Masrur Reaz, Senior Economist, The World Bank Group (WBG)

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BUSINESS THAT KNOWS NO GENDER: BRINGING MORE WOMEN AT THE HELM

Dolly is a family and business of one. The sisters at Christian Organization for Relief and Rehabilitation (CORR) have taught her jute-work through sign language because she is mute. One in five of the poorest people in developing countries has disabilities. She makes jute products which she then sells to the supplier for income. Dolly has been working and living in Jagorani Chakra Foundation for many years.

Her specialty is jute-topped table dusters which are exported to Japan. Recently, the foundation is not being able to meet the target cost of Tk. 40. The final cost of each product is now Tk. 90. Dolly is not informed about cost issues. She doesn’t know how much longer she can sustain the product line if costs continue to increase. Moreover, suppliers complain about the delay in obtaining raw materials, the duty tax and dismal transport conditions. Circumstances leave Dolly in the market scenario where most of the odds are against her.

Masrur Reaz and his team at the WBG are working to establish a world that recognizes the unrecognized potentials in women-owned businesses such as Dolly’s throughout the world. “I work in the unit which is known as Finance, Competitiveness and Innovation Global Practice. The main goal of this unit is to support countries around the world (both governments, and the private sector) to attain greater economic prosperity and faster poverty reduction. We can ensure this by building a stronger financial sector which enables greater access to finance, and the competitiveness of their economic sectors such as manufacturing, services, and trade.” 

Photography: Nusrat Nahid Babi

Equality Takes a Master Plan and Strategy
The Women Entrepreneurs Finance Initiative (We-Fi) has made access to finance and empowering women in work as well as the business a top priority. Masrur highlights that a stronger economy needs to put women in active roles: “It has already been proven that any emerging country will struggle to reach its full potential if they do not empower women. They must be an integral part of the overall economy through jobs and businesses.” We-Fi will facilitate women-owned businesses by making it easier to obtain access to finance while supporting the growth of their business through greater market linkage. The project also focuses on employment opportunities for female participation in the workforce. Bangladesh is one of nine countries under the project.” The program involves a three-pronged strategy and WBG will consider gradually extending it to other countries. “The first stage involved mapping of women businesses and the ecosystem for female entrepreneurs. We will look into the number and types of women-led businesses in Bangladesh. This field work will allow us to create a database of these businesses in Bangladesh.”

After they have mapped the opportunities, WBG will conduct several assessments; they are focusing on creating a linkage between foreign and large businesses with women-owned businesses/SMEs, or women entrepreneurs. “The key concerns are linking women to a bigger value chain. We need to pinpoint stakeholders, potential buyers, and suppliers by analyzing the ecosystem; it must be coupled with understanding the linkage to government institutions that are relevant to their growth.” Mapping will help the organizations find the key problems, issues, and opportunities as well as constraints. Masrur proposes that this will be followed by a solution-oriented approach. “Our second phase will be to create an enabling environment involving policy, and regulatory framework. It leads to the scope for more activities and provides a legal base for new/future transactions.” One of the major barriers in Bangladesh is the lack of access to finance; only 15 % of women complete transactions with financial institutes. “When you think about finance, generally it involves the procurement of loans. Financial services need to create more and diversified products that are for women. The limited number of products have propelled us to look into newer financial instruments the WBG are working with regulators such as Bangladesh Bank, the Securities Exchange Commission, and Insurance regulator in this regard.”

 

Traditional banking schemes do not sufficiently allow many women from procuring loans. Masrur explains that the third phase will investigate this dynamic, which will also require work to adjust the enabling environment: “We have found that lending to women based businesses can be regulated through what is known as alternative data. Loans are given on the basis of credit history. Most of these businesses do not have any credit history because they have not taken loans or used financial products. We need to create both banking and non-banking financial products.” It results in a chicken and egg effect. Women are unable to approach the financial institutions because they do not have a prior history with the bank. “Alternative data comes in many forms to alleviate this counterproductive cycle. For instance, women can prove their financial stability based on telephone and utility payment track record; a person’s ability should be an indicator of this.” A proposed solution for this is substitute forms of collateral. “The usual way of looking for collateral is some form of cash or immovable asset solvency. However, if a woman owns movable assets two or three cattle, each can be valued at Tk. 50,000 and that is a form of collateral. Similarly, if her family member owns a motorcycle, they can put that against the loan.”

Once these opportunities become available to women, they must have the proficiency to manage their finances. Masrur describes this as the most direct phase of the operation. “Capacity instantly becomes a growing concern as business transactions expand. These women need to understand, manage, and run their organizations, acquire certain skills such as negotiation and interactions with buyers, suppliers, and customers.” Like any entrepreneur, they will comprehend certain matters through the experience. Furthermore, certain leadership skills are also required in entrepreneurial ventures. During the final period, Masrur’s team will construct networks for women-owned businesses. “Enabling and bringing women entrepreneurs close to wide-reaching networks will expose them to market access and market entry facilitation points. We are working on a holistic solution that will help them from generation to the everyday operation of their businesses.”

Deciding on Desh: Why Bangladesh is a Prime Candidate
WGB considered a number of criteria that included: the strength of the proposal, the clarity of the work methodology, the target group, opportunities, and challenges. Masrur illustrates that a number of questions needed to be addressed in the context of the country, “We had to evaluate a number of questions:
– Does the country demonstrate a greater need to mainstream women into the economy?
– Have these previous periods of mainstreaming proven to be successful?
And the answer was yes for Bangladesh in both cases.” The nation is 50% women and only a third of them participate in any form of economic activity; that means that nearly 56 million women are not engaged in economic activity. “When such a large population is not engaged in any form of income-generating activity, we found a clear case for Bangladesh as the right context. Moreover, the nation has demonstrated a determination to help promote women’s financial equality as the pioneers of large-scale and successful microfinance programs.”

Vietnam is a developing country that is just 2,100 kilometers away from Bangladesh. Their National Strategy on Gender Equality 2011-2020 is committed to bridging the gender gap. The Investing in Women Initiative will promote increased employment in the formal sector and expansion of women-led SMEs. It has made strides in equal employment. The labor force participation rate for women in Vietnam is 72.8% compared with 81.9% for men. In addition, 30% of SMEs are owned by women and 25% of business leaders and CEOs are women. “Our research has estimated that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutes; this is a financing gap and market opportunity loss of approximately $285 billion. If we can prove this dynamic across many nations, it will make substantial progress for women in the economy.” Banks need to recognize the female demographic and the potential for investments, transactions, and growth. “Financial institutes must start by building a form of trust with the women entrepreneurs and we want to establish that from a more nationalized system.” WGB is starting a project to provide financial schemes where any bank can go to Bangladesh Bank with what they deem as an unqualified loan candidate. Bangladesh Bank will then ensure that they will reimburse the bank if the loan is not paid. They hope that this will build a stronger repertoire between banks and women seeking loans for their entrepreneurial ventures.

Building a Nation Starts with Small-Scale Interventions
Bangladesh has a long way to go in terms of an egalitarian society; less than 10% of business entrepreneurs are women and 9 of 10 are employed in the informal sector. “We need to start by simplifying regulatory framework; this includes law policies and regulations which dominate business operations and entries. When women need to go to government offices that are not even in their districts, it makes it that much more difficult for them to complete official formalities.” Women also require the right skills for access to a changing market. A large part of which is now technology based. “Most women do not understand that they can promote, market and even complete financial transactions digitally. It gives them the liberty to complete business and financial transactions through immediate accessibility.”

According to Masrur, this must be coupled with changing the perception at a household level. “Many families do not see women as financial providers in the family. Their roles are defined more by household chores, child rearing, and support work. This is evident in our largest sector, agriculture. The vast majority of women work in fields and raise cattle or cultivate farmland but their participation in market activities is negligible.” Additionally, safety becomes a determining factor for women’s’ employment. “We need better transport facilities for women. They are constrained because any opportunity that is outside their peripheral or has late hours becomes a matter of risk. In this context mobile money and exploration of efficient digital transaction channels are imperative.”

Nevertheless, this is a global dilemma as Masrur illustrates, “80 of the top Fortune 500 companies collectively purchase $1 trillion in goods and service only 1% of which is from women-owned businesses. A majority of these businesses are in higher income countries. We conducted a study that showed the primary barrier is the lack of awareness among both women and their business opportunities as well as large business and what they can avail from women.” The survey showed 48% of women experienced difficulty in connecting with corporate buyers. “Communication remains a strong barrier; only 4 out of 10 advertised in the last six months or have an up-to-date social media or marketing campaign. Many acknowledge that their businesses would grow if they had refined communication and negotiations skills for their products.” From the business perspective, 55% of corporations do not believe that their high-quality products and services can be provided by women. Although 3 out of 10 of all corporations have encouraged purchasing from women, they are not properly implemented.

In order to access the market, women must be more aware of the arena and the sort of demands that exist. “This is a continual process because the market is changing so rapidly. Women need to communicate with their clients and reach them via staff or liaisons if not themselves. When they recognize the standards, maintaining it becomes easier for their recognition in the market.” Women also need to comprehend that they are playing a leadership role as entrepreneurs. “Financial literacy, organizational management, market access are some other very crucial factors. Understanding your ecosystem is extremely important because you need to identify what is permissible and what is not.”

 

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