Locked out: Survey shows Kenyan women struggle to access loans

A new survey has found that women perceive a slightly higher level of gender bias than men while accessing financial services in Kenya.

According to the survey conducted by mobile loans lender Tala, 65 per cent of women respondents stated that gender bias was “moderate” to “extreme” in financial services. The majority of both men and women reported perceiving some level of gender bias in the financial services industry.

The lender surveyed over 800 Kenyans to identify the challenges and opportunities faced by women entrepreneurs in emerging markets, especially regarding accessing financial services.

The findings of the survey highlight the need for the Kenyan financial sector including the banking regulator and financial institutions to address gender bias and ensure equal access to resources for all business owners including women.

According to the survey, more men reported no gender bias while 58 per cent of respondents said that financial services cater to the needs of all genders equally.

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“Over the years, numerous research findings have established that perception of gender bias in accessing financial services has led more women, especially in emerging markets such as Kenya to self-select themselves out of borrowing or even applying for credit.

“Should the numbers from this report be anything to go by, as players in the credit market, we must intentionally equip our female customers with knowledge and skills to enhance their strategic business ability,” said Annstella Mumbi General Manager, Tala Kenya.

She said key skills areas include financial management, leadership, and technology “which will give them confidence to utilize financial services and unleash their financial power within the larger economy.”

On access to credit, 64 per cent of women respondents reported experiencing challenges accessing financial services while 56 per cent of female respondents reported it was tough to finance their businesses.

Sixty-two per cent of respondents said gender does not impact getting a loan, men were however much more likely to report it as ‘very easy’ to finance their businesses while only 7 per cent of women reported the same. Another notable trend was that of the sample group, slightly more men use a bank account regularly than women respondents.

“Fifty-six per cent of women respondents report it was “hard” to “very hard” to finance their business. Men were much more likely to report it “very easy” to finance their business while only 7 per cent of women reported the same. Even so, 63 per cent of women respondents were confident to very confident in their ability to finance their business in the future,” the findings of the survey indicated.

Thirty-six per cent of the women respondents currently have a small or personal business while 37 per cent do not currently have a small or personal business, but report wanting to start one.

Sixty-one per cent of women respondents said their long-term financial goal is to increase their income. The next two most common long-term goals were increasing inventory or offering a wider variety of products/services.

“Forty-nine per cent of women respondents report getting the money they need to start or grow their business is a main financial challenge to completing their goals this year. This is followed by balancing business needs with personal life (31 per cent) and dealing with unexpected emergencies (30 per cent). The top financial challenge men report, however, is dealing with competition,” Tala said while releasing the findings.

“We intend to use leading machine learning-powered infrastructure to harness the best of next-generation technologies to build trusted, real-world financial solutions for the global majority, and that includes women. We hope that our mobile-first financial platform makes a difference for millions of customers globally, providing instant access to capital and the financial tools they need to grow their income today and build wealth for tomorrow,” said Mumbi.

An earlier separate research also showed that the majority of women in East Africa struggle to finance their businesses.

According to the study commissioned by the Graça Machel Trust (GMT), 71 per cent of women entrepreneurs in East Africa finance their start-ups from their savings because they have no access to capital.

Even after their businesses are up and running, women entrepreneurs in the region depend on a combination of their savings and profits to expand.

Dubbed ‘Explore Growth Barriers Faced by Female Entrepreneurs in East Africa’, the report aimed to establish the key factors that hinder growth from micro and small enterprises to medium and large-sized businesses.

The research covered Kenya, Uganda, Tanzania and Rwanda and surveyed 664 women entrepreneurs across all sectors of the economy. The dominant sectors include retail (17 per cent), agriculture (13 per cent) and consulting services (11 per cent). The more male-dominated sectors of technology, construction and engineering featured less than three per cent, respectively.

The research established that the two biggest financial constraints that hinder female entrepreneurs’ access to finance were collateral requirements and prohibitive interest rates. There is also the fear element related to overall confidence levels concerning utilising financial institutions when business cash flows are irregular or unpredictable.

According to further research worldwide, women’s access to finance is disproportionately low.

Despite substantial overall progress - in 2017, the World Bank reported, 1.2 billion more people had bank accounts than in 2011 - there is still a 9 per cent gap between women’s and men’s access.