Women and youth entrepreneurs are set to benefit from a fund totalling to a sum of Sh2.95 billion for ventures across the agricultural value chains. African Development Bank Group (AfDB) has approved an equity investment of about Sh2.8 billion (€18 million) in the Africa Guarantee Fund and another Sh184.3 million (€1.2 million) to support youth and women entrepreneurs engaged in agricultural value chains in Kenya. This funding, approved on June 6, this year was provided by the European Union (EU) under its partnership with the Bank.
According to the bank, demand for Micro, Small, and Medium Enterprises (MSME) financing remains unmet in Kenya and has been aggravated by the disruptions of the Covid-19 pandemic. The International Finance Corporation (IFC) estimates an SME finance gap of about Sh2.7 trillion ($19.38 billion), representing 30 per cent of the country’s gross domestic product.
The bank Group Director General for East Africa, Nnenna Nwabufo, noted the approval as “another milestone in the implementation of the partnership with the EU, which also signals the importance given to the role of women and youth in the agricultural sector in Kenya.”
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The World Bank’s Covid-19 Business Pulse Survey shows that many potentially viable firms are still struggling. The agriculture sector employs the largest share of the population, especially in rural areas. According to data by the Kenya Youth Agribusiness Strategy 2017-2022, 64 per cent of the unemployed Kenyans are youth (18 to 35 years old).
Women face many constraints hampering their access to finance and the growth of their businesses. These include a lack of business management skills, legal, social, and policy barriers, poor access to networks and information, and inadequate financing options catering for their specific needs. Banks often perceive women-led businesses as risky due to the low quality or number of assets for collateral and the generally smaller business sizes.