Why Marsabit women shy away from formal loans
Women selling firewood in Marsabit town. Although more than half of small and medium-sized enterprises are owned by women, the region cannot grow due to lack of financing.
What you need to know:
- Women-led businesses in Marsabit County cannot grow due to lack of financing.
- There are three chief mechanisms that shape women entrepreneurship in Marsabit; religious barriers, patriarchal culture and illiteracy.
Marsabit County is one of the fastest growing economies in Northern Kenya; driven by small and medium-sized enterprises.
Although more than half of these businesses are owned by women, the region cannot grow due to lack of financing. Kenya National Chambers of Commerce and Industry (KNCCI) Marsabit Charter chairperson Hajji Gure, says many factors contribute to the impediment of women-owned businesses.
“There are three chief mechanisms that shape women entrepreneurship in Marsabit; religious barriers, patriarchal culture and illiteracy,” he explains.
He cites a case study by the Mastercard Foundation interest free, zero fee short-term concessional loan, launched in September 2020, to ensure business continuity and sustainability in the post-Covid-19 crisis.
The facility is a revolving fund available to repeat borrowers upon repayment of the loan within two months. The KNCCI pre-screens applications against a set eligibility criterion before approval and disbursement of funds.
Mr Gure explains that only 150 micro, small and medium-sized enterprises (MSMEs) have so far, benefitted from the loan against the target of 1,000 across the county.
Loan application criteria
He says many women were locked out because they did not meet the set criteria. Some could not answer simple questions while others used their husbands’ IDs and details resulting in the mismatch of particulars. More than 100 women were turned down for not meeting the loan application criteria.
On the flipside, Mr Gure says most women in Marsabit would generally not apply for loans without their husbands’ consent. The Stand Up, Shout Out (Suso), a youth empowerment organisation, Marsabit Division Director Asha Bonaya, tells nation.africa that a host of mechanisms have shaped women entrepreneurs’ stagnated growths.
She says some women have a negative belief that taking a formal loan would portray them as being too needy. Some say getting a loan would reduce their freedom to run the business and use the money as they see fit. The entrepreneurs’ lack of knowledge and low financial literacy is also a contributing factor.
Ms Bonaya notes that such challenges could be mitigated by educating women entrepreneurs on book keeping, investing loans and the relationship between interest and risk.
“There is a need for widespread public awareness and sensitisation about the benefits of formal credit facilities to women in this region,’ she says.
She adds that most women lack collateral like houses or land, while those who have, need their husbands’ permission to use the property as collateral.
For those who can use their houses as collateral, they fear losing them in case they default. Some have complained of unattractive borrowing terms offered by banks and the long, costly and tedious application process.
Often, entrepreneurs’ beliefs are also rooted in legitimate Sharia laws that bar Muslims from taking loans that accrue interests.
Ms Bonaya says it is imperative that policymakers undertake comprehensive sensitisation to tackle these problems that have stagnated women empowerment.
