Discussion Paper No. 263 of 2020 on Gendered Effects of Government Credit Programmes on Entrepreneurship in Kenya

Abstract

Addressing gender-based disparity in entrepreneurship is of policy importance globally. It does not only correct a social inequality but also enhances productivity and improves development outcomes. While appreciating that women and men face different opportunities and constraints in entrepreneurship, access to finance remains a challenge, in particular where the former tend to be adversely affected. Among other attributes, Kenya women-owned establishments tend to be less productive and have higher incidences of being necessity entrepreneurship compared to men-owned ones. In recognition of existing gender gaps in entrepreneurship and finance, the Government of Kenya has established several funds as avenues for gender mainstreaming. The mandates of these funds were tailored to respond to the Millennium Development Goals and Sustainable Development Goals, including but not limited to eliminating discrimination against women and girls, decent job creation, entrepreneurship, creativity and innovation, and encourage access to financial services. The impact of these funds in bridging gender gaps in entrepreneurship remains unexplored. The current study aims to address this literature gap by assessing the role of government funds in bridging the gender gap in entrepreneurship in Kenya. The specific objectives were to: (a) examine the role of gender in accessing government affirmative action funds; (b) determine whether government funds have any impact on entrepreneurship; and (c) determine whether gender moderates the impact of government funds on entrepreneurship. The study results indicate that access to government credit is not influenced by gender, meaning that both male- and female-owned establishments have an equal opportunity to access government credit. In addition, access to government credit fails to statistically impact on the rate of opportunity entrepreneurship but negatively impacts on the rate of necessity entrepreneurship. Access to government credit, however, strongly impacts on growth of the establishments. Male-owned establishments which access government credit have reduced chances of being necessity entrepreneurs. Contrarily, access to government credit fails to impact entrepreneurial outcomes among female-owned establishments