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7 in 10 East African women avoid loans to finance business, study finds

“Women simply wants a hustle free kind of repayment methods when it comes to credit,” says Lead Researcher Andia Chakava

NAIROBI, Kenya, Mar 7- Seventy-one percent of women entrepreneurs in East Africa finance their businesses from their own savings.  

According to a research by Graça Machel Trust and New Faces News Voices, a majority of women are still not ready to access formal financing due to lack of collateral as well as high-interest rates.

New Faces New Voices Lead Researcher and Kenya Director Andia Chakava, however, says women entrepreneurs have a negative perception towards external financing, as they do not believe they have the requirements to access financing from banks and other financial institutions.

“I would say a minimum of 50 percent of women across all the countries in the regions said they are part of a savings group. So there is a lot of ‘Chamas’ going around that is helping to support business starting and growth,” said Chakava in interview with Capital FM Business.

And due to lack of the high cost financing, Chavaka says a lot of women end up remaining at the micro and small medium enterprises compared to their male counterpart.

Most women interviewed owned enterprises with an investment of between $1,000 to $5,000 to start their businesses and only 8percent of these businesses have an annual turnover of $100,000.

“But when the business needs to go to a different level, you need additional capital and some of these amounts needed are too big. The women are saying that when it comes to expansion capital they do not find those traditional forums helpful,” Chavaka adds.

Apart from savings, other options sought include Angel Investors willing to inject capital in exchange for ownership equity or convertible debt. Others include grants or women funds.

“I think women are not just looking for money and repayment. Instead, they are saying, are you going to walk with me so that we grow this business. Is this something we are going to utilize our networks together? Are you going to be a true partner?,” she says, “Women simply wants a hustle free kind of repayment methods when it comes to credit.”

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The research sought to establish the key factors that hinder growth of women enterprises from micro and small enterprises to medium and large-sized businesses.

It covered Kenya, Uganda, Tanzania and Rwanda and interviewed women entrepreneurs across all sectors of the economy, aged between 20 to 40 years.

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