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Research: How effectively is the Women Enterprise Fund Managed?

A new study suggests that among the key challenges facing women owning Micro and Small Enterprises, access to adequate finances for business, and financial management top the list. In a recent study on the Government’s Women Enterprise Fund (WEF) initiative, the women identified the loan sizes they received and lack of financial management skills as some of the impediments to business success and growth. The loan amounts tend to be too small and the women also lack skills on how to manage it. The research also showed that the women lacked the necessary training on business planning and marketing of products and services in order to grow their businesses.


The research by Strathmore University’s Prof. Ruth Kiraka, Dean School of Graduate Studies was based on interviews with 855 women entrepreneurs across the country who had benefitted from the Fund. The managers of the Fund were also interviewed. The money from the Fund and is disbursed through financial intermediaries (FIs) and through the Constituency Women Enterprise Scheme (CWES). The other members of the research team were Prof. Margaret Kobia, (then CEO Kenya School of Government and now Chairperson Public Service Commission) and Prof. Allan Katwalo.


Why women?

Previous studies have shown that many women support themselves and their families through the income they receive from their entrepreneurial activities, making supporting women’s entrepreneurship important to family well-being. Other rationales for supporting women’s entrepreneurship involve efficiency and empowerment arguments. Women can gain confidence, self-esteem, decision-making experience and a greater sense of control over their lives in social and economic sphere through starting and managing a business. This benefits both the women and their families.


However, women’s entrepreneurial development is impeded by some gender-specific constraints. Women have less freedom to select sectors within which to operate, have less access to credit and other productive resources, and have less time and opportunity to obtain education and experience relevant to entrepreneurship. According to Government Statistics about 48% of micro- and small enterprises in Kenya are owned by women, which suggests that they are well represented in this sphere. However, owing to the aforementioned challenges, many of them do not grow beyond five employees and tend to remain informal. The challenge in Kenya is therefore less about trying to increase the number of women entrepreneurs and more about how to legitimize and strengthen the base of their activities so that they can grow their enterprises.


Doing the research and finding solutions is one way of trying to empower the woman to access financial services, gain knowledge on financial literacy, learn to make financial decisions and plan for the growth of their enterprises.


Funding the Research…

The research was funded under the Investment Climate and Business Environment (ICBE) Research Fund, an initiative of TrustAfrica, a research organization based in Dakar, Senegal and the International Development Research Center (IDRC) of the Canadian Government. Together, these institutions set up a special research fund to promote enterprise and livelihoods in Africa through research and advocacy.


A key objective of ICBE has been to generate knowledge on policy issues, gaps and options that can potentially improve the business and investment climate in Africa for both foreign investors and local entrepreneurs.


Key Findings…

On borrowing money from the financial intermediaries, the requirement was that the loan approved was dependent on the nature of business proposed and the lending terms of the financial intermediary. This meant that the FI determined who could access the loan, how much they could access and the terms of borrowing. The implication was that borrowing from FIs meant going through the traditional lending mode. This included: having a business plan, the business having been in operation for at least three years before borrowing, the woman entrepreneur operating a bank account for 6 months prior to borrowing. The women also needed to have collateral. These factors hindered most women from accessing the necessary funds.


Borrowing money through the Constituency Women Enterprise Scheme (CWES) was much easier, as the major requirement was for women to be in groups registered with the Ministry of Gender, Children and Social Development to be able to apply for the loans. However, the issue they faced was in the amount of money they could borrow. They were only allowed to borrow small amounts of money, which meant the women were not benefitting much. The first loan that a group could take was capped at Kshs.50,000, the second one at Kshs.100,000 the third at Kshs.200,000. When shared among the group members, these amounts were very small to run individual businesses.


Over the five year period 2007-2012, a total of Kshs.2.278 had been disbursed to the Fund by the government. Of this, Kshs.1.5 billion (66%) had been disbursed through the FIs and benefitted 63,708 borrowers (16% of total borrowers). A total of Kshs.764 million (34%) had been disbursed through the constituency scheme and benefitted 391,410 (84%) borrowers over the same period. The average loan size through the FI stream was approximately Kshs.23,500, while the average loan size per entrepreneur through the CWES stream was a paltry Kshs.2000.


On business development services, with the exception of business training that was reported by 50% of the respondents, the provision of meaningful complementary services to women borrowers was rarely done. About 25% reported receiving information and awareness on available business opportunities and another 25% received supported in monitoring their business progress.



The Fund continued to face numerous challenges at different levels. The main challenges at the Fund level included: inadequate WEF field personnel, inadequate facilitation to field teams, low loan amounts, delays in disbursements and an inefficient multi layered Fund structure. High cost of loan administration, competition with commercial bank products, poor dissemination of information, high demand/limited scope of coverage, lack of distinct product branding, lack of individual choices in group lending, bureaucratic processes and limited business monitoring were the main challenges at the lender level. At the borrower level the challenges faced included: high competition, lack of business knowledge, misconception about purpose of the Fund, diversion of the funds to other household needs, low literacy among segments of women borrowers and domestic interference from family members.



  • The Fund should integrate an effective strategy on business training to support innovation and business growth.
  • There is an urgent need to design an effective business monitoring programme. This will increase the likelihood that women borrowers will receive timely interventions to enable their businesses continue on a growth and innovation path.
  • Funding through the CWES stream should be remodelled towards more individual lending. This will give prospective borrowers the freedom of investment choice.
  • Loan allocation ceilings should be significantly increased. In most instances, the amounts of funds allocated to borrowers fall far below the actual business investment needs.
  • If the Fund is to impact more lives of the economically marginalised women, more funds should be allocated to the CWES stream which is reaching more people.
  • To minimize the risks involved in funding start-ups, business incubator initiatives should be promoted to improve the contribution of the Fund in supporting viable innovations which would otherwise be denied funding as start-ups.
  • The Fund should make the revolving fund structures functional and efficient to ensure that funds are available to borrowers based on recoveries in both the FI and CWES streams. Good borrowers should get access to more funds.


The full research report was published by TrustAfrica and is titled: Micro, Small and Medium Enterprise Growth and innovation in Kenya; A Case Study on the Women Enterprise Fund may be found here.