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9.2 Barriers to financing women entrepreneurs: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
| Guest post by: International Labour Organization |
Article Overview: Although women entrepreneurs have consistently proven to be good credit risks (as a result of good repayment histories), limited access to credit for both new and growing women-owned firms is confirmed by researchers and key informants as a major constraint.
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Free Download - References: Learning to change: Skills development among the economically vulnerable and socially excluded in developing countries By International Labour Organization |
9.2 Barriers to financing women entrepreneurs: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
Although women entrepreneurs have consistently proven to be good credit risks (as
a result of good repayment histories), limited access to credit for both new and growing
women-owned firms is confirmed by researchers and key informants as a major
constraint. Two-thirds of women entrepreneurs in the ILO (2003) study used their own
savings to start their businesses, followed by assistance from their spouse (32.8 per cent),
credit from family and friends (21.1 per cent), credit from a micro-finance institution (8.6
per cent), credit from a bank (3.9 per cent) and credit from a moneylender (0.8 per cent).
As their businesses grew, they depended even more on their own savings (78.0 per cent),
as well as micro-finance credit (25.0 per cent) and bank credit (10.2 per cent), and less on
money from their spouses (1.6 per cent), and family and friends (12.5 per cent).
Only half of the women who applied for bank credit were successful (ILO, 2003).
The most commonly cited problems were cumbersome procedures, high interest rates
and the requirement for 125 per cent loan collateral. Since Tanzanian women are often
denied control over property, either because of property laws or traditional customs, they
are unable to meet these collateral requirements. In addition, the women entrepreneurs in
the ILO (2003) study felt that bank officers did not take them seriously, doubting
whether they would repay the loan. Their success rate in obtaining credit from an MFI
was 75 per cent, but in some cases the micro loan ceiling was too low to be of much value. Interest rates are variable and often go higher than 30 per cent. Factors such as
these are detrimental to the start-up and growth of women-owned firms.
Consequently, women start businesses with the money they are able to put together
from their own savings and personal networks. This affects their capacity to start
businesses of any magnitude, and hampers their ability to grow quickly, if at all. Key
informants all stressed the importance of introducing a loan guarantee programme for
women entrepreneurs in order to help overcome their lack of collateral security.
Another constraint to women’s access to credit is the low level of awareness of
financing amongst women in the MSE sector. Key informants stressed the need for
training women micro-enterprisers on dealing with financial institutions and preparing
and presenting a loan application, and for linking credit with business development
support.
1.2 Mission Objectives: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
8.0 Promotion of women’s entrepreneurship: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
1.3 Methodology: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
4.0 The state of women’s enterprises in Tanzania: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
1.1 Background and Introduction: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
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Related Forum Posts
Re: Why aren't there more women entrepreneurs?
- My opinion on this (being a women, and being disabled), is;
Women in general like security. Women are the caretakers, in general.
In the work environment we are the one to have children. We are the ones who leave work to do this. We deal with a stigma that we are bad mothers if we work, but we are a bad mother if we do not work.
I feel there is no way a man could ever understand this. Sure they can try, and some do a good job of it, however they truly do not understand. How could they??
Being a entrepreneur is throwing cation to the wind. It takes believing in yourself. It takes a women who can have someone say no, put us down or just plan old negativity and for us to turn it around. Women who can do this are called names, while men in the business world are just expected to have a thick skin.
Studies show in the work environment that women are more apt to be bullies. Women are more apt to turn on each other. We expect more out of each other. Many women also use the work environment to socialize and to find a mate.
Men and women are not created equal. Once we understand this and take what we are and "run" with it; the better all of us will be. Women business owners, women entrepreneurs are still considered a minority. Since there are more women then men in this world, some day this will turn around. This too is why men need to protect themselves and keep us under some kind of control.
What bothers me to no end is when women give in to the mans world using sex as a selling tool. We need strong women leaders, not those who use their bodies as a step up.
This is just my opinion on this subject.
Re: History of Women in Business in the United States
- Yes. Women have increasingly made positive economic contributions to society and their position is being recognized more and more as seen on the Forbes List of Executive Women. In general, women can be a bit more practical in their approach as entrepreneurs too.
Re: Women and Financing - It's Difficult!
- I found this paragraph of interest (in the article from Nana's link:
[quote="Nana":3r7womqv]Other studies show that women operate more service and retail establishments than men, which might explain their difficulty in getting financing since financial institutions often consider these two sectors more risky. However, although women are generally less inclined than men to apply for financing, when they do, they are more likely to get it. According to a study by Industry Canada on SME financing in Canada, in 2000 majority female-owned SMEs obtained a loan approval rate of 82%, which is slightly higher than the approval rate for majority male-owned businesses (80%). This suggests that when they do apply for financing, businesswomen submit excellent applications. [/quote:3r7womqv]
They say, "Women are more likely to get [financing]."
But the difference is only 2 percentage points! Big deal! And, that was only for one year, 2000. I'd like to know what the 10-year average is.
Numbers can be manipulated to mean anything you want them to mean...it all depends on what you want to show.
A ton of Great Women
- You might want to profile Teresa Cascioli of LakePort Brewery. She has an amazing story! I met her at at the celebratory luncheon for the Profit/Chatelaine Top 100 Women Business Owners. The Top 100 list is also a great resource for inspirational stories of Women Entrepreneurs.
Profiles of Women Entrepreneurs - Bravado Designs
- Bravado Designs is a great company to profile for women entrepreneurs. Kathryn From and Shery Leeder are once again on this year's Profit 100 list of Women Entrepreneurs and this year have moved up to #68. They also won the prestigious Rotman's Canadian Woman Entrepreneur of the Year Export Award in 2002.
The company, which designs, manufactures and sells nursing bras and nursing apparel, has been steadily growing since it was started at a kitchen table in 1992, and now has worldwide sales. Could it possible be another Robeez????
Kathryn From speaks regularly on entrepreneurship and would be great to profile.
Maureen
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