“Nepali women own 14K SMEs”

 

IFC champions diversity and inclusion. As part of this agenda, IFC supports the participation of women in business and we believe that firms perform better, and that benefits are more widespread, when women are full participants. Together with our private sector clients we are helping create jobs for women, increasing their access to finance and necessary credit to operate their business, helping private sector firms open up sectors hitherto reserved for men and working with governments to mainstream gender and bring regulatory reforms that positively impact women entrepreneurs.

 

Each year, on International Women’s Day, IFC awards its annual CEO Gender Award recognizing outstanding achievement in promoting women in business. In 2012, IFC-investee client FineChem, a chemical sector company in India, won this award for opening employment opportunities for women in the chemical sector which earlier engaged a male-only workforce.

 

There are many examples where we are helping create opportunities and employment for women in South Asia, but specifically in Nepal,

 

• IFC released a study in November 2012, which finds women entrepreneurs could play a more significant role in the country’s economic growth if financial institutions address their financing needs with suitable offerings. Currently in Nepal, women own about 14,300 small and medium enterprises, accounting for two percent of GDP and employing over 200,000 workers. The study suggests that meeting their current credit requirements of $106 million can increase their contribution to the economy.

 

• The Federation of Women Entrepreneurs Association of Nepal estimates tourism benefits 750,000 local women, including many in small lodges, tea shops, and handicraft business apart from hotels, restaurants, tour companies, and tourist sites. To increase the opportunities in tourism and other industries, IFC helps Nepal’s banks become bigger players in global trade.

 

• Our $750,000 guarantee allowed Bank of Kathmandu to finance a local travel agency’s transactions with international airlines. It helped create more jobs for women in Nepal.

 

• To expand the impact even further, IFC’s advisory team partnered with the government of Japan to build trade finance skills of Nepal’s banking industry that employs and benefits women.

 

 

‘‘Women entrepreneurs are mostly concentrated in micro level businesses’’

 

Though businesses in Nepal is predominantly male-dominated, an International Finance Corporation (IFC) report has shown that women are more entrepreneurial than men, and they generate 6 percent higher profits on annual sales even though they operate smaller businesses.

 

Major Hurdles 

The barriers to women’s entrepreneurship are various: women face greater obstacles in accessing credit, training, networks and information, as well as legal and policy constraints. 

 

Women are under-represented as business leaders and are less likely to engage in formal entrepreneurial activities. Intra-regional trade potential is largely unexploited in the region, which can benefit immensely through better networking, cooperation, and economic integration to foster faster economic growth.

 

a. Access to Finance for Women Run SMEs: Access to finance is one of the major challenges for women-led SMEs to start and scale up their enterprises, including owing to women’s weak financial literacy and lack of gender sensitivity within the banking sector (credit and lending). Micro finance institutions only issue loans of Rs 50,000 to Rs 100,000 which is hardly an amount to grow in business. Gender friendly laws should be introduced by the government 

 

b. Access to national, regional, and international markets: Access to national, regional, and international markets is a significant barrier in promoting women’s businesses. Some of the issues facing women in this area include lack of access to trade promotion opportunities; lack of funding to participate in trade fairs; and a lack of knowledge of export procedures (e.g., customs, tariffs, duties) and certification standards.

 

c. Moving from Micro to SME: Women entrepreneurs are mostly concentrated in micro level businesses in the South Asian region, a by-product of the revolutionary microfinance scheme providing collateral free loans to women entrepreneurs. 

 

Stereotypes

When we come to picture female entrepreneurs, everyone have the thought of some small micro business such as handicrafts, beauty products, knitting, sewing, agriculture etc. Women in Nepal have a low status in family, community and public life, with significant disadvantage in the formal economy and in accessing to education, health, justice and politics. In the Global Gender Gap Report 2012 published by the World Economic Forum, Nepal ranked at 123 among altogether 136 countries in terms of overall gender gap index.

 

Women entrepreneurship is a relatively recent phenomenon in Nepal. Many socio-cultural factors confine women to traditional, socially acceptable roles which leave very little room for entrepreneurial aspirations. The literacy rate for women is estimated at less than 40 per cent in rural areas. Literacy is a requirement to access the free training, some funding and marketing assistance, offered by Nepal’s government and by non-governmental organizations.

 

Changing Scenario

Over the years, there have been some positive changes; still the situation is not satisfactory. Of the total population in Nepal (approximately 30 million), over 51 per cent are female, yet the number of women entrepreneurs is estimated at 30,000 (0.1 per cent). It is difficult to assess how many of these women are even real entrepreneurs, ‘undertaking the organization and management of an enterprise involving innovativeness, independence and risk, as well as the opportunity for profit’. 

 

Positive initiatives 

The Government of Nepal has also come up with policies for the economic development of Women. There is an act where property owned by women is given 25% rebate in tax registration. The scale of remittance in Nepal is 25% of the country Gross Domestic Product (GDP), which is the highest among the South Asian countries, out of which women migrant workers contribute 11%. 

 

What should be Done?

• Improve access to information: Create dedicated women’s help desk in central & commercial banks 

• Improve financial literacy: Financial literacy training for women entrepreneurs on forming effective business proposals, preparing cash flow analysis and other basic finance skills 

• Improve policy and regulatory environment: Establish quotas for government financing of women run enterprises; provide preferential loans; introduce collateral free loans and establish networks to lobby for collateral free financing-joint liability groups; create trust funds for women entrepreneurs, establish women’s banks 

• Ensure access to information for MSMEs: Develop awareness of government regulations, certification & licensing 

• Promote capacity building for MSMEs: Provide technical and professional skills training to create a culture of entrepreneurship.

 

Role of State in Promoting Women Entrepreneurship 

 

Women are focused on small, cottage and medium industries. Limited access to the market and financing, lack of technology and seed money and razor edge competition in domestic and international markets are some pertaining challenges for women entrepreneurs. The progress made by women entrepreneurs amid all these challenges is indeed commendable. Industrial sector contributes 6.13 percent to the Gross Domestic Product (GDP). Out of this, the contribution of small and medium scale and cottage industry stands at 72.8 percent. Given the contribution of the industrial sector to the national economy, the state has been playing positive role in the promotion of this sector. 

 

The state has been working on policy, structural and procedural reforms. The existing Industrial Policy has included a provision of providing special incentives to women entrepreneurs. The Industrial Enterprises Act was tabled at the previous Parliament. We hope the new government comes into action sooner than later to get it endorsed by the parliament. 

 

The government is fully aware of the problems being faced by women entrepreneurs especially their limited access to finance. Keeping this in mind, the government has made 60 per cent women participation compulsory in its Micro-Enterprise Development Programme. 

 

Similarly, the Ministry of Industry has managed various funds targeting cottage and small industries. Micro Cottage and Small Industries, Micro Cottage and Small Industries Loan Fund, and Women Entrepreneurship Development Fund have been established by the government. The government has already earmarked Rs 40 million in the Women Entrepreneurship Fund and the fund ensures easy loan to women. Similarly, the government has also established a Rs 20 million Technology Development Fund to ensure women’s access to the market. 

 

Another crucial facilitation being done by the state is group formation of entrepreneurs. The government has provided facilities to set up Common Resource Center. 

 

Similarly, the government is mulling a mandatory provision for all government offices to use at least 50 per cent domestic products. This provision will benefit women entrepreneurs.

 

Self-reliant through Entrepreneurship

 

Many women have become self-reliant through entrepreneurship. Financial self-sufficiency simply means you have the capacity to decide for yourself. It is hard for women to manage between home and commerce. But they should not hesitate to get out from traditional roles. The state has to cooperate and facilitate women’s endeavors in the entrepreneurial world. The government should introduce policies that can facilitate women to easily access capital and related infrastructure to increase the number of women entrepreneurs.

 

Women Entrepreneurship on the Rise

 

The number of women starting their own businesses is growing fast. Women’s entrepreneurial spirit will help achieve economic prosperity in the country. It is worthwhile mentioning here that the traditional role of women has been changing and they are inspired to do something in the business world. Their improved skills and capacity will help them to achieve success in the business sector. In my opinion, some really positive initiatives are undergoing in the country. These initiatives by both the state and private sector are expected to enhance capacity of women entrepreneurs.