NAIROBI, MARCH 8th 2017 – The majority (71%) of women entrepreneurs in East Africa finance the start of their businesses from their own savings because they have no access to finance. Even after their businesses are up and running women entrepreneurs in the region depend on a combination of their own savings and profits to expand their business.

This is according to a research report commissioned by the Graça Machel Trust (GMT), to Explore Growth Barriers Faced by Female Entrepreneurs in East Africa, to establish the key factors that hinder growth from micro and small enterprises to medium and large-sized businesses. The research covered Kenya, Uganda, Tanzania and Rwanda and surveyed 664 women entrepreneurs across all sectors of the economy. The dominant sectors include retail (17%), agriculture (13%) and consulting services (11%). The more male dominated sectors of technology, construction and engineering featured less than 3%, respectively.

“Women entrepreneurs make an important and ever-growing contribution to African economies through the various businesses they own and run. Despite socio-economic challenges and an uneven playing field, women continue to pursue entrepreneurship as a path to financial freedom by finding innovative ways to run and grow their businesses.  This research is unique as it is one of few studies that looks at women entrepreneurs from a regional perspective, to assess similarities and differences in how women entrepreneurs are coping with financial and non-financial barriers to growth,” says Nomsa Daniels, Chief Executive Officer, Graça Machel Trust.

Less than one third of women entrepreneurs have been successful in applying for a business loan

Women’s negative and fearful attitudes towards external finance comes from the fact that they do not believe they have the requirements to access financing from banks and other financial institutions. The research established that the two biggest financial constraints that hinder female entrepreneurs’ access to finance were collateral requirements and prohibitive interest rates. Moreover, of the sampled population, only 27% of women entrepreneurs successfully applied for a loan for their business. There is also the fear element, which is related to overall confidence levels concerning utilizing financial institutions when business cash flows are irregular or unpredictable.

Angel investors are the preferred financiers

“Women entrepreneurs cited that they intend to finance their business expansion using their own resources first, followed by working with an angel investor, then receiving a grant. This is despite admitting that their current mode or level of financing does not meet their short to mid-term needs. When we checked what type of financing female entrepreneurs were most interested in applying for, the responses differed slightly with grants topping the list, followed by angel investors and then microfinance. The openness towards angel investors as a preferred form of financing indicates a desire to be mentored by someone more successful and experienced than them in their specific industry,” said Lead Researcher, Ms. Andia Chakava, who is also an Investment Consultant.

70 % of women are using the internet to fill their knowledge gaps

Most women-owned enterprises are small with an investment between US$ 1,000 to US$ 5,000 to start their businesses. Only 8% of these businesses have an annual turnover of US$ 100,000 but, encouragingly, 63% said their businesses are profitable and have achieved profitability within one year.

Other than access to finance, the other challenges faced by women entrepreneurs include access to markets, fending off competition and recruiting and retaining staff.  63% of women entrepreneurs lack business industry mentors for both personal and professional guidance.

Furthermore, one third of women entrepreneurs have not participated in any training for their business. Those that did undertake training favored courses on branding and marketing strategies. Currently women are filling 70% of their business knowledge gaps through the internet. The women in business are most interested in learning more about strategy and entrepreneurship.

Women entrepreneurs appear to obtain their support informally and through various female networks, with 54% either belonging to a network or membership organization. 20 % of the women business owners in Rwanda and at least half in Kenya and Tanzania, participate in savings groups primarily for investments or loans to sustain or grow their business. This number increases to two thirds in Uganda.

Yet, 55% of the respondents do not have a financial cushion for their businesses, such as adequate retained earnings or overdraft facilities.  They also perceive insurance to be expensive, citing irrelevance due to their small size or type of business. The study also highlighted that overall, knowledge and information on the varying types of growth capital available and how and when to apply it to their businesses, is lacking, thereby affecting confidence and product uptake levels.

“These findings demonstrate that unless a different approach is followed, women entrepreneurs will continue to run small businesses that do not fully reach their growth potential. They will continue to be viewed as risky and unviable investment opportunities for financial institutions,” says Daniels.  She adds, “Through the findings and insights gained, we want to contribute to unlocking the incredible opportunity that women entrepreneurs offer to the economic advancement of the continent and will be looking at implementing a combination of financial and non-financial interventions to specifically address some of the barriers highlighted in this study.”




 The Graça Machel Trust

The Graça Machel Trust is an advocacy organisation that works across the continent to drive positive change across women’s and children’s rights, as well as governance and leadership. Through our support of local initiatives and connecting key stakeholders at a regional, national and sub-national level, we help to catalyse action where it is needed. By using  our  convening  power  the  Trust  seeks  to amplify  the  voices  of  women  and  children  in  Africa;  influence governance;  and promote women’s contributions and leadership in the economic social and political development of Africa.


Network of Women in Finance (NFNV)

New Faces New Voices (NFNV) advocates for women’s access to finance and financial services. The network aims to bridge the funding gap in financing women-owned businesses in Africa and to lobby for policy and legislative changes. The overall objective of the network is to advance the financial inclusion of women by bringing more women into the formal financial system.

 For more information on the Barriers to Growth for Women Entrepreneurs in East Africa, contact:

Andia Chakava, Lead Researcher

 Issued By:

Kamuzu Banda, Chief Operations Officer,
Tim-Sky Media Services
Email: Tel: +254723859690

Graça Machel Trust
Communications Department

Click here to download the press release.

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