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Studies: East African Businesswomen Face Deep-Rooted Discrimination

Studies: East African Businesswomen Face Deep-Rooted Discrimination

Just one percent of women in East Africa own property and requirements for collateral by banks have greatly hampered women’s efforts to start and grow businesses, according to two studies.

Kenyan businesswomen lack access to funding and are plagued by societal misconceptions of women in business, the studies show.

Lack of entrepreneurial, marketing, and management skills are needed in the African business arena.

Grace Wambui, five-months pregnant at the time, narrated myriad hindrances that contributed to the poor performance of her small shop in Nairobi:

“My clothes business failed due to insufficient capital. No bank was willing to lend me money to boost the business since I don’t have any property in my name, so I closed it down and opened another business dealing with selling of household items.

“It is also facing a lot of challenges. I have had to close it even for weeks when the child is unwell and admitted to hospital, and in a few months I will close it for several months as I embark on taking care of the baby I am expecting.”

Businesswomen face challenges that their male counterparts are unlikely to encounter, says East African Women in Business Platform Vice Chairwoman, Marren Akatsa-Bukachi.

Societal misconceptions that women-run businesses are not real ventures but done as hobbies or projects have led to women not being taken as seriously as male counterparts. This misconception is driven by the view that women are not strategic thinkers and they have to consult someone during decision making. According to the studies, this is due to an ingrained patriarchal misconception that women ought to remain at home.

With most businesses being male dominated, women who dare to venture into publishing, manufacturing, or banking are viewed as too aggressive and subjected to severe ridicule and rejection. Society views them as unmarriageable.  Women are expected to start businesses such as beauty and cosmetic shops, bakeries and restaurants.

Women who want to venture into business have to contend with these negative attitudes from other women as well as men, in addition to dealing with unwilling suppliers and vendors.

Women-run enterprises in East Africa often fail due to lack of access to information, and lack of entrepreneurial, business development and management skills, two studies note. Many women start businesses without conducting feasibility studies and without business plans.

Too often, women rely on hearsay, and as a result their businesses close soon after opening.

The multiple responsibilities that women have to deal with have also been cited as a major cause of women-run businesses collapsing. Women have to deal with the traditional roles of taking care of children and the family. This is a major cause of failure of small informal businesses, the studies noted.

Businesswomen are forced to make frequent border crossings with small volumes of goods, leading to high transactional costs. Harassment of women traders at border points is often reported. This, coupled with a lack of information on the provisions of the EAC Customs and Common Market Protocol, are major roadblocks for women who want to venture into cross-border business activities.

Women enterpreneurs are now imploring the Kenyan government to level the playing field for them to compete with their male counterparts. The women say the challenges they face hinder growth and proliferation of women-run businesses. The hurdles are also discouraging potential women investors in the country.

Various women’s groups have come together to form informal clubs to try and raise capital for lending to one another or to start group-managed businesses. This has come with its own challenges as many of the women are unable to repay the loans, leading to acrimony between members.

Women have also complained of discrimination when accessing loans from banks. Banks ignore them and sometimes ask for excessive collateral. Many women shy away from these institutions and instead seek financial assistance from other sources that require higher interest.

One alternative option is micro-finance organizations that lend money with household items providing the necessary security. Loans from micro-finance institutions in East Africa have no grace period, and they offer a limited amount with sometimes very high interest rates. Land title deeds and car log books are also accepted as collateral by some lenders.

The study noted that, after giving items such as cookers and fridges as collateral, the items are confiscated to the detriment of the whole family if default occurs.

Mary Wanjiku took a loan of Ksh21,000 ($247) that she was supposed to pay within one year at an annual interest rate of 20 percent. Within two months, the business collapsed. The lender took her only cow and several household items to recover the money. Such losses led to an outcry by women leaders, who are lobbying the government to assist women aspiring to venture into business.

The “Study on Women Owned Businesses in EAC” was conducted by the East African Women in Business Platform, highlighting the challenges that local women encounter in formal and informal businesses. The Platform brings together businesswomen from across East Africa. A second study, “Opportunities and Challenges for Women Informal Cross Border Traders in the EAC”, was conducted by the Eastern African Sub-Regional Support Initiative for Advancement of Women. It came up with similar findings.

The Women in Business Platform is based in Arusha, Tanzania. Its study covered all five member states of the East African Community: Kenya, Uganda, Tanzania, Rwanda, Burundi.

Coordinator Ruth Kihiu says some women entrepreneurs have excelled despite the numerous challenges that the report highlights.

According to the Women in Business Platform report, most women-run businesses face challenges such as lack of investment and growth capital, family obligations, and lack of markets and relevant information. A low education level and illiteracy, a hostile societal mind set, and stigma associated with certain businesses add to their disadvantaged position.

Both studies noted that the high cost of doing business in Kenya was attributable to poor infrastructure, rigorous business registration processes, and many expensive business licenses. Other factors included limited access to markets, and a lack of sufficient education and training for women.

The Kenya government recently initiated a women’s fund, where women can borrow capital with a few collateral requirements. The government also released Ksh6 billion ($69 million) to establish a youth and women fund.

The funds would have been used by the country to stage a rerun of the presidential race if no clear winner had emerged in the first round. President Uhuru Kenyatta pledged to divert the funds to help the youth if he won in the preliminary race, which he did.

Lobby groups have been insisting that money loaned for business purposes should have a grace period before repayment can begin. The government has promised to give tax incentives and grants for local and foreign investors to encourage investment in the country.

Both studies note that the non-tariff barriers that still exist between EAC partner states are a major obstacle to free trade in the region.

Women make up slightly more than 50 percent of the population in Kenya. Both studies recommend the government include women in policy and decision-making processes, and initiate training and mentoring programs to assist women in business.

Women need help identifying and penetrating new markets. Proper management of the just-initiated women’s fund should be ensured, the reports say. Linking businesswomen with financial institutions, and appropriate marketing strategies, should also be priorities and programs developed accordingly.