Kenyan women’s businesses received a major boost following the commitment by Ecobank to channel more financial resources to support their growth.
Speaking during the ongoing Africities conference in Kisumu, Ecobank’s Director for Commercial Banking in Kenya and East Africa, Samwel Odhiambo explained that despite progress that has been made over the last two decades in mainstreaming women-owned businesses into the economy, they still face unnecessary barriers that limits them from fully participating in the economy.
“We estimate the total funding gap for women-owned businesses to be Sh 4.2 trillion, equivalent to USD 42 billion across the African continent, of which about 1 percent of that figure is Kenyan. In order to address these persisting inequalities, it is important to channel all forms of support for these businesses through affirmative action,” he said.
“We are doing this by increasing the amount of financing that is ring -fenced for their businesses, improve their self-perception of credit worthiness and profile their credibility as astute business managers,” he noted.
Odhiambo added that several research studies back the move to support women’s businesses increasingly as they are more likely to be financially disciplined and less likely to default on their loan repayments.
He highlighted that Ecobank’s affirmative financing is banking on the women having a minimum 30 percent of its business portfolio around women related businesses and has put in place a special program for women-owned businesses and those where at least 30 percent of key management positions are held by female employees.
Odhiambo noted that it also includes concessionary terms and conditions of access to financing for women-owned businesses some of which are access to non-collateralized lending, shorter business gestation period for accessing credit facilities, lending on business cash flows and creating a value-chain and ecosystem banking model for them.
The bank has also initiated capacity building programmes through the Ecobank Africa Academy Program, where currently more than 600 women are going through business management training.
Odhiambo further explained that all the supportive programs still require a conducive regulator environment to foster the level of impact on urban economic growth they are anticipated to achieve.
“Kenya needs to strengthen legislation at both the national and county government levels to protect Micro- Small and Medium Enterprises (MSMEs) within the business supply and value chains. These legislations include those that focus on trade credit relationships between MSMEs and their trading partners,” he said.
The suitable regulations cover differentiated credit risk classification guidelines which can promote lending to MSMEs and women-led enterprises such as shortening the period for delisting of women-related businesses from adverse credit reporting. This will allow them to learn from their mistakes and take a second chance in accessing financial services.
The director cited that Ecobank is also advocating for the national and county governments to create more youth and women focused funds as well as partnering with banks to facilitate access and delivery of these programs.
“There should be a consistent, deliberate effort to legislate value chain relations between MSMEs, youth, women enterprises, and the larger corporations to create a fair share of business opportunities. Legislation supporting locally sourced supplies from MSMEs, youth and women enterprises should be encouraged,” noted Odhiambo.