Social and cultural constructs create economic barriers for women, more so in emerging economies. In Bangladesh, access to finance remains the greatest hurdle for women entrepreneurs. Although women make up half of the labor force aged 15-49, they represent only 17 percent of those employed by cottage, micro, and small and medium enterprises (CMSMEs) that account for 99.93 percent out of 7.8 million businesses in the country.

“It was difficult at first, as anyone would expect, but being a woman and an entrepreneur in a country like ours added a different dimension to my hardship,” explained Rownak Sultan, owner of ShoeMart, which employs 60 people with the turnover of around BDT 30 million (USD 362,700).

To bring women into the mainstream economy, the Bangladesh Bank (BB) introduced policy initiatives to ease access to finance for female entrepreneurs through affordable and secure options for female entrepreneurs. The Bank opened a Women Entrepreneurs Development Unit in its head office and branch offices, advising all banks and financial institutions to open similar units. Banks and financial institutions across the country have been instructed to provide credit to new women entrepreneurs in the CMSME sectors. Every branch has been advised to identify at least three prospective women entrepreneurs who have not yet taken out any formal loans. Banks and financial institutions are to provide the necessary training for the selected entrepreneurs and financial services should be extended to at least one each year. All banks and financial institutions have been asked to consider authorizing loans for women entrepreneurs of up to BDT 2.5 million (USD 30,225) without collateral, but against a personal guarantee under the refinance facilities provided by the BB.

“I got the financial support from banks. I took BDT 1 million (USD 12,090) from Rupali Bank Limited and BDT 1.6 million (USD 19,344) from Islami Bank Bangladesh Limited. I overcame all the obstacles and today I am Halima Khatun Mukta, a successful women entrepreneur,” said proud Halima Khatun. Her textile production company employs 20 women and men as permanent workers to produce saris, bed and cushion covers. An additional 600 women work for Halima from their homes and are paid based on their production.  

With the intervention from BB, the amount of financing for women entrepreneurs and the number of borrowers quickly increased. In 2010, banks and financial institutions in Bangladesh financed USD 231 million for 13,233 women-led MSMEs. By 2016, the amount was USD 543 million, while the number of women-led CMSMEs rose to 32,842.

Financing women-owned enterprises not only improved the lives of female entrepreneurs and their families, but also led to establishing of CMSME-friendly environment in the country’s banking sector – bringing together banks, financial institutions, and local and international development agencies. Women are appreciative of the BB’s lead in bringing systematic changes to cater to their needs, yet more still needs to be done.

“I want women entrepreneurs in my country to get the help and financial assistance in their times of need. We need to equip our women with the necessary skills so that they can be independent and contribute to the economy,” concluded Rownak adding that she is “optimistic that the women entrepreneurs will transform the socioeconomic landscape of our country.

Sources:

Case Study 5: Expanding Women’s Financial Inclusion in Bangladesh, AFI SMEF Working Group Publication, February 2017

AFI – Bangladesh Bank Joint Learning Program (JLP) on digital financial services (DFS), 4 – 8 Dec 2017, Dhaka, Bangladesh

Session 12: Women Entrepreneurship through SME: Regulations and Case Study. (Representative from BB and commercial bank talked about the SME regulations and how it encourages participation of women entrepreneurs, market mechanism: strength, weakness and opportunity. Two women entrepreneurs shared their real-life experience.)