The Challenges of Growing Small Businesses - International Labour ...

oadly similar in nature and focus, and came from discussions that highlighted women’s
experiences in raising funds to finance the start-up and growth of their businesses.
(i)
Banking attitudes and financial products and services
At all three conferences, women entrepreneurs and other key stakeholders stressed the
difficulties that women appear to have when accessing mainstream finance. Banks, it was
felt, tend to be reluctant to provide loans to women entrepreneurs in particular, and in
general interest rates are perceived as being too high for MSEs. It was also felt that banks
favour certain types and sectors of business and these are ones that tend to be dominated
by men. As a result, women are often disadvantaged and feel discriminated against by
financial institutions. A number of key recommendations were aimed at banks and
mainstream financial institutions. In particular, it was felt that banks should offer a wider
range of loan options, with variable interest rates, repayment terms and conditions, and that
these should be based on the varying needs of the businesses. Banks, it was felt should be
more women friendly, and in Zambia the working group even went as far as to recommend
that a women only bank should be established.
(ii) Collateral
Women’s ability to provide appropriate collateral was raised as an issue by each
discussion group. As banks generally require land or buildings as collateral, it was noted
that this put women at a disadvantage as the legal ownership of land and buildings is often
held by men. Many of those who had been able to raise bank loans had done so by
providing personal guarantees. The discussion group in Tanzania recommended that the
government should investigate mechanisms for establishing a guarantee fund to support
women in accessing bank loans.
(iii) Financial know-how and confidence
A critical issue that arose in all three conferences related to women’s knowledge and
understanding of how bank finance is managed. The workshop in Zambia made a
recommendation that women entrepreneurs’ associations need to be more informed about
the banks and their services, so as to be able to assist their members to develop a better
understanding of how to approach and negotiate with banks. Also, BDS providers could
support women entrepreneurs by providing training around managing relationships with
banks and other business support providers. The banks themselves could make more effort
in informing various groups of potential clients about their services and their ways of
operating.
(iv) Micro finance institutions
Micro finance organizations, whilst a welcome source of funds for microenterprise,
were viewed as being unable to provide appropriate support for small-scale or growing
businesses. It was felt that MFIs need to examine the services they provide and their
conditions of repayment in light of the needs of women entrepreneurs. The discussion
groups felt that MFIs were more likely to develop repayment schedules and lending
conditions that suited their own institutions, rather than taking the needs of the women’s
businesses into consideration. It was also noted that overdraft arrangements for working
capital were also difficult to secure.
Recommendations to MFIs therefore, focussed on their ability to provide more
flexible and appropriate lending, and the need for them to extend their portfolios to include
small businesses, which require larger loan sizes and access to working capital more than
their microenterprise clients.
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