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The Bill & Melinda Gates Foundation and European Investment Bank launch pilot in Africa to improve women entrepreneurs’ access to capital

By Bill & Melinda Gates Foundation

The Bill & Melinda Gates Foundation and European Investment Bank launch pilot in Africa to improve women entrepreneurs’ access to capital

The Bill & Melinda Gates Foundation and the European Investment Bank (EIB)  launched a new partnership to strengthen women’s economic power in Kenya by tackling key barriers to financial inclusion.

The cooperation is spearheading a new €30 million microfinance program in Kenya, backed by €15 million from EIB Global and financing from KCB Bank Kenya. Designed to ensure that 80% of final beneficiaries will be women, this pilot includes increasing access to finance for borrowers who lack collateral or credit history, risk-adjusted pricing to address high interest rates, adapting digital services to the specific needs of female borrowers, and improving financial literacy.

This first scheme, to 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. It 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,” said Greta Bull, director, of Women’s Economic Empowerment at the Bill & Melinda Gates Foundation. “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.”

“Women are the backbone of the African economy, and Africa is home to the highest percentage of women entrepreneurs in the world,” said Thomas Östros, European Investment Bank Vice President. “Yet 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. This exciting 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. The pioneering gender-focused microfinance scheme led by KCB Bank Kenya establishes a benchmark to tackle the $42 billion financing gap for female entrepreneurs in Africa.”

KCB Bank Kenya Managing Director, Mrs. Annastacia Kimtai said: “Despite their dominance, 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: female financial inclusion – particularly the promotion of financial literacy, digital banking, and access to credit.”

“Kenya and the European Union are committed to delivering gender equality,” said H. E Henriette Geiger, European Union Ambassador to Kenya. “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.”

Tackling technical and financial barriers to equal access to finance
Research last year estimated that the gender finance gap in Africa is $42 billion, a gap that hinders women’s ability to take a greater lead in growing the economy and improving social change.

The 2023 EIB Financing in Africa survey also found that 65% of African banks have a gender strategy in place and an additional 19% plan to implement one soon. Concerning 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% stated that poor or incomplete credit history is a major constraint.

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 data and risk sharing.

The Gates Foundation released a whitepaper 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 first facility benefits from a partial guarantee from the European Union under the European Fund for Sustainable Development Plus (EFSD+) and is part of the Global Gateway strategy.