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Influence of participation in "table banking" on the size of women-owned

micro and small enterprises in Kenya

Article  in  Journal of Enterprising Communities People and Places in the Global Economy · October 2015
DOI: 10.1108/JEC-11-2013-0036

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 Journal of Enterprising Communities: People and Places in the
Global Economy
Influence of participation in “table banking” on the size of women-owned micro
and small enterprises in Kenya
Castro Ngumbu Gichuki Milcah Mulu Mutuku Lydia Nkatha Kinuthia
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Influence of participation in Participation

in “table
“table banking” on the size of banking”
women-owned micro and small
enterprises in Kenya 315
Castro Ngumbu Gichuki, Milcah Mulu Mutuku and Received 11 November 2013
Revised 12 May 2014
Lydia Nkatha Kinuthia Accepted 29 October 2014
Department of Applied Community Development Studies,
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Egerton University, Egerton, Kenya

Abstract
Purpose – The purpose of this study is to investigate the inability to access affordable credit in Kenya
which hinders many women entrepreneurs from either starting their own or expanding existing
enterprises and capital base. The emergence of table banking groups attempts to fill the existing credit
gap.
Design/methodology/approach – A cross-sectional survey involving 225 randomly selected
women entrepreneurs who participate in table banking groups within Nakuru Municipality was
conducted. Data collection comprised a questionnaire whose reliability coefficient was 0.83 at 0.05
confidence level.
Findings – Results indicated that a majority women entrepreneurs aged between 20 and 60 years with
71 per cent of them married. Further, 44 per cent had attained secondary-level education, while no
illiterate entrepreneurs participated in the study. A positive increase in the number of employees, after
members participated in table banking groups, was realized. Credit received from table banking
influenced changes in the size of enterprises.
Originality/value – The study shows that availability, affordability and accessibility of credit from
table banking groups led to positive growth of women-owned enterprises.
Keywords Women entrepreneurs, Micro- and small enterprises, Credit, Table banking
Paper type Research paper

1. Introduction
Access to affordable credit services by micro- and small entrepreneurs has been a major
challenge in most of the developing countries. The major challenges arise when formal
banks find it hard to cover the high cost involved in dealing with small firms and the
associated risks involved in lending to micro- and small enterprises (MSEs) (World
Bank, 2005). On the other hand, the low-income earning entrepreneurs have fears that
formal banks have high interest rates, limited credit repayment periods and high
collateral requirements (Nabavi, 2009).
In sub-Saharan Africa, women entrepreneurs have been even more disadvantage Journal of Enterprising
Communities: People and Places in
when accessing credit compared to their male counterparts. This is because most of the the Global Economy
women do not have control of their family resources like land and assets used as Vol. 9 No. 4, 2015
pp. 315-326
collateral (ILO, 2002; Winn, 2005). Further, gender discrimination that is deeply © Emerald Group Publishing Limited
1750-6204
entrenched in most societies traditions makes it hard for women entrepreneurs to access DOI 10.1108/JEC-11-2013-0036
 JEC credit from formal banks and successfully run their micro-enterprises (United Nation,
9,4 2006; Weeks, 2009; Don and Morduch, 2007). Over the years, inability to access
affordable credit from formal commercial banks has been attributed as one of the major
factor that forced women in developing economies to start informal baking groups.
However, credit accessed from informal banks is not always sufficient to meet the
household needs of the women and develop their micro-enterprises (ILO, 2007). Thus,
316 majority of women-owned enterprises tend to perform poorly compared to their male
counterparts’ enterprises (Akanji, 2006; Ekepe et al., 2010).
A survey of credit market in Kenya indicates that 38 per cent of the women
entrepreneurs are not able to access credit, while majority relied on Rotation Saving and
Credit Associations (ROSCAs) for credit (Financial Sector Deepening Kenya, 2007; ILO,
2007, Dupas and Robinson, 2009). To increase the presence of women entrepreneurs in
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business ownership, it is imperative to provide business-operating environment that is

conducive. This can be achieved by availing accessible and affordable credit and saving
opportunities to empower women economically (Gikonyo et al., 2006). The need to
empower women micro-entrepreneurs prompted non-governmental organizations in
sub-Saharan Africa and Kenya to mobilize women to start table banking groups
commonly known as village saving and credit groups to meet poor women’s credit needs
at affordable rates. Thus, the aim of this study was to investigate the influence of
participation in table banking groups on the size of women-owned enterprises. The
study will also describe changes in the size of MSEs owned by women who participate
in table banking groups.

1.1 Women micro-entrepreneurship

In recent years, there has been an influx of women venturing in the field of
entrepreneurship in developing countries. This is attributed to advocacy on women
empowerment programs and policies (World Bank, 2009). Case studies on the
characteristics of women-owned enterprises in sub-Saharan Africa portray women
micro-enterprises as low-income-generating ventures that only seek to sustain the
household needs of women (World Bank, 2007). Thus, it is not surprising that generally,
women in sub-Saharan Africa tend to operate smaller enterprises than men. This is
depicted by an observation that women-owned and -managed enterprises are most
likely to have an average one employee, whereas the male-owned enterprises employ an
average of three (ILO, 2009; Dupas and Robinson, 2009).
Women micro-entrepreneurship studies in Kenya suggest that 48 per cent of MSEs
are owned by women (Kapila, 2006). Stevenson and St Onge (2005) observed that
majority of women-owned enterprises operate in jua kali sector (unregistered informal
businesses). Most of the women entrepreneurs operating from jua kali sector have low
education levels of primary school and usually lack entrepreneurial training. A World
Bank (2009) study further established that a vast majority of women
micro-entrepreneurs in developing countries were attracted to start enterprises
associated with women traditional roles such as hairstyling, restaurants, retail shops
and whole sale outlets. In addition, these types of enterprises are more attractive to
women as they do not require intensive capital to start.
The localization of economies in developing counties has facilitated access and
sharing of market information. This has made it easier for women micro-entrepreneurs
to start micro-enterprises in the urban towns and in the uptown rural areas (Mano et al.,
 2012). However, Winn (2005) and Olarenwaju and Olabisi (2012) argue that women Participation
entrepreneurship breakthrough is still far fetched in most of the developing countries, in “table
unless affordable credit is availed to women micro-entrepreneurs; an argument shared
by Sacerdoti (2005) who asserts that credit access remains the second major challenge
banking”
after market access in small and medium-sized enterprises (SMEs) growth in Africa.

1.2 Financing capital in MSEs 317

Different empirical studies and models have been advance on capital structure of
enterprises; however, according to the pecking order theory advanced by Myers and
Majluf (1984), firms that seek to expand or finance new investments will always follow
a particular order. Myers and Majluf (1984) hypothesized that firms will first prefer
internal financing when seeking to expand their capital finance. When internal finances
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are not sufficient, firms will tend to borrow from external sources (credit) rather than
issue equity. The existing models and discussions on financing the capital structure of
firms have been biased toward large enterprises with little attention on small firms
(Zingales, 2000). Abor and Biekpe (2009) assert that the existing theories that explain
capital financing in large enterprises can also be applied in small firms in developing
countries.
Studies on capital structure of small enterprises premises that small firms will
always be seeking to finance their capital from internal sources, as they are unlikely to
be guaranteed debt (credit) from external sources. Neither can they neither issue equity
because of their sizes nor attract investors. Judy and Dalglish et al. (2013) observed that
micro-entrepreneurs in sub-Saharan Africa were unable to raise sufficient savings and
credit to finance capital expansion of their MSEs. Moreover, Hartungi (2007) and
Coleman (2007) demonstrated that access to affordable credit was associated with
improved performance of MSEs. Sacerdoti (2005) attributes lack of affordable credit and
adequate savings to slow growth in the MSEs sector; thus, the potential of MSEs in
transforming economies of most of sub-Saharan African countries is not likely to be
realized.

1.3 Accessibility and reliability of credit from table banking groups

Most of the women entrepreneurs in sub-Saharan Africa do not have the capacity to
create large amount of savings which play a strategic role in guaranteeing financial
safety or enabling them to secure insurance premiums during emergencies (Sharief and
Sharief, 2008). Nonetheless, the little savings they make can be significant in financing
and fostering growth in small and micro-enterprises while creating vibrant and
sustainable economic growth in villages (Dupas and Robinson, 2009; Wasihum and Paul
(2010). Case studies in developing countries indicate that women have depended on
savings made from ROSCAs to finance their household needs (Townsen, 2009).
Anderson and Baland (2002) also observed that women’s ability to create savings is
higher than that of men.
Women’s ability to create savings through village informal groups has prompted
non-governmental organizations to initiate table banking groups among women in
sub-Saharan Africa. These groups are able to offer credit at affordable rates of less than
10 per cent interest repayment rates, in addition to creating savings opportunities,
emergency loans and dividends that are awarded at the end of the year. Hevener (2006)
and Allen (2006) inferred that the vacuum left by formal commercial banks’ inability
 JEC to adequately serve small and micro-enterprises can easily be filled by informal
9,4 financing arrangements such as table banking groups. International Labour
Organization (2009) and Saadani et al. (2011) recommended table banking model
because of its ability to offer savings and credit services at affordable rates compared to
the formal banks and micro-finance institutions and because its formation is far much
cheaper than developing a micro-finance client base.
318 The formation of table banking groups requires a maximum of 30 members who are
supposed to collect funds for a specified period and in reasonable amounts. Members are
allowed to borrow the first credit when the required lump sum amount is attained but
must repay the credit with interest of not more than 10 per cent within the agreed period.
The interest paid on the credit is allowed to accumulate in the group fund up to the end
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of the group’s financial calendar when members decide to divide part of the profits as
dividends or start investments projects (Deelen and Majulin, 2008). When starting table
banking groups, it is imperative for members to attend a six-month induction course on
leadership, simple financial management and book keeping, which is important due to
the transactions of large amount of money (Allen, 2006).

1.4 Empirical literature on the growth of MSEs

The literature on micro-credit and growth of MSEs extensively discusses the potential
that MSEs have with regard to eradication of poverty in developing countries. Berner
et al. (2012) and Jake et al. (2010) observed that it is imperative for SMEs to be provided
with financial capital at low and affordable rates. Different case studies on MSEs
indicate that affordable financial capital was a significant factor in reducing poverty
levels. Bowen and Makarius (2009) and Ibru (2009) investigated the factors which were
perceived to contribute to successes and failures of MSEs in developing countries. It was
observed that factors such as managerial experience and education levels of
entrepreneurs had an influence on the performance of SMEs. However, the treatment
groups of SMEs that were advanced credit with low interest rates were able to record
much better performance than those unable to access credit or rather those who accessed
credit with high interest repayment rates. Coleman’s (2007) study also examined the
relationship between small enterprises financing and development with a specific focus
on micro-enterprises that were particularly owned by women. The empirical findings of
the study revealed that women entrepreneurs had difficulties in rising necessary
finances to develop their MSEs. Similar observations were recorded by Berner et al.
(2012). However, loans received at low cost facilitated profits growth in SMEs.
Based on the empirical studies and models advanced on growth of MSEs in
developing countries, this study utilized multiple regression model to qualitatively
measure the influence of participation in table banking on the size of women-owned
enterprises. The explanatory variables were measured by total amount of credit and
dividends received from table banking groups between years 2010 and 2012 and
invested in MSEs, period in years the entrepreneurs participated in table banking
groups by creating social networks and the number of times credit was received. The
dependent variables in the study were measured by changes in the number of employees
in the enterprises during the period the entrepreneurs had been participating in table
banking groups.
 2. Methodology Participation
2.1 Area description in “table
The study was conducted in Nakuru Municipality that had a population of 4,57,495 by
2010. Female gender comprised 51 per cent of the Municipality’s population, which has
banking”
a growth rate of 13 per cent per annum, hence, the fastest growing town in sub-Saharan
Africa (Nakuru District Development Plan, 2011-2012; UN-HABITAT, 2010). The
Municipality is located in rift valley and covers an area of 290 km2. The major economic 319
sectors of the town are commerce, manufacturing industry, tourism and agriculture
(Mwangi, 2011). Most of the MSEs operate in informal open-air market commonly
known as jua kali and are not registered. Consequently, it was difficult to identify the
exact number of MSEs in the area under study.
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2.2 Population of the study and sample selection

Accessible populations of 517 women entrepreneurs who participate in 20 registered
table banking groups in Nakuru Municipality were identified based on the data from
Nakuru District gender office and locations of the enterprises. Yamane’s (1967) formula
was used to determine the sample size of 225 respondents drawn from 20 table banking
groups and the four locations, namely, central business district, Afraha, Kaptembwa
and Lanet division:

N 517
n⫽ ⫽ ⫽ 225
1 ⫹ N(e)2 1 ⫹ 517(0.05)2

Where,
N ⫽ population;
e2 ⫽ level of precision; and
n ⫽ sample.
The sampling procedure used to select the actual respondents to participate in the study
included stratification according to the location of the enterprises and table banking
groups. Proportional allocation method was then used to identify the number of
respondents to be picked from a particular strata used. Stratified random sampling was
used to identify the respondents to participate in the study by picking the third case in
every location.

2.3 Data collection procedures

A self-administered questionnaire was used to collect data from the location of the
respondents’ enterprises. The semi-literate respondents were assisted in filling in the
questionnaires by the researcher. The questionnaire consisted of 25 structured
questions related to demographic characteristics of both the respondents and MSEs,
permanent numbers of employees in the MSEs between years 2010 and 2012. It also
captured the number of years of participation in table banking groups and the total
amount of credit and dividends received from table baking groups between years 2010
and 2012. Further factored was the number of times credit was received from table
banking groups between years 2010 and 2012. It took an average of 20 minutes to fill in
the questionnaire for the secondary level and above educated respondents, whereas 30
minutes was taken for primary level and less educated respondents.
 JEC 2.4 Data analysis
9,4 Descriptive data were presented using frequencies and percentages. The multiple
regression model was used to investigate the influence of participation in table banking
groups on the size of women-owned enterprises in Nakuru Municipality. The model
equation was as follows:

320 ␥i ⫽ ␣ ⫹ ␤x1(TTCA) ⫹ ␤x2(TTD) ⫹ ␤x3(NOYP) ⫹ ␤x4(NOTLR)… … … (1)

Where,
␥i ⫽ Size of the enterprises;
␤x1(TTCA) ⫽ Total Credit Acessed From Table Banking Between year 2010-2012;
␤x2(TTD) ⫽ Total Annual Dividends Acessed From Table Banking Between year
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2010-2012;
␤x3(NOYP) ⫽ Numbers of years of participation in Table Banking; and
␤x4(NOTLR) ⫽ Numbers of times received credit from Table Banking Between year
2010-2012.

3. Results
3.1 Demographic characteristics of the respondents
Table I presents descriptive statistics of age of the respondents and their education
levels. Most of the women entrepreneurs (43.6 per cent) had attained secondary school
education, whereas a sizeable proportion (26.2 per cent) had tertiary education. The
findings showed that 42 per cent of the women entrepreneurs were aged between 31 and
40 years, whereas 11 per cent were aged between 51 and 60 years. Only 2 per cent of the
respondents aged 60 years and above.

3.2 Characteristics of women-owned enterprises

The descriptive results presented in Table II indicate that almost half (48 per cent) of the
respondents were in service businesses, 27.1 per cent of women entrepreneurs practiced
farming, whereas 25 per cent of the respondents were involved merchandise-related
business. With respect to the age of the MSEs owned by women entrepreneurs who
participate in table banking groups, only 44 per cent of MSEs were in operation for four

Level of education (%)

No formal education 0
Primary school 30.2
Secondary school 43.6
Tertiary education 26.2
Age (years)
20-30 17.8
31-40 42.2
Table I. 41-50 26.7
Demographic 51-60 11.1
characteristics ⬎ 60 2.2
 to six years, whereas 28 per cent of the MSEs were more than ten years old. Table II Participation
represents these results. in “table
banking”
3.3 Changes in the size of enterprises
Size of enterprise was measured in terms of the number of persons employed in the
MSEs between years 2010 and 2012. The descriptive results, as presented in Table III,
indicated that in the year 2010, 61.8 per cent of the enterprises did not have employees. 321
However, in the year 2012, 59.7 per cent of the enterprises had employed between one
and five employees. The results further showed that no MSEs had more than ten
employees in the year 2010, but in the year 2012, 3.6 per cent of the enterprises had
employed more than ten employees.
Table IV presented results of multiple regression model, illustrating the influence of
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participation in table banking groups on the size of the enterprises. The independent

Type of enterprise owned (%)

Farming enterprises, for example, chicken, dairy, crops farming 27

Service enterprises, for example, hotel and catering, hair dressing 48
Merchandised enterprises, for example, wholesale and retail shops 25
Age of MSEs (years)
0-3 2
4-6 44 Table II.
7-10 26 Type and age of
Over 10 28 enterprises

No. of employees Year 2011 % Year 2012 %

0 61.8 32.4 Table III.

1-5 36.9 59.7 Number of
6-10 1.3 4.3 employees in the
Above 10 0 3.6 enterprises

Standard Marginal effect

Predictors Beta t p ⬎ |t| error coefficient R2

Constant ␣ ⫺0.487 ⫺0.99 0.325 0.494

Number of years of participation in
table banking ␤x3 (NOYP) 0.105 1.27 0.205 0.0741 0.94 0.08
No times received credit from table
banking ␤x4 (NOTLR) 0.044 0.32 0.75 0.0857 0.27 0.014
Total amount of credit accessed
from table bank ␤x1 (TTCA) 0.397 5.72 0.000** 1.52 8.6 0.11 Table IV.
Total dividends received Regression results on
␤x2 (TTD) 0.07 0.72 0.47 5.58 4 0.04 influence of
participation in table
Note: **Significance at 0.05 banking groups
 JEC variables were numbers of years the respondents had been participating in table banking
9,4 (NOYP), number of times credit received (NOCLR), total amount of credit accessed from
table banking groups between years 2010 and 2012 (TTCA) and total dividends received
from table banking between years 2010 and 2012 (TTD). The dependent variable was
measured in terms of the number of employees in the enterprises:

322 ␥i ⫽ ␣ ⫹ ␤x1(TTCA) ⫹ ␤x2(TTD) ⫹ ␤x3(NOYP) ⫹ ␤x4(NOTCR)

Number of observations ⫽ 225, R2 ⫽ 0.244, standard error ⫽ 2.061, F ⫽ 17.757,

**significant at p ⬍ 0.05:

␥i ⫽ ⫺0487 ⫹ 0.37(TTCA) ⫹ 0.07(TTS) ⫹ 0.105(NOYP) ⫹ 0.44(NOTLR)

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The model was statistically significant with F statistic (4, 220) ⫽ 17.757, and accounted
for approximately 24.4 per cent of the variance of influence in size of the enterprises
(R2 ⫽ 0.244). The total amount of credit had an R2 of 0.11. This implied that about 11 per
cent of the variation in the influence of enterprises size could be explained by the total
amount of credit received from table banking groups between years 2010 and 2012. Only
4 per cent of variance influence on the size of the enterprises was explained by total
dividends received ␤x2 (TTD) with R2 of 0.04. The findings further indicated that the
total amount of credit accessed from table banking groups had the highest marginal
effect (8.6) on the model with a beta value of 0.397 and a mean of 5.72. Total dividends
received had the second highest, marginal effect of four with a beta value of 0.07 and a
mean of 0.72. The number of years of participation in table banking had a marginal
effect of 0.94 on the model and a beta value of 0.105 and a mean of 1.27.
The multiple regression results presented in Table IV show that with p ⱖ 0.000, the
total amount of credit accessed from table banking groups ␤x1 (TTCA) was the only
predictor variable that was statistically significant at 0.05. Thus, the total amount of
credit received from table banking between the years 2010 and 2012 had a significant
influence on the size of MSEs owned by women entrepreneurs. The results of the
analysis in Table IV also showed that the other predictor variables, namely, number of
years of participation in table banking groups and number of times credit received from
table banking groups did not influence the size of enterprises at 0.05 significant levels.
This was attributed to low marginal effect coefficients of the two predator variables.

4. Discussion of results
The study findings show that all the respondents had attained formal education of
primary-level education. This is to be expected, as 70 per cent of women in Kenya are
considered to be literate with 30 per cent having attained secondary education (UNICEF,
2009). However, the study shows interesting results that 26.2 per cent of the women who
participated in table banking groups had attained tertiary education. The observations are
in contrast with studies carried in sub-Saharan Africa where it is perceived that only illiterate
women and those with minimum education levels participated in informal banking groups.
With respect to the age of the respondents, the study revealed that the majority (87 per cent)
of the members of table banking groups aged between 20 and 50 years. Abebe and Selassie
(2009) and Anderson and Baland (2002) observed similar results and deduced that majority
of the women who participated in informal banking groups were within child-bearing age
group, and thus needed to support their household needs.
 The study observed that majority (73 per cent) of the respondents were in service Participation
businesses such as hair dressing, hotel and catering businesses, whereas others owned in “table
merchandised shops in wholesale and retail. These results support World Bank’s (2007)
study which established that the vast majority of women micro-entrepreneurs in
banking”
developing countries were attracted to start enterprises associated with women’s
traditional roles such as hairstyling, restaurants, retail shops and wholesale outlets.
Brana (2008) and Stohmeyer (2007) also reported that in most of sub-Saharan African 323
countries, women entrepreneurs are attracted to MSEs that related to informal sector
(jua kali), preferences being business services and merchandise business. These
enterprises did not require large amount of capital and skills to establish and, thus,
favored by women.
In terms of changes in the size of women-owned MSEs. The results showed that in the
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year 2010, 38.1 per cent of the MSEs employed between one and ten employees. However, by
the year 2012, majority of the enterprises (67.7 per cent) had employed between one and more
than ten employees. These findings clearly provided support for Alabi et al.’s (2007) study
where it is depicted that micro-enterprises that accessed micro-credit from isusus (informal
banking groups) had an increase of an average one employee.
The results of this study on the influence of participation in table banking groups on the
size of women-owned MSEs showed that among the four predictor variables, only the total
amount of credit received significantly influenced the size of enterprises at 0.05 significant
levels. Thus, it can be empirically deduced that credit accessed from table banking groups
influenced the size of enterprises owned by women entrepreneurs in Nakuru Municipality.
The study findings can be theoretically supported by Wiklund and Shepherd’s (2003) study,
which shows that micro-credit is perceived to be an emerging opportunity for small
enterprises to develop and grow in size. Sathiabam (2010) argues that the spillover of growth
in small enterprises can be well evaluated by the number of employment opportunities that
the micro-enterprises are able to create in the communities. Abor and Biekpe (2009) in
reference to capital structure and pecking order theory inferred that MSEs that inspired to
grow in size required borrowing from external credit sources to finance their capital. Berner
et al. (2012) further argued that credit available in the market must be accessed at affordable
rates for MSEs to experience growth.

5. Conclusion and recommendations

The literature reviewed on micro-enterprises emphatically points out that affordability,
availability and accessibility of credit are critical determinants of success and
performance of MSEs. Further literature reviewed on table banking groups revealed
that these banking groups are able to provide credit services to entrepreneurs, with the
lowest interest rates in the market, in addition to being available and accessible at the
village level in the rural areas. In view of affordability, accessibility and availability of
credit from table banking groups, the study results highlighted that the amount of credit
accessed from table banking groups was a significant factor in influencing changes in
the size of the enterprises.
Based on the study findings, it would be essential for policymakers and
non-governmental organizations to mobilize more women micro-entrepreneurs in
sub-Saharan Africa to start table banking groups. It would also be imperative for women
entrepreneurs to be supported by governments, as they can be a source of employment in
sub-Saharan African countries. The study would recommend further research on the levels
 JEC to which long-term credit and short-term credit received from table banking group affect the
9,4 growth of MSEs. The findings of this study have certainly contributed to the body of
literature on informal banking and women micro-entrepreneurship in sub-Saharan Africa, in
addition to providing some significant insights into theoretical and practical implications in
the field of micro-entrepreneurship.

324 References
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Further reading
Beck, T. and Demirgüç-Kunt, A. (2006), “Small and medium-size enterprises: access to finance as
a growth constraint”, Journal of Banking and Finance, Vol. 30 No. 11, pp. 2931-2943.
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role of competition, innovation, and the government”, Policy Research Working Paper.

Corresponding author
Castro Ngumbu Gichuki can be contacted at: ngumbucg@yahoo.com

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