Women Enterprise Fund in Kenya was first budgeted for in 2007/08. Its objectives are to promote women’s empowerment poverty reduction and national development.
Women have been targeted for their pivotal role in families. Various studies show such interventions have fundamental impact on poverty reduction and economic betterment globally. The fund was started with a billion Sh ($25 million) kitties, with an initial Sh 1 billion ($12.5 million) allocation.
Women entrepreneurs borrow through contracted banks and financial institutions after presenting their business plans to the Women Enterprise Fund.
Low ownership of collateral (security) required to secure loans from financial institutions
The fund was motivated by the success of microfinance institutions such as K- Rep, Kenya Women Finance Trust and FAULU Kenya in their lending to women- based enterprises that have been recording over 90 percent repayment and contributing to the improvement of women’s wellbeing. The fund is implemented under the general direction of the Ministry of Gender and Children’s Affairs. Unlike the other funds, this fund was not set up through an act of parliament.
Reasons for the establishment of the Women Enterprise Fund in Kenya:
To provide affordable loans through existing micro-finance institutions, registered NGO5 involved with microfinance and SACCOs for on-lending to women enterprises
• To attract and facilitate investment in micro-small and medium enterprises oriented commercial infrastructure such as business markets or business incubators that will be beneficial to women enterprises
• To support women-oriented enterprises to develop linkages with large enterprises
• To facilitate marketing of products and services of women enterprises in both domestic and international markets
• To support capacity building of the beneficiaries of the funds and their institutions
Institutional framework of the WEDF:
Women Enterprise Fund in Kenya is managed though three institutions namely;
1) The Advisory Board:
This board oversees the management of the fund and advises the ministry on the operations of the fund. The board is headed by a non-executive Chairperson and has a Chief Executive and members of staff.
Composition of the advisory board
The Board consists of a non-executive Chairperson, the Permanent Secretaries in the Ministries of Gender, Finance, Trade and Industry, Agriculture and Planning, and five persons with expertise and experience in enterprise development and financial management.
2) Divisional women enterprise fund committee (DWEFC):
Composition of DWEFC
It is composed of the Chairperson (Divisional Officer [DO]), the secretary (Gender and Social Development Officer), the Treasurer who is elected by the committee members, a representative of the area Local Authority, a representative of women living with disabilities, a prominent woman entrepreneur, a representative of an FBO, a representative of the provincial administration and the sitting MP as an ex-officio.
Role of the Gender and Social Development Officer
• Secretary to the DWEFC
Monitors disbursement of the funds through financial intermediaries
• Facilitates loan recovery from the women groups
• Participates in the capacity building of groups that get the loan
• Recommend to the ministry groups which have been trained
Role of the DIVEFC
• Support the capacity building of the beneficiaries of the fund
• Create awareness on the Rinds disbursement procedures and requirements
• Assist in the mobilization, selection, identification and vetting of the women groups seeking loans
3) Intermediary Micro-finance institutions (Mfl):
Components of the funds are disbursed through micro-finance institutions. Most of the intermediaries are rural or urban based with large national networks to ensure effective disbursement to the rural based women groups.
They include: Family bank, Equity bank, Co-operative bank, and 1K-REP bank. Others are: Kenya Women Finance Trust (KWFT), Kenya Industrial Estates (KIE), Small and Micro-Enterprise Programme (SMEP), Pamoja Women Group and Jitegemee Credit Scheme.
Disbursement of the WEDF:- It is done through loans to the micro-finance intermediaries and through the constituency women enterprise scheme.
Loans through Micro-finance Intermediaries:
Here the lending component of the fund is through financial-intermediaries such as banks, NGOs, SACCO5 from which the women access funds to start or expand viable businesses.
The financial intermediaries lend the funds allocated to them from which women access funds directly either as individuals or as organized entities such as groups, cooperatives, and companies.
Characteristics of the revolving loans through MFIs:
1. The loans will be financed through financial intermediaries
2. Efforts shall be made by the ministry to identify areas that are not covered by the approved financial intermediaries so that other credible intermediaries operating in the regions can be engaged to loan the funds
3. The loan targets all forms of women owned enterprises whether individual, companies, groups, or cooperatives. The loan will be accessible to any women owned enterprise operating in Kenya
4. The loan will attract interest at the rate of 8% per annum on a reducing balance
5. The loan amount is dependent on the nature of business proposed and the lending terms of the financial intermediary
6. The financial intermediary, will seek approval for loan amounts exceeding KShs 500,000 from the fund’s advisory board
Constituency Women Enterprise Scheme:
The constituency women enterprise scheme has an allocation of Kshs 1 million per constituency. It targets viable enterprises of women groups within the constituency and it is managed by the DWEFC.
This portion of the fund ensures that all women, especially those living in remote areas not well served by financial intermediaries, are not disadvantaged in accessing the fund.
Characteristics of Constituency Women Enterprise Scheme (C-WES)
I. The loan targets enterprises of women groups in the divisions
2. Accessible only to women groups operating within the parliamentary constituency
3. A maximum loan amount per group is KShs 50,000
4. It is not accessible to individual owned women enterprises
5. The loan attracts no interest but has an administration fee of 5% deductible upfront from the approved loan
6. Proposal screening recommendation and approval is done by the DWEFC at the divisional levels
7. Full repayment in twelve equal instalments, after three months’ grace period
8. Groups with male and female membership MUST have at least
70°/o women membership and I 00% of women in leadership position
9. A standard application form is available to all potential applicants
Capacity building and community mobilization:
Another component is the capacity building and mobilization of women groups and their institutions. This role is facilitated by the ministry with a possibility of outsourcing for such services from other institutions with capacity to train women in enterprise and business development skills.
Minimum conditions for accessing WEDF:
• One must be 18 years old and above
• Must be a Kenyan female
• One must have intention of investing iii Income Generating Activities (IGAs)
• The groups must be registered by appropriate authorities and must have been in existence for three months
• The amount given is a loan and NOT a grant and must be repaid.
Proposal evaluation guidelines:
The District Women Enterprise Fund Committee subjects proposals to rigorous assessment that includes financial/technical viability in consultation with a specialist at the district level.
The basic requirements for the group:
1. Be registered by the Ministry, Attorney General or other appropriate authorities for at least three months before applying for the loan
2. Based and operating within the division
3. Undertaking/proposing to carry out business oriented activity
4. Operating an active bank account
5. Recommended by the local gender and social development officer or the secretary of the Divisional Women Enterprise Fund Committee (DWEFC) Challenges
• Many women groups have members who lack entrepreneurial skills that hamper their capacity to utilize the leans
• Lack of financial institutions in some areas of Kenya like the arid and the semi-arid parts of northern Kenya means some groups are unable to access loans
• Lack of adequate information amongst women on the existence of the fund and how to benefit from it
• Difficulties encountered in choosing viable businesses by the women groups
• Due to illiteracy/semi-literacy amongst local women there are complaints the proposal formats written in English are difficult for them to comprehend
• The fund was highly politicized at its initiation; in some areas it has completely been shunned due to this reason
• The financial institutions have very slow procedures that discourage women groups wiling to access the funds through them.
• Given the high poverty levels, the fund should factor in a social safety net to avoid applicants eating into the capital as the business picks