becomes teaching women how to navigate the existing financial system, without questioning whether that system understands their businesses.

Kirabo’s view has been shaped by more than a decade of working with small businesses and impact investment funds across East Africa. She began her investment career at Mango Fund, in Uganda before working for Yunus Social Business and Mercy Corps Ventures, all impact investment funds. She later set up M-Kyala Capital in 2024.

Before becoming an investor, Kirabo ran an advisory company for small businesses in Uganda. About 90% of its clients were women, many of whom had left corporate jobs to start companies. They paid for help with hiring, taxes, financial systems and market-entry strategies years before accelerator programmes became commonplace in East Africa.

When Kirabo moved into impact investing, however, she found that women were largely absent from fund portfolios. A portfolio of ten companies might contain only one owned by a woman. Fund managers often told her they could not find enough suitable female entrepreneurs.

Kirabo was unconvinced. She knew some of the businesses herself.

“When investors say, ‘We don’t know where the women are’, I’m always asking: where are you looking? Who are you talking to? What is your mandate? What sectors do you work in? What revenues are you looking for?”

The problem is partly one of how investors find companies. Much of private capital operates on the assumption that entrepreneurs will discover a funding opportunity and compete for it. Investors announce that money is available, add that “women are encouraged to apply”, and wait for a diverse pipeline to appear.

Women entrepreneurs, Kirabo says, are more likely to ask their networks about an investor before applying. They want to know where the money comes from, how the investor treats founders, and what value the fund will add beyond its cheque.

That makes trust and reputation important parts of fundraising. But it also requires investors to venture beyond their usual social and professional networks.

“There has to be intentionality. There has to be trust-building,” Kirabo says. “If you don’t want to invest in that, it might become very difficult for you ever to build a portfolio that is truly inclusive.”

The missing working capital

The financing problem becomes more acute as a woman-owned business grows. Many start with personal savings or money raised through friends, relatives and savings groups such as Kenya’s chamas and Uganda’s savings and credit co-operatives.

A microfinance institution may provide the next loan, but the amount is usually capped. Beyond that, the most obvious source of capital is a commercial bank, where the business owner encounters collateral requirements, rigid credit assessments and products based largely on her company’s current cash flow.

Private capital is supposed to fill some of the space between microfinance and commercial banking. But venture capital has concentrated heavily on technology companies capable of growing fast enough to produce exceptional returns.

Most women-owned businesses do not resemble that model. They operate in agriculture, food processing, light manufacturing, retail, and services. They may be profitable and capable of regional growth, but what they need is often predictable working capital.

Research conducted by M-Kyala Ventures for a Gender Smart Lending Toolkit examined that gap. The firm spoke to more than 100 women and assessed about 26 financial institutions across East Africa. Its researchers also posed as business owners and approached financial institutions to ask what products were available.

The findings challenge the assumption that women avoid borrowing because they are more cautious about risk. Many understood precisely how much money they needed and how it would be used.

“One thing women entrepreneurs know like the back of their hands is their working-capital needs,” Kirabo says. “They are very, very good at managing cash that way.”

But their calculations often differ from those of lenders.

For example, a retailer seeking to open several shops may calculate the money required to rent the premises, buy stock, hire employees and keep each branch running until it breaks even. A manufacturer may need to purchase inputs and increase production months before the additional sales generate cash.

A lender looking only at the company’s existing turnover may conclude that the entrepreneur is asking for more than she can handle.

Kirabo says some financial institutions told her that women seek substantially more money than the businesses need. The lenders often reject the requests.

“Someone is asking for $100,000, but in your view, they only need $20,000,” she says. “It is because of what you are looking at now. You are not thinking about what they want that for. Where do they want to grow? What do they have in place?”

A lender could instead examine the expansion plan and negotiate a smaller first step. If the entrepreneur wants to finance six branches, the institution might begin with three and increase the facility after the first outlets perform as expected.

That sort of conversation is rare in traditional lending, Kirabo argues. The relationship is usually transactional: an entrepreneur completes a form and receives a yes or a no.

“With more rejection, less trust is built,” she says. “They are looking for a trusted, long-term partner who can provide the working capital they need to grow.”

The short-term nature of funding also makes planning difficult. A business may secure enough money for its immediate needs, only for the owner to restart the application process when the next opportunity arises. 

The owners’ growth plans remain, as Kirabo put it, “up in the air”.

Training is easier

Training programmes are not without value. Weak bookkeeping, poor governance and a founder’s inability to delegate can prevent an otherwise promising company from expanding. Mentorship and professional networks can help entrepreneurs avoid costly mistakes.

The problem begins when training becomes a substitute for capital.

For development organisations, an accelerator is comparatively easy to run and measure. They can report how many women enrolled, attended workshops or completed the programme. Investing requires experienced fund managers, lengthy due diligence and a willingness to accept that some businesses will fail.

Training an entrepreneur is less risky than backing her.

For investors, blaming a weak pipeline is also easier than changing how they source and evaluate businesses. The consequence is an ecosystem that keeps “fixing” women without confronting the institutions that repeatedly deny them capital.

M-Kyala Capital is attempting to build its model around what women entrepreneurs said they need. The fund provides debt for working capital rather than relying on the conventional venture capital model.

It can begin with about $50,000, observe a company’s repayment record and operating performance for a year, and then consider providing more money. The financing is accompanied by support intended to improve operations, hiring and decision-making.

The order is important. The entrepreneur receives capital and then support, instead of completing programme after programme in the hope that one may eventually lead to money.

Listen to the full podcast on Spotify.

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