Why women agribusinesses are struggling to secure credit

It has been documented that women-led enterprises, especially in agriculture, where they account for close to 60 percent, have huge potential for growth only if the hurdle they face are addressed. One of the major impediments that has been identified is lack of enough finances.

This is the case because women are denied credit from financial institutions due to a number of reasons, including low savings, existing debts, lack of collateral, and bad credit history.

Various initiatives have been started in a bid to address these setbacks, with the latest by Agriculture Finance Corporation (AFC) which has come up with Women Affirmative Access Window (WAAW) programme.

The plan is aimed at driving financial inclusion in agricultural finance by opening up funding for women and advancing them up to Sh1 billion in the next two years without having a form of collateral.

“AFC aims to enhance access to agricultural finance by women across the value chains by increasing loans advanced to women to approximately Sh1.4 million per day or Sh1 billion in a calendar year,” said AFC managing director Lucas Meso.

This, he added, is in line with the Constitution of Kenya that requires measures be put in place to strengthen inclusivity and redress past disadvantages among vulnerable segments of the country’s population.

Mr Meso said they are designing a special package that will see women and youth get loans with ease without necessarily having collateral.

“We understand that one of the major challenges in access to loans by women has been lack of collateral. Under this programme, we are designing a special product for this group that will enable them to access funds,” he said.

The initiative follows a survey that was conducted by Kenya Institute for Public Policy Research and Analysis (KIPPRA) and the Kenya National Bureau of Statistics. The study was supported by UN-Women, Food and Agricultural Organisation of the United Nations (FAO) and the European Union (EU).

FAO country representative Tobias Takavarasha said the input of women in agriculture is not commensurate to the amount of money that they get as loan.

“Women play a major role in agriculture in the continent, however, they have been hampered financially as they cannot access funds easily to expand their enterprises,” he said.

Dr Takavarasha noted that by generating statistics and evidence about women’s situation helps in making decisions, mapping out where they are and targeting them with proper interventions.

“This study will show us the challenges that women are facing, where they are in terms of location and how do we intervene especially on access to finance,” he said

He said lack of collateral, knowledge and lack of information is a major challenge for t women and “yet they are highly productive since when they get loans they pay back”.

“This study will therefore help us shape our policy, directing it in our project and making sure we come up with interventions that address the issues of women in financing,” he said.

The survey was aimed at establishing the status of access to agricultural finance by women in Kenya.

The findings of the survey are expected to guide in developing effective and coherent strategy in programming of the WAAW initiative; set a reference point for later comparison and measurement of achievements of set interventions.

Of the total AFC portfolio, women are the minority accounting for only 25 percent despite data showing that their loans are much productive than those of their male counters.

Country Director UN Women, Anna Mutavati said one of the challenges women face is interest rates that are not responsive to the capacity of women.

“We are hoping that through a study like this we can engage financial institutions to come up with more responsive products that respond to the capacity of women and their needs, so that we do not burden them with loans that will leave them worse off than they were at the beginning,” she said.

Eliud Moii, researcher at Kenya Institute of Public Policy Research and Analysis (KIPPRA), said that across the board women are disadvantaged but when you come to agriculture it is even worse.