A study of women small scale entrepreneurship in the urban informal sector:

Abstract

This study is a socio-economic analysis of the activities of women entrepreneurs in Nairobi's informal sector with specific reference to the market women. The main objectives of the study were (a) to examine the background. characteristics of the women entrepreneurs in relation to their age, level of education, family size and so on; (b) explicate the factors that motivate the women to engage in informal income generating activities; and (c) to examine the nature of enterprises set up by the women with special emphasis on, the structure of enterprises in relation to investment, employment and development of entrepreneurial skills. The study population consisted of women entrepreneurs currently operating small scale businesses in Nairobi. At the time of study there were approximately 1045 women officially located in 22 markets of Nairobi city. The findings of this research indicate that the majority of the women in the informal sector in Nairobi are of low socio-economic status. Consequently, their attempt to engage in small scale business is seen as a step towards improvement of their survival and

alleviation of extreme marginalization. Most of the women start their business with very little capital put together from personal savings. Few of them, however, use available credit facilities such as loans to operate. This is largely because they have no access to credit from financial institutions. Capital formation is a very slow process because even after the women establish their businesses, they remain unable to exploit available resources to obtain loans. This is because they lack the necessary security. The women are basically lacking in education and general awareness about entrepreneurship in the context of the larger modern socio-economic set-up. This often hinders them from gaining the courage to approach organizations to finance them for fear that they may easily lose their small businesses to the lenders. Thus, they prefer to operate on very little capital. Inevitably they often replicate existing businesses causing very stiff competition among themselves. Naturally, this lowers the rate of wage employment in the informal sector because most of the women entrepreneurs cannot afford to engage labour. Those who employ, do so on casual basis. In the light of all this, this study argues that women need to be educated on such important entrepreneurial skills as management, borrowing loans to finance their businesses and making sound investment decisions. This would, in turn, mean investing in diverse types of business rather than congregating in a few such as dressmaking, hair making and kiosks. Consequently, there would be reduced competition in the businesses operated by women in Nairobi and creation of more wage employment in the informal sector. Capital formation would also be a fairly faster process and at a reasonably low cost. However, for all this to occur, policy makers need to redefine entrepreneurship with a view to increasing the productivity and efficiency of those engaged in the informal sector because, as this study argues, this sector is a major, vital and integral part of the Kenyan economy.