Women entrepreneurs are to undertake business mentorship and leadership training organised by the Kenya Women Holding— an offshoot of the microfinance institution that offers them formal banking services.
Studies have shown that many small businesses have stagnated at their infancy stages because the owners lack business skills to efficiently manage their operations, including finding the right markets for finished goods.
A survey conducted by the company showed there was lack of skills among its clients who are mainly involved in small businesses hence the need to develop a curriculum that the entrepreneurs would be taken through using grants from unilateral donor institutions .
The business training will complement the lending and savings services that are now offered through the Kenya Women Finance Trust Deposit Taking Microfinance Limited (KWFT DTM) and is expected to increase the credit appetite among the clients and raise the average loan size which now stands at about Sh40,000.
Dr Jennifer Riria, the group CEO of Kenya Women Holdings, says that the challenges that most entrepreneurs face in running their businesses are non-financial since they relate to the daily operations of businesses and that providing them would empower women to become business leaders.
“This is a result of a Training Needs Assessment Survey conducted among our clients that has clearly identified the need for focusing on non-financial life cycle challenges that women face daily,” said Dr Riria during the company’s AGM held on Saturday.
The modules would be delivered through a network of trainers who will be working with target groups whose training needs have already been identified.
The training will include drawing up business plans, filing of VAT returns and product innovation through market research to understand the consumers’ needs.
KWH has a client base of about 400,000 individuals who are organised in small groups of about 10 working together to co-guarantee their members in accessing credit facilities and this has enabled the company to minimise the exposure to default risk.
The composition of the programme loan portfolio indicates that about 95 per cent of the loans are given for purposes of business services while five per cent is awarded to finance ventures in agriculture.
Apart from the social benefit that the training is expected to come with, the company expects to boost its loan repayment levels which stands at 98 per cent, but can be improved if the individuals who are beneficiaries of loans advanced by KWFT are armed with better skills for running their enterprises.
In what has been seen as a strategic approach to creating relationships and reducing the default rate, KWH has embraced a different approach to involve the clients in the operations of the company and ratification of key management decisions as witnessed in this year’s annual general meeting .
In the year ended December ,2009, KWFT disbursed Sh13.6 billion up from Sh9.1 reported for the previous year, indicating a huge credit appetite among the target groups which presents headroom for future lending that the company can exploit.
The approval of the Central Bank that allowed KWFT to become a deposit taking financial institution is also expected to reduce the interest rates that are applicable to credit because of the cheaper source of financing that deposits offer compared to loans that the institutions has been relying on.
Among the biggest lenders that the company has sought finances from include the local commercial banks which charge the institution an annual interest rate of about 12 per cent for medium term loans whose maturities range from three to seven years.
“We will reduce the lending rates once beginning July from the current 18 per cent because of the declining interest rates in the market,” said Ms Grace Nzou, a manager at the institution adding that customer deposits would offer the bank a cheaper source of financing whose benefits would be conveyed to the clients.