Hearing from women entrepreneurs in Kenya and Rwanda: What we learned during MEDA’s Second Chance Success Project GLI Summit

Above: A group photo of Summit attendees

It’s well known that women-owned small and growing businesses (WSGBs) have difficulty accessing finance. Yet, prior to this project, there was little existing research that examined viable approaches to improve access to capital for women entrepreneurs. Despite these challenges, there have been many lessons learned that are useful for future initiatives, such as the critical role of Technical Assistance (TA) in getting WGBs investment ready and getting investors’ willingness to support WGBS.

The two-day MEDA’s Second Chance Success Window project Summit held at the end of July 2022 combined the robust findings, learnings, and recommendations from the Second Chance Success Project. The event brought together investment funds, financial institutions, civil society representatives, business development service providers, and women-owned small and growing businesses from Kenya and Rwanda. Actors from across the investment spectrum shared essential lessons, including the importance of mainstreaming gender and embedding flexibility into all aspects of the investment process to provide the tailored support necessary for the diverse needs and opportunities WGBs present.

Above: Some of the Summit attendees engaged in conversation

Lindsay Wallace, MEDA’s Senior Vice President for Strategy and Impact, kicked off the Summit by highlighting MEDA’s impact investment strategy that includes assisting fund managers and small businesses to access the capital, expand their businesses, and provide capacity strengthening activities through staff training and technical assistance.

“Ultimately, the Summit will contribute to driving more investment into women-owned businesses, shift the perspectives on women financing and gender lens financing.”

– Lindsay Wallace, Senior Vice-President, Impact and Strategy

Here are six high-level insights from this informative and productive event

The Second Chance project collaborated with partners to drive the gender lens investing (GLI) agenda

Working with local partners played a vital role in the implementation of the Second Chance Success project by recognizing the need to synergize to achieve its goals, priorities, and impact of WSGBs, mainly by understanding demand-side factors such as investees’ attitudes and behaviors toward GLI and financing opportunities and understanding supply-side factors such as investor attitudes and perceptions and structural biases within investment processes. Also, by cataloging lessons learned in providing technical assistance to both investees and investors and understanding systems-level constraints in the investment ecosystem and GLI opportunities to facilitate improved access to capital for WSGBs.

Criterion Institute is a non-profit think tank based in Canada and a pioneer in gender lens investing research. The project worked with Business partners International, a regional investment fund specializing in risk finance of SMEs and operates in seven countries with over three hundred staff. Volta Capital providers of business advisory services, developing a technical assistance manual; produced a report describing the regulatory environment in Kenya and Rwanda and have a deep understanding of frontier markets, underserved sectors, and impact management as the overall project strategy focused on building partnerships; and shaping the ecosystem. The Monitoring, Evaluation, Research, and Learning (MERL) plan was central to MEDA’s strategy for generating evidence around GLI, which MEDA hopes will catalyze increased investment in WSGBs beyond the project’s scope. Notably, the MERL plan is an ongoing, collaborative process with the participation of all project partners and funders.

Providing Financial Access to Women-Owned Small and Growing Businesses (WGBS): Financial Services Provider Perspective (BPI)

Business Partners International illustrated how WSGBs make up a significant part of the declined applications due to challenges like a lack of business formalization, financial oversight, occupational health, and safety issues. Other include general environmental issues and social and governance-related concerns. Technical assistance significantly improves the chances of financing by addressing the challenges businesses are facing and providing capital to the qualifying businesses after the technical assistance.

Above: Jean- Claude, Country Manager for Rwanda at Business Partners International, illustrating the Second Chance model and its success.

“Building a business is not a sprint. It is a marathon. With highs and lows.”

– Jean Claude, Country Manager Business Partner, Rwanda

There were informative panel discussions on WGBs’ financial access

Above: A panel discussion by capital providers giving their perspective on gender lens investing

During the panel discussion, the attendees gained insights from Andia Laura Chakava at Graca Machel Trust, Amos Gachuiri at Financial Sector Deepening FSD Africa, and Mercy Kimalat at Kenya: Association of Startup and SMEs Enablers of Kenya (ASSEK). The financial ecosystem actors shared their perspectives on barriers that limit women’s access to finance and discussed how gender and societal power structures limit women’s access and potential ways forward. Key takeaways from the panel discussion were barriers on the supply side, such as unconscious bias when women ask for finance. Loan officers are generally hesitant to lend to women, and the credit assessment processes because the ability to pay does not favor women enterprises.

Credit assessors should look more at predictive behavior, allowing people who have not accessed finance to receive credit. Credit assessment processes should emphasize the entrepreneur’s credibility and not her history. Additionally, fund managers must manage risk by protecting the trust given to them by the owners of capital. This can lead to more female fintech companies receiving capital to grow their businesses. FSD Africa, for example, is helping to build infrastructure for financial markets through technology to remove the bias in the due diligence processes for lenders.

Lastly, men generally have more advantages than women in entrepreneurship. More men enroll in university technical courses than women. This disadvantages women because it is in this environment that business ideas are generated. We need to solve the issues at a systemic level and teach entrepreneurship in universities for both women and men. We must also work with the government to generate the data that informs policies that includes more women in finance.

There are also differences in the resources of rural vs. urban women too; women in urban areas have more access to finance than women in rural areas. We need to bring more incubators to rural areas to ensure women have the same access to opportunities. Infrastructure, access to electricity, and roads are also critical enablers.

Impact measurement and management can support gender lens investing

According to Genesis Analytics, training and engaging women alone does not address the underlying measures needed to serve women better. A holistic and comprehensive change at institutional and product levels is required to improve women entrepreneurs’ access to finance.

Genesis analytics also highlighted the need to measure impact at the macro, meso, and micro levels. Gender lens investing frameworks include data that not only provides finance but also deals with the systemic barriers that hinder access to financing for women. When measuring GLI results, stakeholders focus on different things regarding inclusion. Recommended GLI measurement frameworks include the World Bank Framework, Bloomberg Gender-Equality Index, and the 2XCollaborative. The results of the WSGBs self-evaluation Feminist evaluation include the women reporting improved confidence and accessing finance.

Technical assistance plays a strong role in facilitating financial access for women in small and growing businesses

The elements of technical advice are the most important in supporting SMEs to access financing as discussed by technical assistance service providers (TASP); Private Equity Support (PES), Global Experts Rwanda, African Managers Initiative, and Africa Risk management advisors.

The central purpose of TA is to support entrepreneurs to articulate their business, vision, develop an entrepreneurial mindset and business resilience. Resilience requires certain management practices, including customer relationship management, planning and growth, fiscal management, operations management, and talent. TA helps understand how businesses are implementing these practices. Poor management practices are a barrier to accessing financing.

However, support to WGBs should go beyond developing plans and supporting them with implementation and raising funds to implement the strategies. There is a need to create awareness of alternative forms of financing, including technology-enabled financial solutions for WGBs. Knowing your customer (KYC) is more accessible through technology, financiers need to work with TA providers to improve KYC to reduce the barriers for WGBs in accessing finance.

Above: Some of the Summit attendees

Furthermore, TA helps entrepreneurs to understand their business from an investor lens. It provides a mirror that allows the entrepreneur to understand the industry’s weaknesses, separate the company’s sentimental value and focus on the viability of the business. TA should be delivered throughout the lifecycle of the business because, as the business grows, new challenges emerge, and there is a need for diverse types of TA that support the company to deal with the emerging challenges.

“TA can help you turn your no into yes.”

– Diana Gachaga, Founder and CEO of Private Equity Support

GLI faces many challenges in East Africa

Above: Dr. Jennifer Riria, ENA Africa and founder of Kenya Women Finance Trust, Keynote speaker of the summit giving her perspective of GLI opportunities and challenges

Dr. Jennifer Riria of ENA Africa and the founder of Kenya women finance trust (KWFT) closed the Summit. She stated that GLI requires different legal/policy frameworks that emphasize investing in women. She mentioned that GLI is discussed frequently, but the action does not match the talk. The international development community keeps asking: Are we reaching the right people? What impact are we creating? GLI is about developing products and services with a gender lens to overcome barriers women face in accessing finance. The obstacles include cultural perceptions, religious inhibitions, and a lack of collateral.

The GLI field is not static- we must keep answering emerging challenges through innovation in financial products. Finance should also help mitigate against other issues that affect women, such as gender-based violence (GBV), and improve health and overall economic inclusion.

“To achieve inclusion, we need to improve the financial capabilities of women and support confidence building to help women take advantage of emerging opportunities.”

– Dr. Jennifer Riria
Above: (From left to right) Dial-a-Pad co-founder Faith Mutindi, MEDA Technical Specialist, Impact Investment, Regina Nyakinyua Kagiri, and Dial-a-Pad co-founder, Linda Ng’ondu


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