This blog was written as part of GIZ’s Governance of Digital Finance project. Blog 3 of 3. 

Women-owned MSMEs (WMSMEs) create an estimated 18 million jobs across the continent and contribute approximately 13% to Africa’s total GDP. Within the broader WMSME landscape, cross-border trade represents a crucial yet often overlooked segment. Informal or small-scale cross-border trade constitutes up to 40% of total regional trade in sub-Saharan Africa (SSA), and women make up between 70% and 80% of this sector.

Digital financial services (DFS) can potentially help traders to grow their businesses by enabling access to faster payments, a safer way to transact, more customers, and credit to purchase stock. However, as observed in Cenfri’s research for FinMark Trust on “The untold realities of women cross-border traders” in Southern Africa, many women cross-border traders opt to use cash.

The first two blogs in our series, “Why are more African women not making use of digital financial services?” and “Why are women more vulnerable to risk in digital financial services?”, examined (1) the reasons why some women with the tools to take up DFS end up not doing so and (2) why women tend to be more vulnerable to DFS risks.

In this final blog we highlight pain points in everyday financial interactions faced by women cross-border traders. By addressing these lived constraints, we can ensure that DFS meets WMSMEs’ needs and acts as an enabler for women traders’ economic empowerment.

Who are these women cross-border traders?

The women cross-border traders in our study typically juggle business and household roles, lean on peer networks, and use smartphones and social media for their business, yet they still primarily transact in cash.

They often trade in low-cost, low-margin goods. Unreliable suppliers who provide incorrect or poor-quality stock, or weak network connectivity that delays payments and jeopardises deals, can have serious consequences for their businesses. Poor cross-border logistics and the need to verify the quality of their goods, mean that many women travel across borders themselves to purchase and sell stock, despite facing threats like theft, extortion, and harassment along the way.

Persistent pain points: insights from the field

From our primary research with women cross-border traders from Mozambique, Malawi and Lesotho, we identify four day-to-day pain points that hold back optimal use of DFS by women traders:

1. Cost of digital payments compared to cash

Cross-border traders operate under constrained margins, making them very sensitive to any costs that may eat into these margins. Our research found that both men and women traders in Mozambique preferred paying suppliers in cash to avoid high digital transaction fees. In countries where suppliers were predominantly paid through digital payments, like in Malawi, transaction costs were still lamented, as demonstrated by the quote below.

“Sometimes he [the supplier] complains because the bank charges him for card payments. But then he says it’s ok because I travel from too far to pay the extra fees.”

—Malawi woman trader

2. Low trust prevents use of digital payments

In Malawi, banks are seen as unreliable by both men and women. As a result, many women traders rely on cash and physically transport money to South Africa. This practice exposes them to significant theft risk, a vulnerability that is particularly acute for women. Women traders across the three countries also report that the fear of fraud and scams in digital sales is pushing them back to cash. For example, 76% of respondents in Lesotho reported being scammed by customers making digital payments. Where banks and digital wallet providers are not seen as secure or reliable, usage tends to stall.

3. Restrictive social norms limit agency

Restrictive social norms are a major barrier to access and usage. Many traders in our sample reported that they rely on cash and informal savings and credit to maintain privacy and autonomy from their families or, in the case of married women, their husbands.

“My aunt helped me. She helped me get a bank account that my other family doesn’t know about and that helps my business because it means I can save money for it to grow without my family getting angry or they think I do too much.”

—Mozambique woman trader

“If I get payments into the bank, then I don’t have a bank account. Then it must be my husband’s bank and he knows what my business is doing. Sometimes that is not good. With cash then he does not know, and I can only tell him.”

—Mozambique woman trader

4. Digital tools are not sufficiently leveraged for business support

Smartphone ownership among women traders is high, with ownership rates ranging from 80-95% across the three case study countries. Additionally, 60-70% of participants in Lesotho report having laptops. However, participants continue to rely on manual bookkeeping for their businesses, at least initially, before transferring into electronic records once a quarter or when the book is filled.

The limited usage of digital tools also extends to payments. In addition to avoiding high transaction fees, as mentioned earlier, Mozambiquan traders preferred to pay suppliers in cash to better plan their expenses. Limited digital financial literacy may play a role.

“I prefer paying my business cost using cash although [it] is not safe because [it] is simple for me because digital payment is difficult. It is better to see the money than to see it in the phone bank app.”

—Mozambique woman

Designing for reality: Recommendations for DFS that meet the needs of women cross-border traders

Turning access into real value for women traders and other women-led businesses requires interventions that address the challenges they face. This can be achieved by focusing on:

1. Building digital financial literacy and capability. Regulators and industry players need to make a concerted effort to equip women business owners with the knowledge and skills to further integrate digital tools into their daily business operations. As outlined by the Center for Financial Inclusion (CFI), this can be achieved through digital and DFS capability training facilitated by agents or women’s savings groups. In addition, technology-led financial education delivered through channels such as USSD or social media can serve as an alternative approach to capacitating women.
2. Improving trust through instituting clear redress mechanisms for victims of fraud. In fortifying trust, policymakers can institute reformed liability frameworks in consumer protection by shifting the burden of protecting consumers from scams onto providers. This can include instituting irrevocable customer transactions to ensure traders do not fall victim to scams, as observed in Lesotho.
3. Bundling value-added services with digital payments to limit cash reliance. One way to reduce the dependence on cash among women traders is by advancing the use of integrated payment systems, like electronic billing machines, which enable access to more payment methods. Improved financial management through tracking of invoicing, inventory, and accounting using retail enterprise resource planning (ERP) solutions could result in changed behaviour. There is also an opportunity to add insurance against losses that threaten business continuity, particularly during cross-border travel.
4. Driving regional interoperability in payments to reduce cross-border travel risks. Women traders face increased risk of theft if they carry physical cash to pay suppliers or deposit funds in accounts domiciled across borders. Additionally, because cross-border traders operate on thin margins, fees matter. Driving end-to-end cross-border money transfers between wallets and bank accounts can help reduce costs in terms of travel and transaction fees, and reduce risks emanating from cross-border travel.

Taken together, these recommendations emphasise that making DFS work for women cross-border traders, and WMSMEs more broadly, depends on design choices that are grounded in a nuanced understanding of them as consumers (through segmentation analysis) and, as a result, reflect how their businesses operate in practice.

In this blog series, we moved from analysing individual women’s access to financial services and their vulnerability to DFS risks to concluding with the practical realities of the enterprises that many of them run. DFS can unlock growth for these businesses, but only if the pain points that block everyday use (cost, trust, fit, and financial capability) are tackled head-on. The priority now is to design and govern DFS around how women actually live their financial lives.