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‘Women face financial problems in enterprise growth’

By: Mansoor Ahmad

LAHORE: Women-run small enterprises have failed to attain the status of medium or large enterprises due to gender-specific roadblocks and financial impediments, sources said.

Various studies reveal that most of these small-scale women entrepreneurs lack access to finance, markets and training and skills.

Economist Faisal Qamar said that a large number of male entrepreneurs in Sialkot and Gujranwala started as small enterprises and have now graduated to medium and large-scale enterprises.

“These entrepreneurs were facilitated by government institutions,” he said. “However, it is not common for a woman entrepreneur to start from a micro level and then expand her business to a medium or large enterprise.”

He added that women from the affluent class, who have managed to expand their businesses, owe their success, at least partly, to the influence exerted by their male family members. “This is not meant to take away credit from their success” he said. “It is quite challenging for a woman who doesn’t have enough contacts to expand her business as compared to her male counterpart.”

Recently, the Lahore chapter of the Federation of Pakistan Chambers of Commerce and Industry had organised a roundtable conference for women entrepreneurs who had entered early-stage entrepreneurship. Almost all the participants belonged to wealthy families and those who started their business from scratch were missing. Thus, the conference’s findings and recommendations were generalised.

Financial analyst Amina Asif said that according to the International Labour Organisation and State Bank of Pakistan, a micro enterprise is run by a small team and is led by a single entrepreneur. “The enterprise can be started with as much as Rs20,000 but operates at a relatively bigger scale,” she added.

She said that almost 30 percent microfinance enterprises are owned by women of over two million microfinance borrowers in Pakistan. According to a research conducted by the Civil Society Human and Institutional Development Programme for European Union, 26 to 32 percent of the microfinance borrowers discontinue the loan programme after a year, while 63 percent of them discontinue it due to organisational design and policy, in particular loan product design (35 percent) as the borrowers consider the loan size inadequate and also repayment time unfavourable.

She said that as per the study, almost 16 percent borrowers discontinue due to unexpected events and 15 percent decide not to avail the loan as they do not need the money any more.

“Microfinance experts believe that at least five percent of the borrowers upgrade themselves by living off their retained earnings or opt for commercial banks for larger size loans. This is group of women entrepreneurs, who needs facilitation and policy intervention for further growth,” she said.

Social Worker Dr Kishwar Dhingra said that 70 percent of the SMEs prefer to borrow from friends and families who are immediately available. “If banks want to sell loans to the SMEs, they must compare their products with the ones offered by friends, families, or other informal channels,” she said. “The key characteristics of such informal channels are quick access, reliability, cheap or free loan and small repayment amounts.”

If an entrepreneur needs money and banks do not offer similar terms, the entrepreneurs will tend to return to better-known sources” she said. “This further limits the amount of investment and growth that can take place in the SME in question.”

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