Financial Credit and Savings Products by Financial Service Associations and the Growth of Rural Women Owned Enterprises in Kiambu County

Abstract

Most women-owned enterprises in Kiambu County operate in the informal sector, characterized by small-scale operations, low capital investment, limited access to modern technology and business infrastructure, and low survival and expansion rates. Although Kiambu County is economically strategic owing to its proximity to Nairobi and its growing urban population, many women entrepreneurs remain economically vulnerable due to unstable and insufficient business incomes. Financial Services Associations (FSAs) are rural, community-level, member-based semi-informal financial institutions that combine features of savings and credit cooperative organizations and microfinance institutions, operating under a table banking system. With over 100FSAs spread across rural Kiambu County, membership ranges from 10,000 to 20,000 per FSA, and their primary aim is to provide financial support to poor rural communities for both investment and consumption purposes. Despite this, rural women entrepreneurs in Kiambu County continue to face significant challenges in accessing financial resources essential for business growth, a situation compounded by persistent gender-based disparities. This study examined the contribution of FSAs to the growth of rural women-owned enterprises, focusing specifically on how financial savings and credit products influence enterprise performance. A cross-sectional survey design supported by covariance-based structural equation modeling (CB-SEM) was employed. Findings indicate that most users of FSA savings products held multiple accounts, principally Group Savings, Save as You Earn (SAYE), and FOSA Savings, with over 85 percent reporting business growth. These results confirm a consistently positive association between FSA savings utilization and enterprise performance. However, a small but statistically identifiable subgroup of women-owned enterprises did not experience growth, reflecting heterogeneous effects of savings participation. Regarding credit, access was not evenly distributed across enterprise categories, yet enterprises that accessed credit reported significantly better business performance. The findings point to the presence of structural and institutional barriers to credit access and underscore the need to encourage credit application among women entrepreneurs, improve approval rates through tailored financial products, and complement credit provision with broader financial capability support