There is plenty of compelling evidence that the informal sector is a powerful driver of economic growth. We know that women make a significant economic contribution to the Kenyan economy through their entrepreneurial activities and involvement in the labour market.
We also know that women are good savers and that they plough back most of their income into improving the well-being of their families. To increase their economic opportunities, women need a level playing field with a sound educational foundation, more and better jobs, a business and legal climate that supports their economic pursuits, a financial sector that gives them access to affordable financial services tailored to their needs as well as and the recognition of their importance as a market segment which should be cultivated because it makes good business sense.
The role women play as important economic agents is largely obscured by the fact that the majority work in the informal sector where their contribution is not adequately quantified or measured. Most women tend to work in the agricultural sector and produce most of the food that feeds our families, communities and nations.
However, when it comes to accessing credit and other forms of agricultural finance, the share of women’s access to resources drops precipitously. Within the non-agricultural sector of the informal economy, women are also very active in informal cross-border trade, where they are involved in a large volume of the goods moved across borders. So what are the barriers that women face in accessing finance? Some of these challenges are also faced by men but women are disproportionately affected or, in some instances, are uniquely discriminated against because of their gender.
Some of these sociocultural constraints go a step further in weakening women’s confidence as they seek to enter male-dominated spaces in business and finance that are not considered part of their traditional domain. Even where legal barriers have been removed, women are still subject to discrimination based on customary law or cultural practices.
Lack of education is another serious hindrance that affects women’s financial inclusion levels and the growth of women-owned enterprises as it deprives them of the necessary skills, experience and judgment to properly manage their business, analyze the competition and take advantage of opportunities. Lack of market exposure is a symptom of such poor education which disproportionally affects women.
Women business owners have less work experience, in general, than their male counterparts. They are less likely to have been employed prior to starting a business and have less wage sector experience than men. They are also less likely to be employers and are generally self-taught when it comes to managing their businesses.
The percentage of adults in rural areas who are formally banked is consistently lower than adults in urban areas due to the time and distance they have to travel to reach banks. Women are more likely to suffer in this regard since the majority live in rural areas.
Although financial inclusion levels are very low for both men and women in Kenya, a one-size-fits-all approach that fails to take into account differences between men and women will only impede progress.
Besides being gender blind, this type of approach will inhibit the design and implementation of more targeted policy interventions and will also hinder the ability to measure progress from year to year if men and women are lumped together. This point to the need to educate women more widely about the range of products that are available in the market and how these products and services can serve their needs.
Financial institutions need to do a better job in reaching out to women to increase their knowledge on the range of financial products and services they can access. It also requires banks to change their mindset and misperceptions about women and start recognizing them as an important market segment.
A critical imperative is the need for funding institutions to review their investment mandates in light of their failure to adequately penetrate this segment of the SME market.
This also illustrates the need to find more innovative funding models that are adaptable to where women are instead of where banks expect them to be.
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