Microfinance boosts Bangladeshi business women
Wednesday, 4 January 2012
Rising above cultural stigma, increasingly women in Bangladesh are becoming entrepreneurs, bucking the trend of consumer-led small scale rural business that to running developmental businesses, requiring professional skills such as marketing, sales and product development. This would have been impossible if not for the massive success of microfinance.
Women have cut their teeth on small-scale business such as handicrafts (making hessian bags, jewellery and home cooking) and are moving into big business. One of the founders, the late Jahanara Begum was so successful she founded the 'Jahanara Female Adult School & Handicrafts Training Centre' in Comilla. Jahanara Begum was faced with destitution when her husband became bankrupt and to survive she started a business, making simple hand crafted goods.
Following in her footsteps, her daughter Fatima set up her own business (cottage industry) but this was not without similar problems faced by many women setting out on the road of independence in Bangladesh. Traditionally women have had fewer opportunities to become educated, and to manage the household expenses, for some families a woman embarking on business is seen as at the least as failure and can even be seen as bringing shame on the family.
Violence and honour killings are some of the extreme responses that women may have to suffer. Certainly social customs, religious barriers and the traditional image of a women's domestic role are barriers that Fatima has had to broach. Awadita Mou from Sylhet has also had to overcome these hurdles even thought she had the backing of her father who helped with the finances. From an early age, Mou enjoyed making things and following a Higher Secondary Certificate on a career as a business woman in design and now runs a fashion house designing and making her clothes with her own label.
The government of Bangladesh has implemented changes in favour of women in business by its National Action Plan which improves trading conditions for women and introduces incentives such as tax breaks as well as new laws that focuses on the gender equality. Despite these changes, highly successful business woman Rubina Farouq, General Secretary of the Women Entrepreneurs Association and Director of Hotel Management and Hospitality Ltd., states that in spite of implementing rules and regulations, business women are bounded by their gender and the role model that society expects them to live up to.
But without microfinance, the majority of Bangali business women would not be trading, the rise of Grameen bank (GB) some twenty years ago and the state-owned Krishi Bank adopting the microfinance model are responsible. Over 97% of microfinance is loaned by GB to women, small scale loans up to around £200 GB pounds at low interest rates from 6.0-15% but typically nearer to 11% to women, starting small business in all manner of industries from farming to fashion. November 2011 figures from GB show that there were over 3.5 micro enterprise million loans. The average loan is Bangladesh Taka (BDT) 4000, equivalent to being in the region of £37 ( 57 US dollars). However much of these changes are welcome to prospective women entrepreneurs, there are still areas for improvement, apart from lifting the social stigma of an independent woman trading under her own name.
Researcher Farah Newaz recommends that interest rates need to be reduced, loans should be easier to obtain, should not be based on existing assets and that the government needs to improve the link between gender equality and policies that encourage business.
When it comes to setting up a business for Bengali women it is like climbing a mountain, reaching the top is just the start of a marathon climb that takes in a series of mountains.
Unscrupulous and poorly managed non-government organisations (NGOs) who run microfinance credit schemes in partnership with the banks often insist on conditions that hinder the prospective business woman. Fatima describes a situation where an NGO expected her to set up shop some distance away from her neighborhood, where she is known, and understands the conditions that govern the local market for the goods that she is producing. 'The bank and other financial institutions try to force us to join a co-operative society as a way of marketing our products, and setting up our retail areas in different parts of the region that suits them'…. 'We lose our identity as a trader, and it makes it more difficult to operate in and sell to an area we know nothing about'
Establishing a business as a woman has its trial and tribulations, working in a male-dominated society where government officials such as tax inspectors, and suppliers that are mostly men has its own headaches. Not only do they have to be accepted as 'hard headed business women' but, as Mashi-ur Rahman, General Manager of Micro Industries Development (MIDAS), points out 'we are dealing with women entrepreneurs operating under several social constraints'. A Grameen Bank study is point blank about this, the status of women in business especially in rural areas is one of social dishonor -- 'this is a common societal norm' while rural women entrepreneurs constitute a vital segment as recipients of microfinance.
Microfinance has been hailed as emancipation and the way forward in the march for women empowering women, but Asif Mahfuz, Programme Co-coordinator of Winrock International (a global non-profit organisation that addresses rural development and sustainable resource management through education and empowerment programs) sees microfinance as a 'great tool as a survival strategy' but it doesn't step up to the greater developmental stages of business that require strategic planning, marketing and greater finance as well as logistics and communication. In his analysis micro credit is linked to inequality issues such as land ownership and the States drive to massive capital investment to build large scale industries that deprive the poor of resources to escape poverty' . He goes on to say that what the poor need is capacity training and lower interest rates (he sees the current interest rates as far too high) and better communications as the key to addressing issues that reach the poorest of the poor.
Moving from microfinance to larger sustainable loans is the most difficult mountain to climb, as small businesses seek to pay off existing capital to the banks, as Mashi-ur-Rhaman realises: rural women depend on traditional ways of doing things, and have little financial resource, depending on their family for support. Banks are not so keen to lend money on a larger scale, particularly to women who are largely illiterate and lack the skills needed to write a proper business plan. A villager from Comilla named 'Lovely' expressed her dismay. "We are unable to take any business risks as we have limited financial means, we depend on the support of our family and there is little or no prospect in the way of external support so that we can modernize our practices with modern machinery'.
The prospect is bleak for the aspirations of the poor if they have ideas of grandeur. MIDAS's recent survey shows that many female entrepreneurs are engaged in cottage industries both in rural and urban industries. The evidence is that instead of liberating and emancipating the Bangladeshi woman, microfinance confines them to a shop keeper's life, and it seems that organisations such as MIDAS encourages women to entertain the parochial idea of trading on a small scale.
Farouk has the last word: 'The government needs to enforce its legislation and encourage new enterprise initiatives that are pro-business and pro-women, there needs to be auditing, monitoring and control of NGO's and the banks as well as a change of attitude in society towards women who have the ability to help the country prosper. Women cannot expand their businesses due to a lack of capital and they need training to cope with problems such as marketing, how to compete with competitors, production costs, pricing and demand'.
There needs to be changes in the way the banks lend their capital. There are over 50 million women of working age in Bangladesh (62.5% of the population) with only 10-14% of households that can access microfinance. Microfinance leads to a small business mentality, it helps them to cut their teeth, but what women in Bangladesh really need is access to real capital to set up really big businesses and have the opportunity to test really sharp business acumen so that they can compete in a global market.
The writers can be reached at e-mail: tithefarhana@gmail.com
Women have cut their teeth on small-scale business such as handicrafts (making hessian bags, jewellery and home cooking) and are moving into big business. One of the founders, the late Jahanara Begum was so successful she founded the 'Jahanara Female Adult School & Handicrafts Training Centre' in Comilla. Jahanara Begum was faced with destitution when her husband became bankrupt and to survive she started a business, making simple hand crafted goods.
Following in her footsteps, her daughter Fatima set up her own business (cottage industry) but this was not without similar problems faced by many women setting out on the road of independence in Bangladesh. Traditionally women have had fewer opportunities to become educated, and to manage the household expenses, for some families a woman embarking on business is seen as at the least as failure and can even be seen as bringing shame on the family.
Violence and honour killings are some of the extreme responses that women may have to suffer. Certainly social customs, religious barriers and the traditional image of a women's domestic role are barriers that Fatima has had to broach. Awadita Mou from Sylhet has also had to overcome these hurdles even thought she had the backing of her father who helped with the finances. From an early age, Mou enjoyed making things and following a Higher Secondary Certificate on a career as a business woman in design and now runs a fashion house designing and making her clothes with her own label.
The government of Bangladesh has implemented changes in favour of women in business by its National Action Plan which improves trading conditions for women and introduces incentives such as tax breaks as well as new laws that focuses on the gender equality. Despite these changes, highly successful business woman Rubina Farouq, General Secretary of the Women Entrepreneurs Association and Director of Hotel Management and Hospitality Ltd., states that in spite of implementing rules and regulations, business women are bounded by their gender and the role model that society expects them to live up to.
But without microfinance, the majority of Bangali business women would not be trading, the rise of Grameen bank (GB) some twenty years ago and the state-owned Krishi Bank adopting the microfinance model are responsible. Over 97% of microfinance is loaned by GB to women, small scale loans up to around £200 GB pounds at low interest rates from 6.0-15% but typically nearer to 11% to women, starting small business in all manner of industries from farming to fashion. November 2011 figures from GB show that there were over 3.5 micro enterprise million loans. The average loan is Bangladesh Taka (BDT) 4000, equivalent to being in the region of £37 ( 57 US dollars). However much of these changes are welcome to prospective women entrepreneurs, there are still areas for improvement, apart from lifting the social stigma of an independent woman trading under her own name.
Researcher Farah Newaz recommends that interest rates need to be reduced, loans should be easier to obtain, should not be based on existing assets and that the government needs to improve the link between gender equality and policies that encourage business.
When it comes to setting up a business for Bengali women it is like climbing a mountain, reaching the top is just the start of a marathon climb that takes in a series of mountains.
Unscrupulous and poorly managed non-government organisations (NGOs) who run microfinance credit schemes in partnership with the banks often insist on conditions that hinder the prospective business woman. Fatima describes a situation where an NGO expected her to set up shop some distance away from her neighborhood, where she is known, and understands the conditions that govern the local market for the goods that she is producing. 'The bank and other financial institutions try to force us to join a co-operative society as a way of marketing our products, and setting up our retail areas in different parts of the region that suits them'…. 'We lose our identity as a trader, and it makes it more difficult to operate in and sell to an area we know nothing about'
Establishing a business as a woman has its trial and tribulations, working in a male-dominated society where government officials such as tax inspectors, and suppliers that are mostly men has its own headaches. Not only do they have to be accepted as 'hard headed business women' but, as Mashi-ur Rahman, General Manager of Micro Industries Development (MIDAS), points out 'we are dealing with women entrepreneurs operating under several social constraints'. A Grameen Bank study is point blank about this, the status of women in business especially in rural areas is one of social dishonor -- 'this is a common societal norm' while rural women entrepreneurs constitute a vital segment as recipients of microfinance.
Microfinance has been hailed as emancipation and the way forward in the march for women empowering women, but Asif Mahfuz, Programme Co-coordinator of Winrock International (a global non-profit organisation that addresses rural development and sustainable resource management through education and empowerment programs) sees microfinance as a 'great tool as a survival strategy' but it doesn't step up to the greater developmental stages of business that require strategic planning, marketing and greater finance as well as logistics and communication. In his analysis micro credit is linked to inequality issues such as land ownership and the States drive to massive capital investment to build large scale industries that deprive the poor of resources to escape poverty' . He goes on to say that what the poor need is capacity training and lower interest rates (he sees the current interest rates as far too high) and better communications as the key to addressing issues that reach the poorest of the poor.
Moving from microfinance to larger sustainable loans is the most difficult mountain to climb, as small businesses seek to pay off existing capital to the banks, as Mashi-ur-Rhaman realises: rural women depend on traditional ways of doing things, and have little financial resource, depending on their family for support. Banks are not so keen to lend money on a larger scale, particularly to women who are largely illiterate and lack the skills needed to write a proper business plan. A villager from Comilla named 'Lovely' expressed her dismay. "We are unable to take any business risks as we have limited financial means, we depend on the support of our family and there is little or no prospect in the way of external support so that we can modernize our practices with modern machinery'.
The prospect is bleak for the aspirations of the poor if they have ideas of grandeur. MIDAS's recent survey shows that many female entrepreneurs are engaged in cottage industries both in rural and urban industries. The evidence is that instead of liberating and emancipating the Bangladeshi woman, microfinance confines them to a shop keeper's life, and it seems that organisations such as MIDAS encourages women to entertain the parochial idea of trading on a small scale.
Farouk has the last word: 'The government needs to enforce its legislation and encourage new enterprise initiatives that are pro-business and pro-women, there needs to be auditing, monitoring and control of NGO's and the banks as well as a change of attitude in society towards women who have the ability to help the country prosper. Women cannot expand their businesses due to a lack of capital and they need training to cope with problems such as marketing, how to compete with competitors, production costs, pricing and demand'.
There needs to be changes in the way the banks lend their capital. There are over 50 million women of working age in Bangladesh (62.5% of the population) with only 10-14% of households that can access microfinance. Microfinance leads to a small business mentality, it helps them to cut their teeth, but what women in Bangladesh really need is access to real capital to set up really big businesses and have the opportunity to test really sharp business acumen so that they can compete in a global market.
The writers can be reached at e-mail: tithefarhana@gmail.com