Personal Finance

Breaking down barriers in women's access to finance

Lack of education is a serious hindrance that
Lack of education is a serious hindrance that affects women’s financial inclusion levels. FILE PHOTO | NMG 

There is plenty of compelling evidence that informal sector is a powerful driver of economic growth. We know that women make a significant economic contribution to Kenya 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.

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 they 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.

Even where legal barriers have been removed, women are still subject to discrimination based on customary law or cultural practices. A requirement in some cultures that a woman must marry a man from the family of her deceased husband limits a woman’s right to inherit her deceased husband’s property. In some cultures, following the death of a husband, widows must share the running of the household with a male relative of the deceased.


Removing discriminatory aspects of legal and regulatory frameworks, particularly with reference to land and property ownership, will be an important factor in improving women’s financial inclusion in Africa.

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, analyse the competition and take advantage of opportunities.

Female 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.

This gap in analysing and seizing business opportunities due to poor business training and exposure is a serious limiting factor for women business owners in terms of productivity and competitiveness.

Time and mobility constraints are more likely to weigh on women living in rural areas, more so than those living in urban areas, due to a lack of infrastructure which makes women’s work particularly burdensome. Another time and mobility constraint is proximity to a bank or financial institution which inhibits access to financial services. 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.

Cell phones

This point to the need to educate women more widely about the range of products that are available on the market and how these products and services can serve their needs. Although cell phone penetration in Kenya is very high, women lag behind men in cell phone usage and access to cell phones in general.

Women save and plan for important purchases and how they constantly juggle household and business priorities to find the best financial solutions to meet their individual and family needs whether they are in the formal economy or not. 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 recognising them as an important market segment. Even though there are 43 commercial banks in Kenya, only one bank offers product specifically for women, which shows that most banks are not really targeting this market.

There is a need for bold and concerted action on the part of regulators, policymakers and other stakeholders in the financial sector to address the many obstacles that keep women financially excluded despite their energy, talent and resourcefulness.

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. Similarly, getting more capital into the hands of women must be a priority for governments, development finance institutions and commercial banks. This will ultimately lead to stronger, more sustainable businesses, provided they also receive the necessary training and business development support to make them more bankable.