A joint report by the International Labour Organization and the African Development Bank titled Support for Growth-oriented Women Entrepreneurs in Kenya was released today.

46% of SME’s in Kenya are owned by women who face numerous constraints in establishing and running their business. The goal of the program is to transform women enterprises from being informal and micro-sized, located on inappropriate premises, operating in feminized sectors & and locally restricted markets, and which are under-capitalized, making minimal use of technology – all of which limit their potential for growth. This will be done through tailored financial and other solutions.

In terms of banking and finance, women enterprises are restricted to group savings and micro finance (which yield slow growth). Despite women having high demand for loans and credit, and even though they tend to be better savers and have better loan repayment rates than men, women entrepreneurs are unable to access commercial bank loans. The reasons for this include;
– main problem facing women in Kenya is lack of collateral for borrowing (often is in husband’ name)
– Banks lack confidence in projects owned by women
– Men have bigger ideas and borrow bigger, while women are risk averse and take smaller loans, which are more costly for banks to administer
– Women lack the ability to approach financial intuitions (e.g. management skill, and in some cases education, technical skills or business records that banks require)

Among the recommendations of the report:
– In a pilot program to be implemented in Kenya, the ADB will guarantee up to 50%, loans advanced to women entrepreneurs by a small group of local banks
– Efforts will be made to link micro- finance loan clients to business development services
– A financial guide for women entrepreneurs will be published
– A women’s bank may be established in Kenya to be chaired by the First lady.

PDF’s of the report can be obtained from either the ADB or ILO sites.