Assessing the Empowerment Effect of Microloans

Microcredit is a prominent approach to supporting women’s entrepreneurship and has provided a means to tackle several economic and social hurdles women face which have hindered their  economic progression over decades. Microfinance has been a well-known economic tool supporting women in Kenya since the 1990s, and has since spread across the nation with several established organizations, such as the Kenya Women Finance Trust (KWFT), Faulu Microfinance Bank and Uwezo Microfinance Bank. Although Microfinance Institutions (MFIs) have existed in the nation for decades, their success in empowering women is greatly contested. ​

Microloans can play an essential role in promoting rights, reducing poverty and ultimately contributing to social and economic development. Evidence from microcredit studies shows that this form of financial assistance has resulted in improved income, increased investments as well as improved welfare for the beneficiaries, contributing to the empowerment of women entrepreneurs (Ekpe, Mat, & Razak, 2010). However, comprehensive studies have argued that regardless of decades since its inception, evidence of microfinance’s impact on poverty reduction and women’s empowerment remains scarce (Roodman & Morduch, 2013).

​​Microfinance and Women’s Empowerment in Kenya
The relationship between microfinance and women’s empowerment in Kenya has remained largely inconclusive. Studies have highlighted that microfinance, specifically in the form of microsavings, has had little impact on empowering women entrepreneurs in Kenya, largely due to the difficult and timely processes involved with microfinancing (Maru & Chemjor, 2013). Although women have not felt increasingly empowered through microfinance, the study highlights that access to microcredit has at least increased feelings of empowerment by 27.1% (Maru & Chemjor, 2013). Moreover, studies on MFIs in Kenya have brought to light the existing limitations of microloans, particularly in efforts to empower women entrepreneurs; limitations include extreme pressure to pay back loans resulting in women using their limited savings to pay off their debt, short repayment periods, high interest rates and short grace periods (K'Aol, 2008). 

Beyond Financial Support; Mkono Allies
Although economic participation is an integral part of empowering women entrepreneurs, it is not the sole approach. A study conducted in East Africa emphasises that economic empowerment does not suffice in empowering women (Bayissa, Smits, & Ruben, 2018), and previous research shows that training, management skills and occupational experience are all considered critical components to empowering women and contribute significantly to the success of their enterprises (Maru & Chemjor, 2013). These factors are particularly important to incorporate when empowering women given the different barriers women face as entrepreneurs. A few of these barriers include bias against women entrepreneurs, where it is assumed that women will be less successful as entrepreneurs compared to their male counterparts, as well as the reproductive role women are expected to take on at a certain age which may impede on entrepreneurial activities  (Fetsch, Jackson, & Wiens, 2015).
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Through Mkono Allies, Mkono provides training and education that equip entrepreneurs with the tools they require to achieve their investment and business goals. Figure 1 below explains Mkono’s model, exemplifying an MFI structure which incorporates capital and mentorship by partnering with communities that educate their members on financial considerations. ​
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Figure 1

Mkono works with Allies (i.e. mentors) who are able to work hand in hand with different entrepreneurs and provide critical perspectives. In addition, through local partnerships Mkono is better suited to maximize repayment rates and provide training and support to entrepreneurs to ensure they are achieving their short and long term goals, generating profits and paying off loans with decreased risk of entering or remaining in debt cycles. By offering a broad range of resources and support, Mkono provides entrepreneurs with the necessary keys to successfully grow their SMEs and empower women in their productive roles in contemporary society.​

    Spotlight: Zia Africa

Zia Bett

Mkono’s microloan approach has supported entrepreneurs without the pernicious effects of traditional MFIs. An interview with Zia Bett, owner and CEO of Zia Africa, highlights how the loans provided by Mkono have not only helped her feel more empowered as a business owner but have also allowed her to empower her staff, which is 90% women. In addition to providing her staff with financial opportunities, Zia ensures women remain empowered in their daily work through affirmations and regular motivation. 

“I want women to know that they can be anything they want to be and it doesn’t have to be related to anyone else… just as you are, you can be whatever you want to be.” – Zia Bett

​When asked why Zia chose to work with an MFI, she explained the benefits she has experienced working with Mkono including interest free loans and the ability to apply for a second loan as soon as the first was paid off. Zia has dedicated her work to empowering and uplifting women in Kenya.
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Mkono’s loan has contributed to Zia Africa’s expansion over the years. Zia approached Mkono during the Covid-19 pandemic as a result of the global disruption of supply and slowed imports. With Mkono’s loans she was able to start locally sourcing and producing Zia Africa’s products, and has since hired nine women. Zia states she has felt empowered in her work and through the support she has received from Mkono.
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“Having a microfinance solution like Mkono is empowering because you are able to scale faster than you would maybe if you scaled organically… the growth that happened in 2021 for us was definitely fast and that was empowering.” - Zia Bett

Works Cited 
Bayissa, F. W., Smits, J., & Ruben, R. (2018). The Multidimensional Nature of Women's Empowerment: Beyond the Economic Approach. Journal of International Development, 661–690.

Ekpe, I., Mat, N. B., & Razak, R. C. (2010). The Effect of Mircrofinance Factors on Women Entrepreneurs' Performance in Nigeria: A Conceptual Framework. International Journal of Business and Social Science, 225-263. 

Fetsch, E., Jackson, C., & Wiens, a. J. (2015, July 17). Women Entrepreneurs are Key to Accelerating Growth. Retrieved from Kauffman Foundation: https://www.kauffman.org/resources/entrepreneurship-policy-digest/women-entrepreneurs-are-key-to-accelerating-growth/

K'Aol, D. G. (2008). The Role of Microfinance in Fostering Women Entrepreneurship in Kenya. International Council for Small Business World Conference, 1-14.

Maru, L., & Chemjor, R. (2013). Microfinance Interventions and Empowerment of Women Entrepreneurs Rural Constituencies in Kenya. Research Journal of Finance and Accounting, 84-97.
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Roodman, D., & Morduch, J. (2013). The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence. Journal of Development Studies, 1-46.