Women entrepreneurs and startups in Kenya are set to benefit from €30 million (Kshs 4 billion) in new lending, which has been availed by The Bill & Melinda Gates Foundation and the European Investment Bank, to be disbursed through KCB, through the lender’s Female-Led and Made Enterprises (FLME) and KCB Foundation 2jiajiri propositions.
FLME is a Kshs 250 billion initiative launched two years ago to create solutions for women entrepreneurs that are flexible, accessible, and affordable. It is a 360 degree-intervention platform that seeks to fill the gap where traditional lenders have failed by supporting women and young people to navigate the complex entrepreneurial journey.
To date, FLME has emerged as a catalyst for improving relationships with KCB female customers, understanding their business, increasing their access to finance and provision of the much-needed business advisory. As a result, the bank has disbursed loans worth Kshs 111.6 billion to over 600,000 FLMEcustomers while the total FLME portfolio constitutes 35% of KCB’s SME loan book.
The Bill & Melinda Gates Foundation, Women’s Economic Empowerment Director, Greta Bull says unequal access to credit remains a huge challenge that holds back economic activity and social progress especially for women in Kenya. As a result, giving them an opportunity to scale their operations.
“Across Africa, women need access to more and better credit to support their entrepreneurial activities. This partnership will help transform the banking and financial landscape in Africa and to create incentives for lending to women in business and make them contribute more towards the wider economic growth ambitions,” Bull said.
Statistics indicate that African women have the highest rate of entrepreneurial activity in the world at an estimated 24% and are more likely to start businesses than their counterparts in other regions in the world. However, several factors persistently hinder their potential to grow. These include lack of access to startup capital, lack of access to start-up support ecosystems and networks that deliver capacity building support and lack of knowledge and expertise to implement gender-lens investing strategies among venture capital firms and funds.
“This new partnership brings together philanthropic expertise and resources from the Bill & Melinda Gates Foundation and development finance from the EIB and the European Commission to overcome challenges and enable women across Africa to harness new opportunities and transform communities.
“The pioneering gender focused microfinance scheme led by KCB Bank Kenya will establish a benchmark for other visionary financing programmes to tackle the $42 billion financing gap for female entrepreneurs in Africa,” said European Investment Bank, Vice President, Thomas Östros.
Efforts to close gender gaps in financial inclusion tend to focus on developing new financial products and services that target women, but the broader social and cultural constraints that can prevent women from making the best use of these products and services are often not considered. Social norms, household decision-making, and bargaining processes can result in low uptake or limited impacts on women’s economic empowerment and labour market decisions.
KCB Bank Kenya Managing Director, Annastacia Kimtai, said: “Despite their dominance, women’s economic potential is dwarfed by multiple challenges such as the lack of appropriately designed financial products, weak institutional capacity, and lack of incentives within banks to target and lend to women. The financial industry stands to significantly increase its bottom line by addressing banking’s gender gap: female financial inclusion – particularly the promotion of financial literacy, digital banking, and access to credit.”
The new initiative follows months of technical preparations and will address a range of issues that limit low-income women’s ability to access finance. Technical assistance provided to KCB Bank Kenya will help financial institutions lower the cost of loans to women through digital technology and data, and risk sharing.
“Kenya and the European Union are committed to delivering gender equality and this exciting new cooperation between the Bill & Melinda Gates Foundation, the European Investment Bank and the European Union will enhance opportunities and improve the lives of thousands of women and their families here in Kenya and later across Africa,” said European Union Ambassador to Kenya Henriette Geiger.