When 40-year-old Salma Bai wanted to set up her own tea shop in
Faisalabad, her main worry was obtaining the capital that was required to start
an entrepreneurial venture. She had been supplying snacks to a tea shop at discounted
rates since her husband’s death and realising her niche, had decided to
establish her own tea shop. Fortunately, she met a female microfinance field
officer who guided her to apply for a small group loan through a microfinance
bank, instead of a hefty credit line, which would be sufficient enough to
kick-start her business. “The banker advised me to first repay my previous
loans and then apply for larger amounts gradually, till I could afford a hefty
individual loan needed to expand my business,” Salma explained.
Salma followed the officer’s
advice, and today she owns a well-established tea shop which she runs with her
sons and offers exclusive catering services to as many as 10 clients per month.
“Hopefully, with my savings and monthly profits, I would be free of loans
soon,” she says.
Microfinance, a source of
monetary services for entrepreneurs, has a great potential to increase women’s
access to a wide range of simple financial products and services like
microcredit, Karobar Qarz, insurance products and Ibtida-i-Karobar Qarz. It
bridges the gender gap in the workforce, increases productivity, and creates
employment opportunities for semi-literate or illiterate women, thus leading to
better living conditions.
Microfinance
schemes are giving women a chance to explore their entrepreneurial skills
Salma isn’t the only woman who
changed her life through entrepreneurship with the help of microfinance.
Rehana, 50, earns her living by supplying 400 hand-made dolls per week to a
contractor in a small town of Ghotki district. She has even employed 10 to 12
women from the neighbourhood, introducing social capitalism in the ecosystem.
“I took loan from a microfinance bank and bought raw materials to stitch dolls.
I repaid and applied for a second loan in a group. Since then, I’ve employed a
few women to help because the demand has increased steadily. This way, their
financial conditions have improved, while my business continues to grow,” she
said.
Salma and Rehana are examples
of a very small, budding segment of women entrepreneurs in Pakistan. Women
entrepreneurship is crucial for our country’s economic growth and social
inclusion agenda; however, the first and the most challenging step towards
starting a business remains access to finance. This is where the role of
micro-financing institutes (MFIs) and microfinance providers (MFPs) becomes
extremely important.
Nadeem Hussain, Board Member of Pakistan Microfinance Network
(PMN), an organisation which supports retail microfinance providers, and CEO
Tameer Bank, is a strong supporter of women empowerment via microfinance. He
explained, “MFPs make it easier for women to obtain loans through various
financial products. They can benefit from group-lending structures to take
loans independently without involving male members. Group-lending enables women
to become each other’s guarantors. They support and motivate each other to make
profits and repay their loans on time.”
Though Salma and Rehana were
fortunate in the sense that they could accomplish their goals through
micro-financing, the picture isn’t all rosy and the microfinance sector is not
without some grave downsides. The World Bank Report, Are Pakistan’s Women
Entrepreneurs Being Served by Microfinance Sector?, published in 2013 shows
strikingly low figures for women entrepreneurs and a limited outreach of microfinance
to females who need it. Less than one per cent women have established
businesses as compared to 8.4pc of men and only 3.4pc of women own a start-up
as compared to 14.4pc of men. It states that only 5.5pc of women have access to
banking facilities as against 21.1pc of men, while out of 15.6pc of total
female labour force, only 0.1pc fall under “employers” category. MFP clients
commonly start their business with Rs10,000 to Rs30,000.
One serious drawback is that
women borrowers often pass their loans to male family members and are usually
not the end beneficiaries of the capital. It is estimated that at least 50pc of
women borrowers pass their loans to male family members, and there are no
measures to keep a track of the finance.
“We don’t provide loans, but improve women’s income and social
status by providing them training in first aid and veterinary services for
rudimentary livestock ailments so they can boost their livestock productivity;
we believe that skills can take them much farther than money, ensuring
sustainable growth. So far, we have trained 300 village women who charge for
their skills and services, and earn their living,” said Monezza Ahmed from
Engro Foundation.
Published
in Dawn, Sunday Magazine, January 25th, 2015
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