In Kenya, efforts to expand access to credit for women-owned businesses have been ongoing, with governments, financial institutions, and development partners working to reduce collateral requirements, digitize lending, simplify applications, and make more funds available for lending. Despite this progress, many women-owned micro-enterprises continue to struggle to grow, suggesting that access to credit alone is not enough. A more nuanced approach to finance is needed to address the complex challenges faced by women entrepreneurs.
According to Nathalie Ngatia, an impact strategy adviser in financial inclusion and women’s economic empowerment, a common mistake is to diagnose every business constraint as a shortage of finance when the reality is often more complex. Women may have access to credit but struggle to grow due to lack of customers, equipment, transport, distribution support, certifications, time, or timely customer payments. In such cases, additional debt does not solve the underlying problem; it simply adds another repayment obligation.
To effectively support women-owned businesses, finance providers need to understand the purpose of the money and what stands between that investment and increased revenue. This includes assessing whether there is a demonstrated demand, whether the loan will improve productivity or margins, and whether the woman has control over the funds to invest them as planned. Credit is most likely to support growth when linked to an existing order, reliable buyer, productive asset, or clear sales opportunity.
The financial inclusion sector has focused on expanding access to credit, but loan uptake is an incomplete measure of progress. It does not show whether credit strengthened businesses, increased incomes, or improved resilience. Nor does it reveal whether borrowers retained control over the funds or would choose the same product again. A more holistic approach to finance is needed, one that prioritizes the needs of women entrepreneurs and ensures that finance improves their position.
Responsible finance is not about maximizing the number of loans taken, but about ensuring that finance improves the lives of those using it. Finance solutions designed for women micro-entrepreneurs must begin with the reality of the business and household, rather than the features of the product. This requires a more deliberate understanding of income patterns, market demand, household exposure, decision-making power, and the purpose for which the money is needed.
To ensure that credit works for women-owned businesses, providers must ensure that women retain meaningful control over capital. This can be achieved through safeguards such as staged disbursements, direct supplier payments, and financial counseling. Additionally, finance should be accompanied by mechanisms that protect rather than erode resilience, such as savings, insurance, temporary repayment flexibility, or clear hardship provisions.
Ultimately, credit should not be offered as a stand-alone answer to every growth challenge. For some entrepreneurs, finance may need to be combined with market linkages, practical business support, logistics, or tools that reduce the time required to manage the enterprise. For others, savings or grant-based support may be more appropriate until the business is ready to take on debt. By taking a more nuanced and holistic approach to finance, we can help women-owned businesses in Kenya grow and thrive.
Key points
- Women-owned businesses in Kenya need access to credit that is tailored to their specific needs and circumstances.
- A holistic approach to finance is needed, one that prioritizes the needs of women entrepreneurs and ensures that finance improves their position.
- Credit should not be offered as a stand-alone answer to every growth challenge, but rather as part of a broader support package that addresses the complex challenges faced by women entrepreneurs.
