Philanthropy organisation the Bill and Melinda Gates Foundation and development finance institution the European Investment Bank (EIB) have launched a €30-million microfinance programme for women entrepreneurs in Kenya. The new partnership aims to strengthen women’s economic power in Kenya by tackling key barriers to financial inclusion.

The €30-million microfinance programme in Kenya is backed by €15-million from EIB Global and financing from financial services firm KCB Bank Kenya.

The new pilot will address a range of issues that limit low-income women’s ability to access finance. Technical assistance provided to KCB Bank Kenya will help financial institutions lower the cost of loans to women through digital technology and data, and risk sharing.

Designed to ensure that 80% of final beneficiaries will be women, the pilot includes increasing access to finance for borrowers who lack collateral or a credit history, risk-adjusted pricing to address high interest rates, adapting digital services to the specific needs of female borrowers, and improving financial literacy, the companies said.

This first scheme, which will be launched in the coming weeks, will improve access to microfinance across Kenya and be managed by KCB Bank Kenya, under their dedicated female-led and made enterprises (FLME) and KCB Foundation 2jiajiri initiatives.

The programme will leverage key learnings to enhance the impact of further gender equality engagement across Africa as the cooperation is expanded in the coming years.

“Across Africa, women need access to more and better credit to support their entrepreneurial activities,” says Bill & Melinda Gates Foundation women’s economic empowerment director Greta Bull.

“Unequal access to credit remains a huge challenge that holds back economic activity and social progress, including for women in Kenya. This partnership will help remove some of the barriers women face in accessing affordable financing and will not only support women in getting businesses off the ground but will contribute to wider economic growth. It’s a win-win,” she says.

The 2023 EIB Financing in Africa survey found that, in terms of lending to small and medium-sized enterprises, almost 70% of surveyed banks reported that less than 30% of their lending was to female borrowers, and 50% of surveyed banks cited a lack of acceptable collateral as a major constraint, while 40% stating that poor or incomplete credit history was a major constraint.

“Women are the backbone of the African economy, and Africa is home to the highest percentage of women entrepreneurs in the world. African women continue to face huge hurdles with prohibitive interest rates, lacking collateral, and financial institutions failing to respond to the specific needs of women,” says EIB VP Thomas Östros.

This new partnership brings together philanthropic expertise and resources from the Bill & Melinda Gates Foundation and development finance from the EIB and the European Union to overcome challenges and enable women across Africa to harness new opportunities.

This gender-focused microfinance scheme led by KCB Bank Kenya establishes a benchmark to tackle the $42-billion gender financing gap for female entrepreneurs in Africa. This gap hinders women’s ability to take a greater lead in growing the economy and improving social change, he said.

“Women’s economic potential is dwarfed by multiple challenges such as the lack of appropriately designed financial products, weak institutional capacity, and lack of incentives within banks to target and lend to women. The financial industry stands to significantly increase its bottom line by addressing banking’s gender gap, namely female financial inclusion, particularly the promotion of financial literacy, digital banking, and access to credit,” KCB Bank Kenya MD Annastacia Kimtai says.

“Kenya and the European Union are committed to delivering gender equality. This exciting new cooperation between the Bill & Melinda Gates Foundation, the European Investment Bank and the European Union will enhance opportunities and improve the lives of thousands of women and their families here in Kenya and later across Africa,” says European Union Ambassador to Kenya Henriette Geiger.

Further, the Gates Foundation released a White Paper on the challenges and opportunities to provide more and better capital to Africa’s women entrepreneurs who have largely remained invisible from formal financial institutions.

"This cooperation represents a concrete step forward to close gender gaps and get more financing into the hands of women. Collaborations such as this are urgently needed to expand microfinance in other East African countries and across Africa," the partners said.

The first facility benefits from a partial guarantee from the European Union under the European Fund for Sustainable Development Plus and is part of the Global Gateway strategy.