Women entrepreneurship development for SME needs a thrust
Friday, 6 May 2011
Md Mizanoor Rahman
Women in Bangladesh constitute almost half the population, but their involvement in the SME (small and medium enterprise) is still very low. Nevertheless, a new class of entrepreneurs has emerged: SME women entrepreneurs in urban and rural areas, who are contributing to the national development. Therefore, enhancement of women participation in SME has become a national challenge. Gender equity in the SME sector is closely linked to policy support and programmes. In compliance with this, the Bangladesh Bank (BB) announced its SME Credit Policy and Programmes on March 25, 2010, which is very encouraging for the women entrepreneurship development in Bangladesh. According to the guidelines, "SME loan shall be disbursed to the small, medium and women entrepreneurs. For encouragement, highest priority shall be given to prospective women entrepreneurs in SME lending upon receiving loan application and settle loan disbursement process within a logical time from the date of acceptance of the application using a separate 'dedicated desk' with trained officials to help the clients." The policy also imposed some restrictions on the banks and Non-Banking Financial Institutions (NBFI) such as: Of the total SME refinance fund, 15 per cent will be allocated for women. Refinance claim to BB will be considered if 10 per cent of their total SME loan is disbursed to women entrepreneurs. They can disburse up to Tk 2.5 million against personal guarantee without collateral. Branch-wise list of 'women entrepreneurs dedicated desk' is to be furnished to the BB within two months from the date of declaration of the guidelines. The SME Policy of the government also encourages other women into business and motivates them to turn into successful entrepreneurs contributing towards the family and also society at large. In Bangladesh the situation is such that there have been government and BB initiatives for women entrepreneurship development on both the counts. It is but natural that these developments are influenced by government and BB policies towards financial supports for women entrepreneurs. The central bank governor said in a TV programmme that about 300 women entrepreneurs are active in the SME sector and contributing significantly to the economy. The present government has been taking positive initiatives for women development including implementation of the upgraded Women Policy. The reasons behind this are to make women partners in development and the initiatives have gradually shifted to the development approach. It is important to say that the government is obliged to bring about the change as Article 38 of the Constitution of Bangladesh has ensured the rights of women and at the same time Article 19 puts emphasis on government's role towards removal of social and economic inequalities between man and woman. The government has also set strategies in its National Action Plan (NAP) for the women entrepreneurship development with specific incentives such as tax holiday, gift tax and other financial supports, etc. In addition to the constitutional obligations the government policy is also being positively affected by the international declaration, as Bangladesh is one of the signatories to the Beijing declaration-the platform for action includes the right of women to credit as a basic precondition for the development of women entrepreneurship. The SMEs constitute one of the major driving forces of economic growth because it generates self-employment and creates new employment. As a large number of women work in the informal sector, the policy should include provisions for the up-gradation of their skills and enhancement of their productivity so that they can access the market, information, technology and finance. They also require linkages and networks with support services under a favourable policy and regulatory environment. The policies of the government for women entrepreneurship development should also include guidelines to find out what commercial bank's financial support is in place for expansion of the business run by women. The BB governor also puts emphasis on research in different aspects of women entrepreneurship development such as to ascertain their present conditions, identify the sectors of their business activities, find out the impediments to the development of women entrepreneurship, report their achievements and problems in business, including their family and social constraints. However, the most important aspect is to study the attitudes, preferences, skills, etc. of those involved in women entrepreneurship development, such as women entrepreneurs, BB officials, loanees, bank officials, NGO workers and employees, so that effective disbursement and utilisation of loan is possible for most effective management. It is in this context that a study may be undertaken for making informed decisions for providing financial support at the institutional level by the central bank, which has national jurisdiction and coverage through banks and NBFIs, and for loan design and operation by the financial institutions. Entrepreneurship has been considered as one of the most important determinants of industrial growth both in the developed and developing countries. Despite its importance to the economy, the emergence of women entrepreneurship is a new trend all over the world. Therefore, economic activities through self-employment have become crucial for potential working women. As a matter of fact, women entrepreneurship or "women in business" in particular is a very recent phenomenon in Bangladesh. Although women are taking to entrepreneurship in many challenging fields, their activities in Bangladesh are not that extensive. According to the Bangladesh Economic Review 2009, around 6.0 per cent of the country's US$ 90 billion economy comes from SMEs, which is also the largest sector in terms of employment generation. Therefore, an upgraded policy based on different research findings would be encouraging to the women entrepreneurship development for SMEs. The writer is an Assistant Professor of Finance and Banking at the Bangladesh Open University, and can be reached at E-mail: mizan2006@yahoo.com
Women in Bangladesh constitute almost half the population, but their involvement in the SME (small and medium enterprise) is still very low. Nevertheless, a new class of entrepreneurs has emerged: SME women entrepreneurs in urban and rural areas, who are contributing to the national development. Therefore, enhancement of women participation in SME has become a national challenge. Gender equity in the SME sector is closely linked to policy support and programmes. In compliance with this, the Bangladesh Bank (BB) announced its SME Credit Policy and Programmes on March 25, 2010, which is very encouraging for the women entrepreneurship development in Bangladesh. According to the guidelines, "SME loan shall be disbursed to the small, medium and women entrepreneurs. For encouragement, highest priority shall be given to prospective women entrepreneurs in SME lending upon receiving loan application and settle loan disbursement process within a logical time from the date of acceptance of the application using a separate 'dedicated desk' with trained officials to help the clients." The policy also imposed some restrictions on the banks and Non-Banking Financial Institutions (NBFI) such as: Of the total SME refinance fund, 15 per cent will be allocated for women. Refinance claim to BB will be considered if 10 per cent of their total SME loan is disbursed to women entrepreneurs. They can disburse up to Tk 2.5 million against personal guarantee without collateral. Branch-wise list of 'women entrepreneurs dedicated desk' is to be furnished to the BB within two months from the date of declaration of the guidelines. The SME Policy of the government also encourages other women into business and motivates them to turn into successful entrepreneurs contributing towards the family and also society at large. In Bangladesh the situation is such that there have been government and BB initiatives for women entrepreneurship development on both the counts. It is but natural that these developments are influenced by government and BB policies towards financial supports for women entrepreneurs. The central bank governor said in a TV programmme that about 300 women entrepreneurs are active in the SME sector and contributing significantly to the economy. The present government has been taking positive initiatives for women development including implementation of the upgraded Women Policy. The reasons behind this are to make women partners in development and the initiatives have gradually shifted to the development approach. It is important to say that the government is obliged to bring about the change as Article 38 of the Constitution of Bangladesh has ensured the rights of women and at the same time Article 19 puts emphasis on government's role towards removal of social and economic inequalities between man and woman. The government has also set strategies in its National Action Plan (NAP) for the women entrepreneurship development with specific incentives such as tax holiday, gift tax and other financial supports, etc. In addition to the constitutional obligations the government policy is also being positively affected by the international declaration, as Bangladesh is one of the signatories to the Beijing declaration-the platform for action includes the right of women to credit as a basic precondition for the development of women entrepreneurship. The SMEs constitute one of the major driving forces of economic growth because it generates self-employment and creates new employment. As a large number of women work in the informal sector, the policy should include provisions for the up-gradation of their skills and enhancement of their productivity so that they can access the market, information, technology and finance. They also require linkages and networks with support services under a favourable policy and regulatory environment. The policies of the government for women entrepreneurship development should also include guidelines to find out what commercial bank's financial support is in place for expansion of the business run by women. The BB governor also puts emphasis on research in different aspects of women entrepreneurship development such as to ascertain their present conditions, identify the sectors of their business activities, find out the impediments to the development of women entrepreneurship, report their achievements and problems in business, including their family and social constraints. However, the most important aspect is to study the attitudes, preferences, skills, etc. of those involved in women entrepreneurship development, such as women entrepreneurs, BB officials, loanees, bank officials, NGO workers and employees, so that effective disbursement and utilisation of loan is possible for most effective management. It is in this context that a study may be undertaken for making informed decisions for providing financial support at the institutional level by the central bank, which has national jurisdiction and coverage through banks and NBFIs, and for loan design and operation by the financial institutions. Entrepreneurship has been considered as one of the most important determinants of industrial growth both in the developed and developing countries. Despite its importance to the economy, the emergence of women entrepreneurship is a new trend all over the world. Therefore, economic activities through self-employment have become crucial for potential working women. As a matter of fact, women entrepreneurship or "women in business" in particular is a very recent phenomenon in Bangladesh. Although women are taking to entrepreneurship in many challenging fields, their activities in Bangladesh are not that extensive. According to the Bangladesh Economic Review 2009, around 6.0 per cent of the country's US$ 90 billion economy comes from SMEs, which is also the largest sector in terms of employment generation. Therefore, an upgraded policy based on different research findings would be encouraging to the women entrepreneurship development for SMEs. The writer is an Assistant Professor of Finance and Banking at the Bangladesh Open University, and can be reached at E-mail: mizan2006@yahoo.com