How friendly is business environment in Bangladesh?

Women's role in economic development is a well established issue both globally and locally. There is no denying the fact that women in Bangladesh have progressed notably in terms of their participation in labour force. As a result, labour force participation rate of women (percentage of women aged 15 years and above who are part of labour force either employed or unemployed) has increased from 15.8 per cent in 1995-96 to 36 per cent in 2010. However, according to the Labour Force Survey (LFS) 2010 published by the Bangladesh Bureau of Statistics, out of 35 million (3.5 crore) women aged 15 years and above, only 17 million are part of labour force- 16 million are employed and the rest unemployed. Again, 92 per cent of these women are working in the informal sector. While the upward trend in women's participation in labour force is a matter of appreciation, we still have very few women entrepreneurs.
According to the LFS, 25 per cent of 16 million employed women belong to the 'self-employed' category, who may be considered as entrepreneurs. Though the proportion seems attractive, 62 per cent of them are working in the agricultural sector having limited capacity to generate employment for other women. Only 12.7 percent are self-employed in manufacturing, which has higher potential to generate employment for other women. It is to be noted that 20 per cent of self-employed women are involved in wholesale and retail trade. If we consider entrepreneurship to be running an enterprise having capacity to generate employment for others, then the women who are involved in manufacturing and trading meet the requirement. Thus 32.7 per cent of total self-employed women or 8.3 per cent of total employed women are entrepreneurs.  The question is why the proportion is so low. In my view there are three main constraints to become a women entrepreneur in Bangladesh - 1) lack of skills including education, 2) unfriendly market environment and 3) lack of access to finance.
Bangladesh's progress in attaining gender equality in primary school enrolment is praise -worthy, but dropout rate is still very high, specially for girls. The programme of free education and scholarships for girls has succeeded in attracting more girls in secondary and tertiary level of education; but lacks in supporting environment including transport facilities and social norms discourage many girls to continue their studies. Their dropout rate is higher than their male counterpart. While half of the students at primary and secondary level are girls, the proportion comes down to 44 per cent at higher secondary level and 24 per cent at the university level. If we look at various vocational training institutes, only 23.6 per cent of the students are girls. All these indicate that women are still lagging behind in formal skill training including higher education.
An entrepreneur runs a business to cater to specific needs of the market. But our markets are mostly not friendly for women, specially in the rural and semi-urban areas. Women involved in trading activities in the rural areas face the problem of transporting their goods to distant markets. Again at the rural markets there is not enough or any utility facility for women such as rest rooms. Therefore, women entrepreneurs are usually involved in home based businesses like dress-making or beauty parlors. Many women both in rural and urban areas do not have enough information on very basic requirements of starting a business, such as registration of business, process of applying for formal loan etc. Some organizations are supporting the women entrepreneurs, but their numbers are very limited and those are mostly urban based having occasional programs in rural areas. A number of NGOs are extending skill training; but those are mostly ties with their micro-credit programs.
Women often start a business without much knowledge on the rules of the game. They often do not have enough money and they have limited market access and knowledge of quality of product. There are also informal barriers in the form of society's reluctance to accept women as business persons.
The women who succeed in overcoming the barriers of skill-needs and market access still face the problem of access to finance. This is the most common and painstaking problem of women entrepreneurs. As the women entrepreneurs mostly belong to small and medium level businesses, they naturally face the unfriendly attitude of banks and financial institutions towards small and medium enterprises (SMEs). The unfriendliness is even more severe towards women SME owners as mistrust on women is added over mistrust on SME entrepreneurs on the whole.
Bangladesh Bank's refinancing scheme is a praise-worthy initiative to help SMEs, specially women entrepreneurs. However, this is yet to reach its anticipated goal. According to this scheme, 15 per cent of the SME loan should go to women entrepreneurs, which could not reach even 5 percent level yet. Who is responsible for this- the commercial banks or the women entrepreneurs? I think both. The commercial banks who are responsible to disburse the loan, are not always serious about catering to the women entrepreneurs. Though a maximum of 10 per cent is supposed to be charged as interest under this scheme, the women entrepreneurs face an effective rate of much more than 15 percent in course of their repayment process. In one hand, such high rate of interest discourages women to take loan to start or expand their businesses. On the other hand Women should also show professionalism in their business so that they run the business with full information and market access facilities to ensure profitability.
We want our women to be empowered and creating more women entrepreneurs is a strong step towards that goal. We need systematic efforts to improve condition of the women entrepreneurs. Women entrepreneurs should form strong networks to address their common challenges such as access to finance, innovating new products and accessing markets. Young entrepreneurs specially face the problem of real-life business experiences. Successful entrepreneurs may come forward to help them flourish. Moreover urban-based businesses should take initiatives to be connected with the grassroots-level entrepreneurs. The central bank should improve its monitoring mechanism of the SME loan and ensure promised 10 per cent (maximum) interest rate for SMEs. Under the corporate social activities, commercial banks may jointly support women entrepreneurs in accessing market. They may support online sale of products or give parallel loan to those SMEs which will work for providing marketing services to merchandise producing SMEs.
Things do not change in one day. Women of Bangladesh have shown their ability to become engine of economic growth. They will grow further as entrepreneurs even without much help. However, a friendly hand towards them will make their journey towards empowerment a little more easy and comfortable.
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The writer is senior research fellow of the Bangladesh Institute of Development Studies. She can be reached: nazneen7ahmed@yahoo.com