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Kenya

Lack of collateral affecting women business

NAIROBI, Kenya, Apr 27 – The Government needs to re-evaluate lending to women business owners to catalyse the growth of women owned businesses.

Kenya Association of Women Business Owners (KAWBO) Eva Muraya said on Monday that many women don’t significantly grow their operations beyond a few employees because of poor access to capital due to lack of collateral.

‘’Due to women’s limited land ownership status in Kenya, women business owners are unable to provide collateral needed for loan requests. This makes it difficult for these businesses to secure post-start-up capital, especially when compared to male business owners,’’ she said.

Ms Muraya who is the Colour Creations managing director, said it is important for the government to design policies that will make growth capital more accessible to women, including offering “stage-based” loans that provide money to businesses based on the stage of development.

‘’Women business owners need the extension of credit lines once start-up loans are paid off besides allowing accounts receivable to be pledged as collateral, ’’ said Ms Muraya.

She said lack of collateral for business women owners would form a key plank in the KAWBO International Women forum that takes place in May 21-23.

A World Bank report indicates that women entrepreneurs make up nearly half of all Micro, Small and Medium Enterprises (MSME) yet they have less than 10 percent of the available credit, largely due to lack of collateral.

Ms Muraya said women entrepreneurs often have to rely solely on their credit history for a chance to receive a loan since women’s repayment rates are generally higher than men.

A recent survey reveals that 86 percent of loans required collateral and that the average value of the collateral, which in most cases is land with a registered title, was nearly twice that of the loan.

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