Why Can't Women Absorb Loans?

Published on 10th June 2008

Gender and Children Affairs Ministry of Kenya risks returning to the treasury a staggering Kshs680 million of the 1 billion shillings set aside in last years budget for the women enterprise fund, as women are not applying for the loans.

The establishment of the women and youth enterprise funds was an innovative developmental approach by the government to reach the low-income end and ignite synergies that would enhance entrepreneurship in the country. It was also hinged on improving the economic and social situation of the target groups by fostering income generating activities in rural and urban Kenya. The informal sector in Kenya, like in many developing economies has had an indelible mark and created an incredible amount of employment, yet the potential is even higher.

The underlying principle for the women fund was to establish a revolving loan fund and subsequently reduce poverty through socio-economic empowerment of women. The favored models of delivery for the funds were the financial intermediaries – microfinance institutions and banks with a track record of serving this target group. The funds would also be disbursed through the women enterprise committees formed at both divisional and district level.

What is astounding commentators is the low uptake of these funds by enterprising Kenyan women. Is it that the ministry has not marketed the fund well? Could it be a problem of project design? Are Kenyan women no longer enterprising? Are the current financial intermediaries unable to satiate the thirst for working capital loans through their own internal lending funds without seeking for extra funds? Does the Gender ministry lack effective in-house capacity to facilitate effective win-win partnerships with financial providers all over Kenya?  Or is this an indictment of a great idea yet lacking innovative technocrats to deliver? These are the many questions analysts would ask.

Now, these funds remain unused against a backdrop of a country with a national absolute poverty of 45.9% ( as reported last year), high inequality and with a GNI per capita of $380 lower than sub-Saharan average of $842 as reported in the world development indicators 2007. With all these people below the poverty line, why would Kenyan women shy away from such an innovative fund that gives them a hand as they fight the endemic poverty?

On the other hand, treasury is most of the time overwhelmed by the hard and painful decisions it makes every budgeting time on allocation of funds. These choices are associated with how best to utilise scarce resources. Supporting the women enterprise fund was an important use of public resources had the money reached the target group rather than sit in a bank account; however there are a million and one alternatives of usage of these funds that could equally have generated impact and larger good for the Kenyan people. 

The best way to understand the magnitude of this problem is to check the next best alternative of these funds, the societal sacrifice Kenyans made to establish the fund. How many Kenyans would be alive today if these funds were spent on maternal and child mortality prevention or malaria management, how many kilometers of tarred road would it have done? What about access to clean water? How many primary schools would have been built etc? These are the very hard questions we should ask.

On the other hand the poverty and entrepreneurial dynamics of this country require some further reflection. Is our people’s poverty due to lack of access to finance or good, practicable ideas? The economically active poor women and the marginalised are literally turning down loans as exemplified by the women enterprise fund. Further, Safaricom initial public offer is massively oversubscribed and huge refunds are made. These signs of a country awash with money call for review of government economic and social agenda.

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