Women entrepreneurs in Kenya have been ‘denied’ corporate procurement: IFC Study

According to a study by IFC, the responses showed that women-led SMEs received fewer contracts than men-led SMEs.  

The research by the International Finance Corporation shows that women-owned businesses in Kenya suffer structural constraints that hinder their capacity to acquire contracts with large companies for expansion.

The survey, which was commissioned as part of IFC’s larger efforts to connect women entrepreneurs to new markets, found a 9% gender difference in SMEs providing directly to corporate purchasers.

Women-led SMEs (WSMEs) reported receiving fewer contracts among the SME respondents in the survey.

It also discovered that women-owned businesses face barriers to financing, networking, and market intelligence, restricting their capacity to take on significant contracts.

Researchers interviewed 14 Kenyan companies and discovered that women-owned firms account for only 3% of their total procurement expenditure, and that women entrepreneurs are largely found in low-value industries like catering, printing, and cleaning.

SMEs being totally or partially credit limited.

According to data from the International Finance Corporation, women hold 33% of formal SMEs in Kenya, with 41% of them being totally or partially credit limited.

Corporate purchasers could collaborate with local financial institutions to provide access to working capital, execute supplier development initiatives, and enhance outreach to WSMEs, according to the report.

Engaging with Women-owned SMEs

“For large companies, there is a business case for contracting with women-owned small and medium enterprises. A diversified supplier base is key to reducing the risk of supply chain disruptions and procurement costs.” Amena Arif, IFC’s Country Manager for Kenya.

It also suggests engaging with local SME support organizations to provide supplier development solutions that can boost women-owned firms’ capacity to deliver on contracts and personalize their solutions to suppliers’ industries and status.

“Enhanced access to information and networks for WSMEs by increasing outreach, and communicating tender opportunities in the channels that WSMEs are most likely to access.”

In addition, the IFC has launched the Sourcing2Equal Kenya program, which aims to promote gender-inclusive sourcing in the private sector and boost women’s access to procurement contracts.

The program will assist ten firms in increasing their sourcing from women-owned businesses and 1,300 women-led small enterprises in becoming procurement ready.

Program Partners 

Unilever, KenGen, Safaricom, Bidco, Stanbic Bank, Absa Bank, Line Plast Group, and Tropikal Brands are among the eight companies that have already signed up for the initiative.

“We set goals to increase sourcing from women-owned businesses because we believe it benefits business, economic development, and creates a more equal society.” Luck Ochieng, Unilever Kenya’s Managing Director.

“We are working with Sourcing2Equal Kenya because it aligns with the ongoing government procurement program. The program will help us access best practices on gender-inclusive sourcing and how to implement them.” Phillip Yego, Supply Chain Director at KenGen.

Kenya’s Policy for women owned SMEs to get a part of 30% of the value of all Gov’t Procurement contracts 

Kenya implemented a policy in 2015 that requires small businesses owned by women, people with disabilities, or young people between the ages of 18 and 35 to get 30% of the value of all government procurement contracts.

The IFC study surveyed 571 SMEs (approximately 60% of which are owned by women) and discovered that women confront particular challenges such as limited access to finance, a lack of resources to improve operational capability, and limited access to networks and tender information.

The lack of procurement opportunities for women is not only a challenge in Kenya. Globally, less than 1 percent of procurement spending by corporate buyers goes to women-owned businesses, according to a 2017 WEConnect International report.

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