Gender effects of government credit programmes on entrepreneurship in Kenya: a propensity score matching approach

Abstract

urpose – This study investigates the role of government-supplied credit in addressing gender gaps in entrepreneurship in Kenya – a critical issue given the state’s influence in shaping entrepreneurial ecosystems, especially in contexts of deep structural inequality. Despite the proliferation of such credit programs, their effectiveness in closing financing and entrepreneurial gender gaps remains underexplored. It also remains unclear whether these initiatives foster transformative, opportunity-driven ventures or unintentionally reinforce necessity entrepreneurship, thereby perpetuating precarity and informality. Design/methodology/approach – The study uses an approach based on propensity score matching with the Micro, Small, and Medium Enterprises (MSME) 2016 survey data from the Kenya National Bureau of Statistics (KNBS).Findings – Government credit did not significantly affect opportunity-driven entrepreneurship but negatively impacted necessity entrepreneurship. It strongly supported employment growth, particularly in male-owned businesses. Gender analysis showed that men benefitted more, with their businesses shifting from necessity to opportunity entrepreneurship and seeing job growth. In contrast, women-owned businesses showed no significant entrepreneurial gains from the same credit access.Practical implications – Government credit promotes employment and lessens the need for necessity entrepreneurship, but its long-term effects on high-growth ventures are minimal. Evaluations should focus on outcomes like firm survival, productivity and competitiveness. Tailored support for women, addressing structural barriers and integrating mentorship and market access are crucial. A more strategic, inclusive and impact-driven approach is required for lasting success.Originality/value – This study challenges the assumption that government credit is inherently empowering, examining its role in promoting opportunity versus necessity entrepreneurship among women and contributing to broader debates on the state’s role in unequal entrepreneurial ecosystems.