Analysis of Challenges Faced by Women Entrepreneurs in Accessing Finance in Kenya (A Case of Beauty Sector in Nairobi Central Business District)

Abstract

Access to adequate and affordable credit for businesses remains one of the key challenges to economic development in Kenya despite efforts by various stakeholders, including the government, non-governmental organizations and private sector organizations to address this constraint. This study sought to analyse the challenges faced by women entrepreneurs in accessing finance in Kenya and focuses on the beauty sector in Nairobi Central Business District. The study was guided by the following specific objectives: to determine the extent to which literacy levels of women entrepreneurs affect their access to finance in Nairobi Central Business District, Kenya; to determine the extent to which the number of lending institutions available affect access to finance by women entrepreneurs in Nairobi Central Business District, Kenya;  to determine the extent to collateral requirements by financial institutions affect access to finance by women entrepreneurs in Nairobi Central Business District, Kenya; and to determine the extent to which interest rates charged by financial institutions affect access to finance by women entrepreneurs in Nairobi Central Business District, Kenya. In order to undertake the study a descriptive survey was used. The target population was drawn from the registered and licensed female owned enterprises in the beauty sector in Nairobi Central Business District, whose number stood at 3,724 as at 31st March 2016 (Nairobi County Trade & Industry Office). A sample size of 400 women entrepreneurs was used in the study. Primary data was collected from the proprietors/managers of the women owned beauty enterprises in Nairobi Central Business District aided by a semi-structured questionnaire. Data pertaining to the objectives of the study was analyzed using descriptive statistics, which includes measures of central tendency, measures of variability and measures of frequency among others. In order to evaluate the relationship between the independent and dependent variables, correlation and multiple regression was undertaken. The information was presented and discussed as per the objectives. The findings are presented inform of frequency tables and explanation is in prose. The study findings indicate that majority of the women entrepreneurs had attained at least a tertiary college qualification as their highest academic qualification. The study concluded that lack of collateral security is has become a constraint to young women entrepreneurs accessing loans since most of them may not have deeds to capital assets  to  present  as  security  against  the  loans  and  that  most  of  young  women entrepreneurs have had loans applied for rejected due to failure to produce collateral security. Finally, the study recommends that for the under-privileged women to access credit, alternative approaches on collateral security requirements get adopted through the emphasis on social capital tools such as trust and network relations for securities. It also recommends that the government offers deliberate and targeted training to the women entrepreneurs in order to encourage entrepreneurship culture hence creation of job opportunities. Government should also ensure policies that are friendly to creation of more lending institutions.

Keywords: Women entrepreneurs, Literacy levels, Collateral, Interest rates