How to ensure financing and growth for women-led SMEs in Kenya

Author: Eleanor Kigen, COO/CRO IMFact.

Lack of access to flexible and affordable working capital or long-term debt for women-led SMEs in Kenya is caused by multiple market failures and systemic issues.

Raising start-up capital is one of the biggest challenges for women entrepreneurs with banks often requiring collateral and guarantees that a lot of women do not possess, a new study has found.

Women are often more sensitive to collateral requirements, as they are not usually landowners. There has been a shift in recent years to tackle this issue, with some African countries adopting collateral registries to expand the diversity of assets that can be taken as collateral, including inventory, machinery, and intangibles.

In terms of traditional financing, affordability, and a lack of tailored financial products for women present added problems. These issues often stem from a lack of gender-disaggregated data that cloaks women’s market size and prevents traditional finance institutions from understanding women’s preferences and product needs.

COVID-19 has also presented great challenges for women-led SMEs in Sub-Saharan Africa (SSA), with a vast majority affirming harsh economic impacts. Kenya has seen this reality too with 30% of SMEs surveyed saying they could not continue business and 61% struggling but able to adapt, as detailed in an IFC Report COVID-19 and Women-Led SMES in Sub-Saharan Africa.

There are positive movements happening within the Kenyan business eco-system, with Enterprise Support Organisations (ESO’s) such as Private Equity Support and other program-led initiatives working towards starting up, growing businesses and facilitating investments specifically for women.

In terms of finance for growth-stage capital, factoring presents an opportunity to fill the gap where traditional lenders fail. IMFact has been on the forefront of creating solutions for entrepreneurs that are flexible, accessible and affordable. IMFact provides financing with no collateral or guarantees required which can side steps the barriers preventing access to finance for women entrepreneurs.

It’s clear that there are a lot of structural changes that need to occur in society to ensure women business owners have the greatest chance of success. Support at each stage of the business journey from inclusion, empowerment, business and financial support are keys to success.

To support our discussion on International Women’s Day Diana Gichaga, Managing Partner, Private Equity and Eleanor Kigen, Chief Risk Officer/Chief Operating Officer IMFact have participated in a Q&A recording to discuss our article and the landscape for financing women-led SMEs.