Women-led businesses in Kenya have a bigger investment impact,
supporting huge portions of household budgets, a survey by the World
Bank shows and firming the need for deeper special financing for such
enterprises.
In Kenya, firm-level profits earned by
female entrepreneurs represent on average 65 percent of their household
income while these businesses mainly employ women — boosting their
multiplier financial effects both on the national economy and on
households.
“Women-led businesses mostly employ women,
which shows they can be a catalyst for bringing more women into the
workforce. About 75 percent of the workers in female-owned enterprises
are women (when excluding the business owner), while in male-owned
businesses, only 20 percent of employees are women,” the study shows.
The
women businesses in Kenya also have an edge in innovation due to more
engagements with customers to establish their special needs.
“A
survey of female-owned firms in Kenya, 82 percent of female
entrepreneurs indicated that they ask customers if there are other
products or services the clients would buy from them. Almost 20 percent
of women business owners said also that they were planning to introduce
new products or improve existing products in the coming two years,” says
the World Bank.
However, 31 percent of the female
entrepreneurs in Kenya suggested that they were unwilling to try
something new unless they were 100 percent certain it would succeed.
With
such huge potential, the World Bank says providing women with access to
secure mechanisms for savings, including bank accounts and mobile
savings technology, can increase their busines
“For example, providing female market vendors in Kenya with
access to savings accounts enabled large increases in business
investment (over 45 percent) and consumption (37 percent), while no
impact was found in providing such accounts to male motorbike drivers,”
it says.
Adding access to business bank accounts to support formalisation
led to significant increases in women’s use of business bank accounts
and insurance, and also enabled more women to separate household and
business money.
“This led to large impacts on sales and
profits for female entrepreneurs. On the other hand, increased access
to financial services does not always translate into greater use by
women. In Kenya, researchers found that providing free ATM cards, which
reduced withdrawal fees and increased account accessibility, increased
overall account use” says the World Bank further.
However, men significantly increased their usage of the accounts, whereas women reduced account usage.
Increase in savings
Surveys
further revealed that in areas where mobile payment provider M-Pesa
expanded relatively strongly, female-headed households experienced
greater increases in consumption than male-headed households in Kenya.
The
rise in consumption came hand-in-hand with an increase in savings by
female-headed households and coincided with a shift in women’s
occupations from subsistence farming to business and retail occupations.
Married
couples operating joint bank accounts were more likely to invest in
livestock and household assets than where each held their separate
accounts where each invested in their separate income-generating
activities.
The World Bank study supported
business-to-business linkages between women-led enterprises and larger
businesses, saying women-led businesses benefiting from such linkages
experienced a 20 percent increase in profits.
Interestingly,
only 31 percent of women ventured into male-dominated businesses with
53 percent playing ‘safe’ by venturing into female-dominated businesses
while another 28 percent preferred to operate in the high stakes sectors
that attract both genders.
In its efforts to improve
women participation in business, in 2017, the government allocated Sh481
million in funding, which up to 70 percent went to women businesses and
four percent to businesses owned by disabled people.
Interestingly,
most businesses run by women were a full-time activity with an average
of two employees and 27 percent reported that their mothers also ran a
business in the retail sector compared to male-led businesses mostly in
the manufacturing sector with at least four workers.
While
women are members of social groupings (chamas), they lacked the
financial muscle to lend high amounts of money to one another for
business growth.
“Men’s
networks are larger and evidence suggests that they are more likely to
provide opportunities for sharing equipment while women often rely on
their spouse, in particular for financial support,” it adds.
The World Bank said deeper investment in women enterprises would help improve the fortunes of households.
While
one in five women traders owned their business premises, most of the
businesses were lowly capitalised compared to the male-owned businesses
that typically had capital up to six times larger than that of
female-owned firms.
Cultural norms that barred women
from owning land and their low capitalised enterprises hurt their
prospects of accessing credit to grow their businesses compared to men
who were able to borrow large amounts of money to grow their businesses.
Most
women, it found, relied on microcredit facilities run on mobile apps
where money borrowed was paid within days allowing the women traders to
borrow afresh the next day.
The women traders, known to
have a higher score in repaying loans than men mostly operate in
makeshift sheds that do not require connection to electricity as opposed
to male traders.
The study found that only innovations
such as the use of psychometric tests as an alternative to the
provision of collateral could benefit women entrepreneurs allowing them
to access higher loans.
Psychometric tests match one’s personality and cognitive abilities to the expected task of running their business.
“Alternative
credit scoring technologies using psychometric tests offer the promise
of easing women’s access to larger business loans,” it adds.
The
World Bank study observes that advent of mobile phone-based money
accounts 13 years ago ignited women’s interest in business where money
realised was ‘stored’ within reach, thanks to privacy of the
pin-protected mobile accounts.
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