CHALLENGES

Kenya’s women entrepreneurs held back from corporate procurement–IFC Study

Among the SME respondents in the study, women-led SMEs reported receiving fewer contracts

In Summary
  • The study noted a 9 per cent gender gap in the participation of SMEs supplying directly to corporate buyers.
  • The study recommends that corporate buyers partner with financial institutions to facilitate access to working capital and increased outreach to WSMEs.
Traders sell vegetables during a market day at Daraja Mbili. /FILE
Traders sell vegetables during a market day at Daraja Mbili. /FILE

Women-owned businesses in Kenya face structural barriers that limit their ability to secure contracts with large companies for growth, according to a study by the International Finance Corporation(IFC).

Commissioned as part of IFC’s wider efforts to connect women entrepreneurs to new markets, the study noted a nine per cent gender gap in the participation of SMEs supplying directly to corporate buyers.

Among the SME respondents in the study, women-led SMEs(WSMEs) reported receiving fewer contracts .

It also found that women-owned businesses face challenges accessing finance, business networks, and market information, limiting their ability to take on large contracts.

Researchers interviewed 14 Kenyan corporations and found they spend just 3 percent of their total procurement budget on women-owned businesses and that women entrepreneurs are mostly represented in low-value sectors, such as catering, printing, and cleaning.

IFC data show sthat 33 per cent of formal SMEs in Kenya are owned by women with 41 per cent of them being in fully or partially credit constrained.

The study recommends that corporate buyers partner with local financial institutions to facilitate access to working capital, implement supplier development initiatives and increased outreach to WSMEs.

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.,” said Amena Arif, IFC’s Country Manager for Kenya.

It also recommends implementation of supplier development solutions by partnering with local SME support organizations that can improve women owned businesses capacity to deliver on contracts, and tailor their solutions to suppliers’ sectors 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,” the study adds.

IFC  has also launched its Sourcing2Equal Kenya program to help advance gender-inclusive sourcing in the private sector and increase women’s access to procurement contracts.

The program will help 10 companies increase their sourcing from women-owned businesses and build the capacity of 1,300 women-led smaller businesses to make them procurement ready.

Eight firms have already joined the program: Unilever, KenGen, Safaricom, Bidco, Stanbic Bank, Absa Bank, Line Plast Group, and Tropikal Brands.

We set targets to increase sourcing from women-owned business because we believe it’s good for business, good for economic development, and it builds a stronger equitable society,” said 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,” said Phillip Yego, Supply Chain Director at KenGen.

In 2015, Kenya introduced a policy that stipulates that 30 per cent of the value of all government procurement contracts be awarded to small businesses owned by either women, persons with disabilities, or young people between the age of 18 and 35.

The IFC study surveyed 571 Small and Medium Enterprises(SMEs) (about 60 percent of them owned by women) and found that women face unique barriers that include limited access to capital, lack of access to resources to enhance operational capacity and limited access to networks and information on tenders.

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.