The Financial Express

Engaging women in trade: Policy  and financial constraints  

Engaging women in trade: Policy  and financial constraints   

Women in Business  (WiB) can be   considered as an important driver for ensuring gender equality and women empowerment.  Without engaging women in economic and entrepreneurial activities at a significant level, it is not possible to attain inclusive development. Countries have taken different policies to engage women in different activities to brand them as self-sustained. Women Entrepreneurs (WE)  specially  establish entrepreneurship at a small scale because of so many social and financial constraints, but they mostly suffer because of policy-induced constraints, finance  and often can not compete with large-scale entrepreneurs.   Several surveys  have found  that man-led entrepreneurs are some-how able to manage their problems,  while women-led entrepreneurs suffer most.

Women, Business and the Law (WBL) 2020, explored trends of 190 economies,  which says that women can not run a business in the same  way as men can do. Bangladesh's score in WBL is 49.4: among the eight indicators the score is 100 in respect of mobility,  other scores are  between 25 and 75 such as, workplace (50), pay (25), marriage (60), parenthood (20), entrepreneurship (75), assets (40) and pension (25).  It is important to note that in respect of mobility Bangladesh's score is in the top and in case of entrepreneurship  score is also good, but in other indicators, position of the country is below the requirements. Eight countries have scored 100 in all aspects; they include Canada, Belgium, Denmark, France, Iceland, Latvia, Luxemburg and Sweden due to recent reform in parental leave.   Score of other South Asian countries are:  Pakistan (49.4), India (74.4), Nepal (73.8), Maldives (73.8), Bhutan (71.9), Sri Lanka (68.1), Afghanistan (38.1).  Position of Bangladesh is only above Afghanistan.

According to economic census 2013, out of a total  of 7.8 million entrepreneurs  women entrepreneurs are 0.56 million or 7.21 per cent. In the advanced  and some developing countries, the number is much higher - in  Ghana it is  46.4 per cent, in Russia it is 34.6 per cent, Uganda 33-8 per cent, New Zealand 33.0 per cent, Australia 32.1 per cent, Vietnam 31.3 per cent, Poland 30.3 per cent, Spain 29.4 per cent, Romania 28.9 per cent, Portugal 28.7 per cent. Scale of operation of course varies from country to country.  In Ghana, 44 per cent of  the total women-owned enterprises are small and medium-sized enterprises (SMEs), similar is the case in Vietnam where  among  31.3 per cent of women entrepreneurs majority or about 57 per cent are micro enterprises, 42 per cent SMEs and 1.0 per cent large enterprises.  Bangladesh is not an exception in that respect;  women entrepreneurs are mostly from cottage, micro and  small  categories.

As women-owned businesses are mostly operated in small scale they are vulnerable for any small changes. Banks are reluctant to provide finance to the small entrepreneurs in general and women entrepreneurs in particular. Even though there is an official circular allowing Tk 2.5 million (25 lakh) collateral-free re-financing funding for women entrepreneurs, in most cases women fail to get and utilise these funding because of a number of requirements which are sometimes undocumented.

Even in case of providing guarantor women entrepreneurs face discrimination. Men-owned enterprises do not require to provide spouse guarantor, whereas women-owned enterprises  need to do that.  Women entrepreneurs said that this is a serious discriminatory practice against them and it creates barrier for their entrepreneurship development.

It is also difficult to get seasonal funding during Eid or other festivals, for example. As  women entrepreneurs  operate in a  small scale, the circulation of money is less compared to male entrepreneurs which reduces the chance of getting the seasonal funding. Banks usually want to see the strength of the entrepreneurs thus request to submit balance sheet for one year and to know the type of business she is running.

A recent  survey of Business Initiative Leading Development (BUILD)  revealed that women entrepreneurs  in some cases are discriminated with some procedural barriers. One of the major problems for them  in performing trade activities is having inadequate knowledge regarding the documentation process of international trade. This makes them incompatible to deal with the various official services required for conducting export and import procedures.

Even though  government is trying to create all business facilities on line, not all the permits and licenses have not become fully online yet.  If any license is online, entrepreneurs are required to submit their documents manually in parallel. It also came up during the discussion in a workshop that the infrastructures of most of the offices are not well equipped to provide full digital support to entrepreneurs. Most of the entrepreneurs said that they do not get proper services, due to server failure.  In case of trade licence, women exporters have to face serious obstacles, they have to visit the City Corporation office several times for getting a trade licence.

Awareness is needed for increasing their competitiveness in technological aspects as increasing level of digitisation is taking place in service delivery mechanism for trading activities. Unless they adapt to the digitised services, they will have to depend on third parties for availing the services. The prevalence of undocumented or unofficial expenses in the trading process cannot be eliminated unless traders are more aware of the legal procedures.

To obtain different permits and documents, officials of commercial departments have to visit different offices. More or less every commercial department recruits a person who is only assigned to visit those offices at the required time. Sometimes this person is named as 'Speed Man'. Offices demands for  unofficial charges at the time of submitting documents for obtaining licence/certificates or collecting these licences/ certificates, duty of the speed man is to negotiate with the officials of the relevant offices about the unofficial charges.  This is not feasible for a woman to manage the whole process thus have to spend more or faces delay in getting permission. 

Financing is a perpetual problem of  Cottage Micro Small and Medium Enterprises (CMSMEs), loan on the basis of turnover is not mentioned though different commercial banks use turnover limit in case of financing. As per circular, the decision of financing should be made by the banks by 10 working days after the loan application is submitted,  but it sometimes takes more than 2-3 or more months in case of giving a decision for loans, even in  cases of a small  amount of loan. It depends on the relationship between bank and customer. In case of collateral, it is mentioned that the group and social guaranty will be considered. But who will be the group guarantor and their mechanism/ structure is not clearly identified in the circular.

To expedite the CMSME loans through banks and non-banking financial institutions (NBFIs), Bangladesh Bank has introduced 4 refinancing schemes. To avail this loan, that particular industry must be located outside all the divisional cities and Dhaka, Chattogram and Narayangonj city corporations. Fixed asset (excluding building and land) of the industry must not exceed Tk 100 million (10 crore) taka. Under this scheme an entrepreneur can maximum avail Tk 30 million (3 crore) taka as short-term loan. In case of getting term loans the limit is 10 crore taka.

 Women entrepreneurs would get preference under this scheme.  This scheme would provide group loans to women entrepreneurs in case of facing any problem in financing a single women entrepreneur.

A refinancing scheme is also available for new entrepreneurs of cottage, micro and small industries. According to this scheme, an entrepreneur has to bear at least 20 per cent of the project. For disbursing collateral-free loans, banks and NBFIs would accept personal guarantor/third-party guarantor/social guarantor. Above three schemes are also available under shariah-based financing.

The interested banks and NBFIs who are eligible to conduct refinancing schemes have to sign an agreement with SME & Special Department of Bangladesh Bank. This facility would be provided to financial institutions on first come first serve basis.

Fair and equitable trade opportunities for women is considered as an integral part of inclusive economic development of a country. It is a reflection of greater gender equality in the distribution of economic resources that has a positive multiplier effect on an economy's inclusive and sustainable growth.

Ferdaus Ara Begum is Chief Executive Officer, Business Initiative Leading Development (BUILD)

[email protected]

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