Female borrowers account for under a third of Sh4.733 trillion loans disbursed by lenders over the past five years to the end of December 2023, despite being better repayers than their male counterparts, pointing to missed opportunities by lenders.
A new study on Kenya’s credit market landscape by the Financial Sector Deepening (FSD) Kenya, shows that women accounted for Sh1.375 trillion or 29 percent of loans issued by lenders during the review period while their male counterparts tapped Sh3.35 trillion.
This means that males have borrowed 2.4 times more than women in the review period, despite the report showing that women recorded better repayment history compared to men. Women accounted for approximately 36 percent of the new negative listings compared to 64 percent for men during the review period.
According to the study, the Sh1.98 trillion gap between credit to men and women during the period represents the missed opportunities for credit providers since they stood a better chance of getting their money back with interest.
“One striking observation is the consistency of the gap between male and female borrowers, pointing to the continued failures to bring more women within the reach of formal credit markets,” says the report.
“In each of the five years, the value of loans disbursed to male borrowers was almost twice the amount disbursed to female borrowers.”
FSD co-authored the report with Creditinfo Kenya—one of the three credit reference bureaus (CRBs) in Kenya— and the Credit Information Sharing Association of Kenya (CIS Kenya), the umbrella body for CRBs and credit providers that share credit information with CRBs.
Over the past years, women tapped 106.9 million loans, or 38.5 percent of the total number of loans while 170.5 million were by male borrowers. Therefore, a 29 percent share of women in the total value of loans means women were also accessing lower values.
“Segmentation by the sex of the borrower shows that men have higher principal amounts for both positive and negatively listed loans compared to women,” said the report.
The report showed that of the 6.58 million new negative listings over the past five years, just 2.24 million or 35.5 percent were from female borrowers while 4.24 million or 64.5 percent were attributed to male borrowers.
“This shows female borrowers have better repayment records. This is also generally true when the new negative listings are taken as a proportion of new loans by gender,” said Jared Getenga, chief executive at CIS Kenya.
According to the report, males were also tapping loans at an earlier age than women. The study showed while the dominant age group for males in terms of taking loans was 18-27 years, the dominant group for females was 28-37 years.
The report did not give reasons for the gap between men and women when it comes to access to credit. However, it referenced other studies that have shown that women face more restrictions compared to men in accessing credit and are likely to face higher borrowing costs.
Panellists attending the launch of the report on Monday, said credit providers will have to innovate more products for women and also eliminate biases that make credit out of reach for women.
“Institutions have been coming up with products for women. However, there is scope to do more in terms of product innovation. For instance, there is room to do more in crafting guarantee schemes,” said Chrispus Muhia, head of consumer credit at Absa Bank Kenya.
Tala Kenya General Manager Annstella Mumbi said the gender gaps in access to lending, speak to the need for more women to access technology such as phones as the starting point of plugging into the financial sector through digital loans.
She added that the financial sector will have to structure their products differently and eliminate any gender biases in their underwriting to attract more women.
“We also have a product structure problem. We have to take time to understand how women actually behave and transact and then feed into their ecosystem rather than requiring them to change their behaviour to fit into the products we offer,” said Ms Mumbi.
