By Charlotte Young
For the small business women in Kenya, dreams of starting a successful business are statistically far and few between. The Business Daily Africa reports that not only do women believe that their businesses will fall, they’re not wrong. Most of the businesses die almost at inception, a fact that is calling to question the sustainability of a Kenyan-based loan provider.
The study, conducted by the Kenya Institute of Management, interviewed 110 entrepreneurs in Nairobi.
Jackline Sagwe, the head of business intelligence and research at KIM tells the Business Daily Africa that the group was “assessed on knowledge and skills, the use of marketing and technology in growing their business” and the all-important entrepreneurial spirit.
It discovered that one in three start-up businesses are estimated to fail and that women rank at the very top of the failure, with business startups that will most likely to fail in the first six months of setup.
So what’s the problem? Researchers say it’s the lack of business savvy. Most of these women start off generic and overdone businesses such as selling clothes. Not only are the women likely to sell the same thing as their neighbors, there’s not much attempt to improve or diversify the products to make them stand out against the fierce competition, and virtually no use of technology.
As such, 48 percent of entrepreneurs interviewed have less than a 50 percent of a chance to make it past the incubation stage.
All of the research combined creates a very dim picture for The Youth and Women Enterprise Fund.
Since its start up in 2006, it has provided loans to over 12 million Kenyans between the ages of 18-35. Women have received about Sh1.29 billion from the Women Enterprise Fund. With all of the failure, The Fund, which is already struggling with high default rates, is unlikely to regain the Sh475 million it lent to entrepreneurs in Nairobi.
Now faced with the prospect of entering into risk-sharing agreements with financial institution, the Fund is considering a tool to better critique business proposals. It may be too late to save some of the struggling businesses, but perhaps for those still dreaming, a better system in place will nurture future business efforts.