Akinyi said that despite having a solid business plan and credit score, she was told by a loan manager at the Kenya Women Finance Trust Bank in Nairobi she had been rejected because her gender identity did not match her ID card.

“It was disheartening, I felt rejected, dejected and out of place because the reason for the rejection was flimsy,” said the 23-year-old, who identifies as female but whose identity card is marked male.

The Kenya Women Finance Trust bank declined to comment, citing client data privacy concerns.

Many trans and intersex Kenyans end up turning to informal lenders charging high interest rates after being denied credit by formal financial institutions, said Gerald Hayo, communications officer at Nairobi-based rights group Rainbow Women of Kenya.

Akinyi is now paying the loan shark a monthly interest rate of 25% on the 100,000-shilling loan, nearly 10 percentage points more than the rate levied by most banks.

“These loans obtained from informal lenders end up trapping many LGBTQ women in a cycle of debt, hindering their economic progress,” Hayo said.

Openly spoke with 10 women entrepreneurs who are trans, intersex or lesbian. All said they had been denied loans from mainstream banks to grow their businesses.

Some, like Akinyi, said they were rejected because their gender identity does not match that of their identify cards, or because their loan guarantors were trans. Others said banks turned them down when they found out they were LGBTQIA+.

Irene Wagema, a trans woman, wanted to expand her chain of grocery stores in Nairobi so she filled out a loan application form at the Kitengela branch of Faulu Bank, where she had been a customer for nine years.

It was her first loan request and she asked to borrow 50,000 Kenyan shillings ($336), providing the name of her partner – who is also trans – as a guarantor.

“That is when trouble started,” Wagema told Openly. Eventually, the loan was rejected.

Faulu Bank’s communications manager Fridah Mutua said the loan was refused because the names provided by Wagema and the guarantor did not match their identity cards.

“That was the main reason of the rejection,” Mutua said in a statement.

Gender change

While identifying as trans is not a crime in Kenya, homophobia and transphobic discrimination are widespread and – though rarely enforced – a colonial-era law makes gay sex punishable by 14 years in prison.

Current laws in Kenya allow people to change their names and gender on official identification but only if they have undergone gender reassignment surgery – a rare procedure in the country.

A public consultation is currently underway over proposals by the Kenya National Commission on Human Rights (KNCHR) for legislation that would secure the rights of intersex Kenyans, including provisions for registering births and amending official documentation to reflect their intersex status.

Difficulty accessing bank credit is a particular problem for trans Kenyans and others from gender minorities, many of whom set up their own small businesses due to discrimination in the jobs market, said Sara Akinyi, executive director of Elite LBQ, a rights group based in Busia County in western Kenya.

Entrepreneur Sandra Njoki, 38, said she was fired from her teaching job when she came out as a lesbian, prompting her to make plans to open a beauty salon.

So in May, Njoki applied for a 100,000-shilling business loan from Sidian Bank, giving her partner’s name as her guarantor.

“The bank manager asked me how and why I had listed a woman as my spouse,” said Njoki.

Sidian Bank declined to comment.

At the Kenya Bankers Association, an industry group, communications manager Christine Onyango said she had no knowledge of loan applicants being turned away on the basis of their sexuality or gender identity.

“Sexuality has never been a determining factor in loan applications,” Onyango said. “It is either you meet the requirements or not.”

Cost of discrimination

While Kenya is seen as a relative haven for LGBTQIA+ people in a hostile region, discrimination against the community is a drag on the economy, said Open for Business, a coalition of companies promoting LGBTQIA+ inclusion.

According to its estimates, LGBTQIA+ discrimination costs Kenya between 18 billion shillings ($128 million) and 130 billion shillings, equivalent to between 0.2% and 1.7% of its gross domestic product (GDP).

Hayo urged policymakers to take action to help boost credit access for LGBTQIA+ businesses as a way to boost economic inclusion.

“Enacting policies that prohibit discrimination based on sexual orientation and providing tailored financial education and support will not only empower LGBTQ women but also benefit the nation’s economic growth and development,” Hayo said.

Asked to comment on LGBTQIA+ women’s economic exclusion and particularly bank loan refusals, Kenya’s cabinet secretary for gender, Aisha Jumwa, said LGBTQIA+ women would be eligible for government programmes that support female-led business.

They include the Uwezo Fund initiative to boost financing access.

“As long as one meets the requirements, they will get the funding,” Jumwa said.

But loans sharks end up being the only alternative for some LGBTQIA+ Kenyans, like Wagema, who took an informal loan at a hefty interest rate of 20% to buy more stock to expand her business.

“Paying back the loan at such an interest rate will be a burden but I had no option,” Wagema said.

($1 = 148.8000 Kenyan shillings)

Reporting by Jackson Okata.