In 2020, M-Kyala Ventures was part of the Aspen Network of Development Entrepreneurs gender action lab and as part of this participation, was selected as a winner of 50,000 USD to carry out a project titled ‘ The Gender Smart Lending Toolkit’. The aim of this project is to provide financial institutions with process and product recommendations that can increase their capacity to support women entrepreneurs while still meeting their growth and profit objectives.

Here are some of the key takeaways from this process

  1. Collateral requirements are a leading barrier to access to credit

While women entrepreneurs were clear on the required capital for their growth strategies, most of them expressed that the lack of sufficient collateral was a major impediment for them when it comes to accessing growth capital through formal financial institutions.

We also learnt that financial institutions that provide, non secured credit products required a rather high annual revenue threshold that most women entrepreneurs found difficult to reach.

This particular challenge seemed like the insurmountable barrier for most women entrepreneurs.

     2. Limiting awareness is a missed opportunity for financial institutions

Women entrepreneurs respond best to having a full array of information. We found that 50% of women entrepreneurs opened business bank accounts where they already had personal accounts but at the same time 86.5% were not made aware of any specific or general financial products that were available for their type of companies.

In essence, 2 out of every 4 women bank account holders are likely future entrepreneurs and business customers for the bank. With this in mind, banks have an opportunity to ensure that they expose female customers to their full array of products and work with them to include their input in the design of financial products that are suitable to their entrepreneurial goals.

     3. Simple innovations can go along way if you listen to the data

In our survey of financial institutions, we found that only a handful had developed innovations that were suitably reaching women entrepreneurs. One institution in Kenya had developed a digital loan product tied to the entrepreneurs mobile money account and using transactional behavior as a credit score. This institution also had a quick approval turnaround time frame all of which were highly favorable for women entrepreneurs.

Another institution in Uganda, has worked with over 10,000 women and designed an entire Women in Business program that includes subsidized interest rates, non secured facilities, an accelerator and business exchange program that allows women to learn from each other and tour other successful women led businesses in the East Africa region.

Designing for women is an opportunity for banks and other financial service providers.

At M-Kyala Ventures, we believe that this work can support financial service providers to serve women entrepreneurs and leverage this as a high potential customer segment with significant growth capacity.

Learn more of our work on this via The Gender Smart Lending Initiative 

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