Credit access and women entrepreneurship in Zimbabwe’s informal sector

Abstract

Despite government’s huge investments in the informal sector activities, women are constrained in the credit market mainly due to culture; norms and lack of collateral securities as majority of women do not have control over productive capital. As a way of improving access to credit by women, the Government recently launched a number of women empowerment policies among them is the improved access to credit from financial institutions. Using individual firm level data and a methodological approach consisting of endogenous switching regression approach, this study intends to empirically investigate whether the improved credit access by women is justified in Zimbabwe. An endogenous switching regression is appropriate to deal with individual heterogeneity and examine whether access to credit is gender-based. The results showed that there is no discrimination in the credit market as there is no significant difference in access to credit between male and female entrepreneurs. However, there is a slight significant improvement in firm performance due to access to credit. The study recommends that Microcredit be made more flexible and to incorporate special relief non-financial intermediations to meet so as cater for the gender needs of household and community.