Women the least recipients of Credit Guarantee Scheme

Women are the least beneficiaries of the Credit Guarantee Scheme, a University of Nairobi Women’s Economic Empowerment (UON WEE) hub study has revealed.  

The report found that more male-owned enterprises succeeded in securing high levels of credit in comparison to women. Further, women only accounted for nine per cent of loans granted between Sh1,000,000 and Sh3,000,000.

The study, Assessing what works for Women’s Economic Empowerment (WEE) in the implementation of Kenya’s Credit Guarantee Scheme, evaluated the implementation of the presidential economic stimulus rolled out in  December 2020, to cushion businesses against the impacts of Covid-19 pandemic.

The research, which was conducted in collaboration with the Kenya National Bureau of Statistics and the National Treasury sampled 813 Micro and Small Medium Enterprises (MSME) across five counties: Nairobi, Kajiado, Kirinyanga, Kitui and Nakuru.

Informal businesses

Speaking during the launch of the policy brief at University of Nairobi on May 13, Dr Meroka-Mutua attributed the disparity to banking policies that marginalised informal businesses, mostly women-owned.

“Formal enterprises are able to access high levels of credit between Sh500,000 and Sh3,000,000 while most informal female-owned enterprises are only able to access lower levels of credit between Sh10,000 and Sh50,000,” Dr Meroka stated.

Mary Kamande, one of the women who attended the launch shared that she could not access any credit from banks and Saccos when she started her enterprise because her business was not formally registered. She also did not have requisite documents such as a KRA pin that financial institutions require to grant loans.

Ms Kamande resorted to access credit from informal sources such as table banking and chamas.

Prof Dulacha Barako, Director of Financial and Sectoral Affairs at National Treasury, said the government had committed Sh3 billion seed capital during the 2020/21 National Budget to the Credit Guarantee Scheme(CGS).

Research findings

He, however, also revealed that as at March 2022, only 31 per cent of the Credit Guarantee Scheme had been utilised since it was introduced to de-risk lending.

Prof Barako who represented the Permanent Secretary for the National Treasury, lauded the research findings as instrumental in increasing women’s financial inclusivity and access to credit.

Women entrepreneurs like Ms Kamande now want policymakers to increase their credit limits so that they can also benefit from CGS. Her sentiments were echoed by the study’s recommendations that advocated that the government should support informal women’s business to transition to formality.

“Banks should also establish group lending products that target women-owned enterprises. This is because many women are in chamas that do table banking and merry-go-round but may have limited savings available for lending to members who need funds,” Dr Meroka added.

The Credit Guarantee Scheme is available in several banks in Kenya including ABSA, Credit Bank, Diamond Trust Bank (DTB), KCB, NCBA, Stanbic and Cooperative Bank.

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