What you need to know:
- The traditional banking model requires that a business have a healthy cashflow and adequate collateral to qualify for loan products
- Women are nurturers; they have to divide their time between running a business and managing the household.
According to a UN Women report, women tend to spend around 2.5 times more time on unpaid care and domestic work than men do.
A Kenya Association of Manufacturers research report published in May 2017 shows they make about 48 per cent of the small and medium enterprises and contribute 20 per cent of gross domestic product (GDP).
However, women in business face gender-specific challenges. These limit the growth of the businesses and, if not proactively dealt with, curtail their survival.
One of the challenges is access to credit and capital. The traditional banking model requires that a business have a healthy cashflow and adequate collateral to qualify for loan products. Research by the Federation of Women Lawyers (Fida) indicated that women hold just one per cent of land titles in Kenya and five per cent jointly with men. That means there are very few women who can provide land as collateral for their businesses. Other property that could be used as collateral, such as vehicles, are used for both business and family.
These factors pose a challenge to women’s ability to borrow against such assets.
The importance of innovative financing models for woman-owned businesses is critical for their survival. Designing products such as a revolving fund managed by a business membership organisation (BMO), based on a pre-determined criterion, is important for them. Encouraging women to save in a credible savings and credit cooperative (sacco) is critical. They can then have the power to use their savings to borrow, growing their businesses.
Divide their time
Women are nurturers; they have to divide their time between running a business and managing the household. According to a UN Women report, women tend to spend around 2.5 times more time on unpaid care and domestic work than men do.
In the African society, women are expected to undertake certain household chores, limiting the time to build their businesses.
Women should, therefore, strive to form structures within the household and the business to assist them build bigger and sustainable businesses. Crucially, digitisation will help the businesses to modify processes, reach more markets and enhance customer experience.
The challenges of nurturing and managing a household limit the mobility of women to seek markets away from home, leading to inadequate supply chain diversity for their businesses.
Compared to women, male business owners can travel farther and for longer. Women have to ensure that their homes are still operational even when they are out for business-related assignments. They, therefore, tend to conduct businesses near their areas of residence, limiting their geographical reach.
Women business owners need to embrace partnerships to widen their reach. BMOs should, therefore, enhance their capacity to partnership and knowledge to enable them grow their businesses.
Other challenges faced by women in business include those that relate to information, such as: Lack of reliable and accurate sources of information, as well as lack of adequate support networks like business advisers and mentors. These prevent women from fully benefitting from business opportunities that are present in the market place. These challenges could lead to business stagnation or, worse, closure.
Women require consistent support to access reliable and accurate information. They should be more proactive to seek information regarding their businesses and the business environments. BMOs have a fundamental responsibility to provide this information.
Proper management and governance of these organisations is critical for building the capacity of women, being the go-to organisation for reliable information to run and manage businesses.
These entities require proper strategies to advance the women in business agenda. Their leadership and management should be professional and ensure the challenges women face are addressed and resolved.
BMOs should be the unified platform to facilitate women in business in several areas, including: Outlining a common agenda for boosting women entrepreneurship; providing information on networking options and programmes that they can benefit from to increase their skills and competencies; facilitating local and domestic marketing linkages; capacity building and services to improve skills and grow their businesses; designing innovating financing models to boost access to finance.
The critical mass within BMOs should create enough momentum to facilitate policy discussion and change.
BMOs have a mandate to make a difference in the businesses of women and change the course of history.
It behoves them to support their members and ensure that their needs are met. Functional and sustainable BMOs are key to assisting women to build great and big businesses.
Ms Gathii, an accountant, is a risk expert at FirstIdea Consulting Ltd and president, Organisation of Women in International Trade (OWIT Nairobi). [email protected].
Mutuma Mathiu’s column will resume next week.