Analysis of women entrepreneurs’ access to financial services: a case of Kigali City

Abstract

This study examines women entrepreneurs’ access to financial services in Kigali City, Rwanda, with a focus on analysing the nature of women-owned enterprises, the factors affecting access to finance, and the policies and programs that can enhance financial access for these entrepreneurs. The research utilized a cross-sectional survey design, incorporating both quantitative and qualitative approaches. The target population comprised 2,489 registered women-owned/women-managed SMEs in the three districts of Kigali City: Nyarugenge (1,135), Gasabo (912), and Kicukiro (442). A sample size of 345 women entrepreneurs was selected using Kothari’s (2004) stratified simple random sampling formula and Yamane’s (1967) simple random sampling formula, with a response rate of 93.62% (323 respondents). Primary data was collected through a structured questionnaire survey, and descriptive statistics (frequencies and percentages) were used to analyse the data. The findings revealed that women-owned enterprises in Kigali are predominantly in the retail/wholesale sector (53.6%), with a majority being micro-enterprises (62.5%). Most entrepreneurs rely on personal asset sales (42.4%) and peer-to-peer loans (36.5%) for startup capital. Despite high leadership involvement (93.2%) and engagement in social responsibility initiatives (63.5%), significant challenges persist. These include perceived gender inequalities in entrepreneurial opportunities (63.1%) and limited work-life balance (70%). Key factors affecting access to formal financial services include the collateralization of loans (52.3%), gender biases (71.2%), limited resources (47.1%), and cultural barriers (54.2%). Technology, however, plays a crucial role in market access and business management, recognized by 88.9% of respondents. Initiatives such as microfinance programs, government-backed loan schemes, and mentorship programs emphasizing financial literacy were acknowledged by 71.2% of respondents as beneficial. The study contributes significantly to academia by enriching the understanding of the specific challenges faced by women-owned businesses in Kigali and highlighting the roles of technology, mentorship, and financial inclusivity. For policymakers, the findings offer critical insights for designing gender-sensitive financial policies and support mechanisms. Women entrepreneurs can derive practical guidance from the study’s emphasis on financial literacy, innovation, and work-life balance. Recommendations include enhancing financial inclusion through gender-sensitive policies, increasing financial literacy programs, creating flexible financing options, expanding mentorship and networking opportunities, and addressing cultural and gender-related biases through advocacy campaigns. Future research should expand beyond Kigali to encompass the entire country, adopt mixed methods research for a more comprehensive analysis, and investigate the causal relationship between access to finance and entrepreneurial success. In conclusion, this research underscores the multifaceted challenges faced by women-owned businesses in Kigali City and emphasizes the importance of targeted strategies to foster their growth and sustainability. By addressing barriers to financial access and promoting a supportive environment, stakeholders can significantly contribute to the advancement of women entrepreneurs and the broader economic development of the region.