Young women entrepreneurs are struggling to obtain loans and other forms of commercial capital from banks due to high interest rates and often little to no collateral or credit history

Ms Maureen Odera from Manyatta Estate in Kisumu County founded Modesh Bakers in 2016 with little funding but when she heard about Somo Africa and Youth Business International (YBI) in 2021, she was able to make remarkable progress and expand her business.

“I heard about Somo Africa when I visited KIRDI Kisumu. They would then train us on entrepreneurial skills and then granted me a loan of Sh100,000 (US$766) through Standard Chartered Bank. I repayed the loan within five to six months,” says Ms Odera in an interview.

After successfully returning the initial amount, Ms Odera adds that she was able to get a bigger loan of Sh1.5 million which she has used to expand her business and employed seven workers.

“I had an oven that needed a three-phase power. So when I got the loan, I was able to approach Kenya Power who installed the three-phase connection for me,” she adds.

She further adds that she has stocked her bakery and managed to add a bigger machine in the bakery with part of the money.

She has trained at least other 80 women on bakery skills, after which 35 of them have secured employment,  20 have started their own bakery shops while three have been retained by Modesh Bakers.

Modesh produces cakes and cookies made from cassava and crickets and trains young women on baking skills.

Ms Odera is currently generating a monthly turnover of Sh300,000 per month versus a baseline of Sh57,000 in 2022.

She appreciates Somo Africa and YBI for the support she received to boost her business.

The loan model has allowed young entrepreneurs who are operating in the informal sector and are excluded from the financial landscape to access capital and grow their businesses into commercially viable and investable models.

“They have walked with me through a bigger journey. They teach you on how to sell the product then after that they grant loans and employ you. They also help you sell the product and introduce it,” she reiterates.

So far Ms Odera has repaid Sh650,000 from her initial loan of Sh1.5 million.

“I am still paying the Sh1.5 million. This is my first year and I was given upto a period of three years to repay. So far I have already paid Sh650 000 at an interest rate of five (5) percent as compared to banks which offer loan at interest rates of between 15-21 percent,” she adds.

Somo has partnered with the Standard Chartered Bank Foundation and YBI to provide financial support to women-led businesses through a revolving fund launched in 2023.

The fund supports low-income female entrepreneurs aged 18-35 to access the financial support they need to sustain and grow their businesses. According to Somo, they provide loans between Sh130,000 and Sh2.5 million at a five percent interest rate per annum.

Ms Odera says that she has not experienced many challenges in her business apart from the economic situation in the country that is affecting almost every business.

The floods experienced in May 2024 also affected her business as most of her clients come from areas that were greatly affected by the floods.

“The floods also affected me because some of my clients come from the areas that were submerged by the floods so they couldn’t come and purchase the cakes and cookies the way they used to,” she says.