1. 8Development Returns Financial ReturnsWomen entrepreneursAccessing market opportunitiesBehind the veilFinance for Muslim women in South AsiaWinning strategiesLending at INECO Bank ....................................Ela Bhatt, Founder of SEWA, Role Model for Financial Leadership

2. ColophonUPsides is a magazine about finance and devel-Letters to the Editor: Upsides is pleased to announce the inclusion of a Letters to theopment. As the name suggests, it focuses on editor section. You may contribute by simply sending an email to editor@upsides.nl.accomplishments. These can be successes as well We look forward to hearing from you.as learning opportunities. Whichever they are, theyare all considered in terms of development returnsand financial returns. These stories are not just aboutinvestment. They are about the inspiring people andorganizations behind an investment. They are aboutthe impact that development banking has on theclient, the business, the economy and society as awhole. micro- and small-scale entrepreneurs andother local private sector firms, regional and inter-national banks and development finance institutions Column: Give the new financial sector the best possible start!...............will all be sharing their views and perspectives.chief editor:Nicholas molodykoCover story: Women entrepreneurs: Accessing market opportunities. . . . . . . . . .The eighth UPsides editorial board: marilou van Golstein brouwers Nanno Kleiterp Welcome to the eighth issue of Upsides - a magazine about finance and develop- Laurie J. spengler ment.december 2008editorial committee: Willemijn van beers 1 Region special: Behind the veil ............................... . . . . . . . . . . . .Upsides is a quarterly publication intended for entrepreneurs and stakeholders in erik van dijkdeveloping and emerging markets. While Upsides is an FmO (Netherlands devel- brigitte stolk Gera van Wijkopment Finance company) initiative, it is supported by a widening body of part- 3 Henk Nijland ners and entrepreneurs.2 Case 1: Invest in modern energy so women can breathe easily..............Upsides Arno de Vette paul Wolff The Up reflects an optimistic tone: The private sector is a driving force behindeconomic development, from micro and small-scale entrepreneurs to bigger firms.contributing authors: Nicoline van slingelandt- Asselbergs, sonya bearden,Upsides will share how the private sector and its financiers are making a2 Case 2: MyC: The explosive power of entrepreneurship ....... . . . . . . . . . . . .difference. matthijs egelie, Nico mensink, donna Nails, manuel sia, brigitte stolk,The side reflects stories from many perspectives: development finance institutions Kirsten c. Weiss and banks, local clients, other international development and business partners2 Case 3: Realizing dreams through access to finance........................will be telling the story. The magazine will be based on their cases, experiences,published learning and projections.quarterly by:Huddles bv s-Hertogenbosch The NetherlandsThe s on the end reflects two types of returns: development returns and financial30 Sector special: Winning strategies for small business lending at INECO Bank ...returns. This is our market. its not just a story about an investment, but it is aboutthe impact of that investment on the client, the business, the sector and theproduction manager: daphne madececonomy.Art direction: co de Gooyer3 Banking special: The potential onus of hard currency debt................Website: www.upsides.nlFor address changes and to subscribe pleasevisit www.upsides.nl20:20 vision: Mary Houghton ............................................For questions, comments or information aboutpartnership or advertising in Upsides please contactWillemijn van beers at info@upsides.nlNo part of this publication may be reproduced in anyform without the express permission of the publisher. 3. .................................................... Column: Nanno Kleiterp Give the new financial sector the best possible start!This issue of UPsides marks the end of hits very close to home. many women we should look at women entrepre-our second year in publication. We still face a glass ceiling and the number neurs as a huge market.take this milestone to honor the accom-of women in top positions is disap-plishments and challenges, but alsopointing. but the call for change grows To enhance female entrepreneurshipthe concerns, of entrepreneurial louder. recently, two very public worldwide means changing systems,women.in doing so, we enter thenotices one from dutch female mindsets and even cultures. What canhighly debated arena of gender leaders and one from dutch male we do as a development bank toinequality.leaders were sent to the dutchcontribute to this? dr. chen explains in minister of Finance stating that now isthe cover story that, if we want toFor those of you who think that gender the time for women in the boardroom. change this situation, we need a betterdecember 2008december 2008issues may only be relevant in the The dutch summonses demand: Give understanding of the markets womendeveloping and emerging world, i can the new financial sector the best operate in. At FmO, knowing marketsFinancial sector development in Asia,tell you that for dutch people, this issue possible start! A reform of the finan- cial system that is now glaringly neces- is our business and wed like to invite you to jointly explore the opportunities Africa, Eastern Europe and Latin America sary should therefore be carried outin this market.UpsidesUpsides by the best teams of managers and leaders. diversity will greatly increaseUPsides 8 brings to you the experi- the chances of success.ences of our clients and other institu- tions who successfully support womenSince 1994 Triodos Bank has contributed itsTriodos Renewable Energy for Development FundThis reform should, of course, extend entrepreneurs. solutions they offerunique expertise as a socially responsible bank focuses on to the expansion of clean energy services infar beyond the boardrooms in therange from providing business devel-to the micro finance sector in Asia, Africa,developing countries. The fund is a source of financeNetherlands creatingdiversity opment services and working withEastern Europe and Latin America. for new and existing local financial intermediaries that throughout the whole financial system womens groups to offering bankingprovide financial services to projects and small and worldwide, be it on micro, meso orproducts specifically designed forTriodos manages three specialised funds: Triodos- medium enterprises in the clean energy sector. macro level. realizing this diversity, of women.Doen, Hivos-Triodos Fund and Triodos Fair Sharewhich gender is just one, but a veryFund. The funds invest in financial institutionsTriodos Bank is a fully licensed independent Bank with important aspect, means that we haveWe at UPsides send our own publicspecialised in the provision of microfinance andbranch offices in The Netherlands, Belgium, United to take an extra step to include womennotice to successfully tap into thesme finance. With the provision of loans and equity Kingdom and Spain. The bank is a pioneering force in in the financial sector. As a develop-femaleentrepreneur market andcombined with our banking experience we aim tothe world of sustainable and transparant banking.ment bank, we at FmO are very leverage female capital. pioneers suchcontribute to sustainable economic development inconscious about the fact that women as ela bhatt and the female businessdeveloping countries and Eastern Europe.www.triodos.comare often excluded and that this is a owners highlighted in this issue areUtrechtseweg 60, Zeist missed opportunity. As highlighted by role models whose vision, commitmentTriodos Sustainable Trade Fund provides trade finance The Netherlandsmary Houghton in the 20:20 vision: itand drive can bring out the entrepre-to certified organic and Fair Trade producers.0031 (0)30 693 65 00 feels like theres more than adequate neurial spirit in each of us. proof that the market of women who can be successful entrepreneurs is as Nanno Kleiterp, CEO, FMOTriodos-Doen is a joint initiative of doen Foundation and Triodos Bank and startedin 1994. Hivos-Triodos Fund is a joint initiative of the Hivos Foundation and TriodosBank and also started in 1994. Triodos Fair Share Fund, a closed mutual fund, is openTLBleast as large as the market of men, soto Dutch private investors and was launched in 2002.Where more than money counts 4. Womenentrepreneurs:Accessing market opportunities .............................Women borrowers are frequentlyexploring these solutions, we will firsttrotted out as the great success story of take a closer look at the statistics anddevelopment finance, particularly insome of the barriers that female entre-the realm of microcredit. Theyre the preneurs face.new entrepreneurs of the developingdecember 2008december 2008world, the backbone of family and What the numbers tell usculture. While few are willing to Global statistics on female-owneddebate the latter point (how politicallybusinesses are hard to come by. itsincorrect!), the former should perhapsestimated that between 25 to 30% ofbear greater scrutiny. Why is it seem-enterprises in the formal sector areUpsidesUpsidesingly so easy to find female microbor-owned and operated by women.rowers, but so difficult to lend to femaleAccording to Zouera Youssoufou,sme owners? if microfinance is so manager of international Financesuccessful, one would think that more corporations (iFcs) Gender entrepre-female borrowers would be able to neurship markets (Gem) unit, empir-increase their business size into the ical evidence suggests that femalesmall or medium enterprise realm. sme owners have decidedly lessEntrepreneurial woman at workaccess to finance than men. in Uganda,Yet lenders lament that there just arent for example, 39% of registered smesmany female sme owners to goare owned by women, and on averagearound. is it true? Or are financialonly 9% have access to credit.institutions falling short in theiroutreach efforts? The answer, perhaps,The percentage of informal businessesis a bit of both, and therein lays some owned by women, however, is signifi-intriguing solutions. cantly larger than that of formal busi-ness owners. microfinance institutionsTwo general approaches have devel-(mFis) target these informal businessoped to address the difficulties of owners. According to survey data fromfinding women with larger businessesthe 2007 microfinance mix, mFisthe ratio of female to male borrowers This issue is particularly striking in director of the microfinance invest- cant trend yet of them engaging into lend to: providing business develop- making group loans with an average falls to 49:51 admittedly respectable countries with strict conservative reli- ment support Facility for Afghanistansmall and medium enterprises, saysment services (bds) to help women balance under $200 report over 90% given the proportion of formal female gious traditions. Few know the difficul- (misFA), a leadingmicrofinance ms. Fakiri. but it is important togrowtheirbusinesses,and/orof these loans go to women. but as loanbusiness owners. Nonetheless, there ties of finding female borrowers asumbrella institution. Women compriseemphasize here that in the context ofimproving the marketing of loans to sizes pass the $1,000 mark for mFisappears to be a trend: as loan sizeswell as Katrin Fakiri, founder of thethe majority of microfinance clients [in Afghanistan, the fact that more than awomen with larger-sized firms. before solely engaged in individual lending,increase, loans to women decrease.AfghanmFi, parwaz,andnow Afghanistan] and there is no signifi-quarter-of-a-million Afghan women 5. Women entrepreneurs: Accessing market opportunities .............................................................................................. Women entrepreneurs: Accessing market opportunitiesare engaged in micro enterprises is aWhats stopping expansion? Al Amana, a leading moroccan micro-order for a microentrepreneur to grow female business owners, but for interaction with men in the marketmonumental feat. even if women are While access to finance is a key finance institution, was the subject of aher business, she must possess both women, both desire and capacity can (reducing access and capacity foracting merely as a channel for loans,constraint for women entrepreneurs,study in 2005 exploring just this issue. the desire and the capacity to expand.be affected by traditional gender roles growth). Today, interviews with two Altheir participation in microfinancedevelopment finance institutions (dFis)While the barriers cited by its female capacity can include financing, timeand mores. For example, a society Amana clients exemplifythisprograms has improved their socio- can and should tackle other road-clients varied, they boiled down toavailability, market(access and may have stigmas against womendynamic.economic standing.blocks to growth. so just what are some combination of lack of capacity demand), business acumen, etc. Theseworking (dampening desire to grow these barriers?and/or lack of desire for growth. in are issues that affect both male andones business) or barriers to womensrabia Helali trained as a seamstress in saudi Arabia. When she returned to morocco and married, she fell back upon what she knew sewing tradi- Ela Bhatt, the Gentle Revolutionary tional womens clothing and set up a shop for herself. Two years ago, sheela bhatt is widely recognized as one of theAt every stage we have a mantra that every such trading is presently being done byborrow and when to save. in their businesstives. We need on-going organizing acrossreceived a loan from Al Amana, andworlds most remarkable pioneers and entre- asset has to be owned by the woman because seWA economic initiatives. These joint enter-and life cycles there are many financial gaps,issues, across activities, and across locationsfeels confident that her business willpreneurial forces in grassroots development.those who have assets are better able to prises are developing strong supply chains,so when there is an opportunity which isto increase womens work visibility, validitygrow. Though she still works out of herKnown as the gentle revolutionary she has combat poverty. For land that was mort-providing access to larger finance to upscale, going to be productive, like purchasing and voice. Our union wages battles related home, she has a plot of land and onlydedicated her life to improving the lives ofgaged and then recovered from the big land-assisting in promoting brand design andworking capital, then they have to know toto major issues and our cooperatives take up needs money to build a shop on it, buydecember 2008 december 2008indias poorest and most oppressed womenholders, im very strict that the land should be market strategy, and hiring trained profes-borrow. but they also have to think of the life development programs for women tomore machines, and hire additionalworkers, with Gandhian thinking as herput under the title of the woman first and ifsionals who are committed to the poor. cycle events that are coming, e.g. a daugh- increase their bargaining power, and thus be workers. shes a woman with vision,source of guidance. she so chooses, in the name of the husbandters wedding, and for that they must savefinancially self-sufficient. in the case of theskills, and an education. To succeed,ela bhatt is the founder of indias self- second. its a struggle because men arent What can MFIs do to expand outreach to instead.poor gaining power, numbers are crucial. a woman needs experience, money, employed Womens Association (or seWA)ready to give up assets to women. Hell say, femaleentrepreneurswithlargerWe have to be large and fast to bring change and education. Whats stopping meUpsides Upsidesand one of the founders of Womens Worldit will never happen in my lifetime that my businesses?How has SEWA integrated microfinancein favor of the poor. That is a constant chal- now is lack of money, she says. Withbanking. seWA, which began as a trade wife becomes the owner of the land. but weit is a matter of a holistic approach to banking and subsector development services to helplenge for seWAs union and cooperatives, both the desire to expand her businessunion, continues to organize women workerssay that shes our member and we know her, for the poor, i.e. financial services that include its clients expand? and for other mFis, today. and the capacity (if the loans keepin addition to providing financial services and so we can take a risk for her and not fornot only credit but also savings, insurance, seWA has organized the poor female self- coming), rabia has a shot at achievingthrough seWA bank and other integratedyou. in fact, later sometimes the men say its housing, pensions, and financial literacyemployed into trade unions and coopera-her dreams.services for women. good we put the land in her name, or theycounseling. When an organization provideswould have mortgaged it off again! integrated financial services, it increases rabias neighbor, Fatma Amar, is alsoSEWA Bank reports that about 43% ofclients savings and assets, as well as a seamstress, and she has her ownborrowers graduate to small loans fromHowdoes globalizationaffect smallincreasing their capacity to absorb credit. shop thanks to a loan from Al Amana.petty loans. That number is above the businesses in developing countries?This is particularly important when the state but her vision of the future is cloudier.average. Why? Globalization results in outsourcing through does not provide social security as an entitle- she says shed like to improve herela bhatt: ill tell you what ive seen. At the long subcontracting chains and in informal ment to all its citizens. in our case, seWA isbusiness, but doesnt have a clearinitial stage, most borrowers are burdenedlow-wage work in developing nations. The an umbrella organization, a trade union,idea how. When asked about theby debt from money lenders who charge demand for such work is neither steady nor and seWA bank provides financial services barriers women face, she says,around 10% per day. Other borrowers are reliable. small producers trying to competeto its members. money is a big constraint, thoughlandless laborers and marginal farmers with in global markets cant get fair prices. Theynow we have mFis like Al Amana tomortgaged land. Our first aim is to redeemare unorganized and therefore unprotectedCan you tell me more about SEWAs financial help us. Husbands can be a problemold debts. The next stage is to make them the in global trade. i think its necessary to orga- literacy training?though, sometimes preventing womenowners of their own production tools, because nize the working poor across borders, partic-For the women, this is the first time theyve from being active. Fortunately fortheir pushcarts or spinning wheel or tools areularly when capital can fly across the borderdealt with a formal financial institution. They Fatma, her husband supports herall rented. Then the third stage comes when so quickly and technology changes so start saving and have good discipline, butbusiness. she admits her greatestthey borrow for working capital. This is whererapidly. We need a forum for women thatthey need to learn how that money can belimitation is time she has to balancethe growth comes from.links producers directly to the global market. more productive and particularly when tothe demands of her family with thoseEla Bhatt of her business, and her family must 6. Women entrepreneurs: Accessing market opportunities .............................................................................................. Women entrepreneurs: Accessing market opportunitiestake precedence. When speaking entrepreneurial and make that leap [totime, knowledge, or entrepreneurial have neither the interest nor the The left hand path: business35% of respondents cited financialwith Fatma she leaves the impression smes] is really asking too much, saysskills to even consider ratcheting up capacity, women like rabia, who dodevelopment literacy training.shes comfortable with her small busi- dr. marty chen, a lecturer in publictheir business. Theyre often just trying have the potential to stretch into theTo address the barriers faced byness as it is. it brings in an income; policy at Harvards Kennedy school of to find two or three activities to do tosme level (or who are already there)women-owned firms, one frequently seWA is a leading womens organiza-theyre getting by.Government and the author of Beyond mitigate risk. its frequently not even inhave little chance of accessing credit. touted solution is training and other tion in india which offers a range of Credit: A Subsector Approach to their mindset to grow. How do we support these entrepre- business development services (bds).integratedservices to assist itsits estimated that only around 10-30% Promoting Womens Enterprises. The neurial women and their dreams of in an on-line survey conducted for this borrowers in developing their busi-of microfinance borrowers graduate way they run their business is frequently Not everyone is cut out to be angrowth? Two paths have emerged in article, 65% of respondents statednesses. We use an integratedto larger sized loans. To expect alljust enough to get cash flow into the entrepreneur. However, when dFi answer to this question.business training was the best way to approach we call beyond microfi-women [microborrowers] to become household. They often dont have theloan officers assume that women promote womens business expansion. nance, says ms. reema Nanavaty, The Tanzanian Association of Women Entrepreneurs (TAWE)Joyce, Jane, and Magrethnumerous other traditional handicraft items.edge offered by TAWe has made a differ-Joyce iriya credits participation in a three- of the networking, sharing of experiences their businesses, with training and mentoringsix years ago, Joyce iriya started a catering The training on developing a business plan ence to their ability to succeed in business.weekHeartland international trainingand training we receive through TAWe forin business management skills, informationdecember 2008december 2008business out of her home. iriya reflects, and accounting through TAWe has really program in chicago for ten TAWe members our individual businesses. on current business trends, financial andThen i found out that people really liked my helped me improve my business, saysChicago, USA to Tanzania with giving me the courage to go back andlegal advice and access to financial credit.cooking and i began to expand. Today,banura.Her long-term plansinclude The TAWe story began in 1999 as the vision pursue the University of dar es salaamTAWes mission is to build strong women-10iriya has 25 employees and last year wonopening a cultural center where visitors canof a small group of Tanzanian women in contract.owned businesses that lift up communities,Economic empowerment 11the bid for a five-year contract to run the see how the items for sale are made and chicago attending a training program families and hence our national economy asTAWes National president, Jovita bubele, isUpsidesUpsidesstudent canteen for the school of education more young people can be trained to makeconductedby Heartlandinternational Though there are many benefits to being awe believe that a woman is an engine of proud of the groups accomplishments inat the University of dar es salaam. the items.assisted by a grant from UsAid. This groupmember of TAWe, magreth Koyi says with development. TAWe provides its members encouraging womens economic empower-of women decided to go back to Tanzaniagreat passion, we have all seen the benefits with the opportunity to network and promote ment. it is inspiring to see the confidenceTwo years ago Jane banura owned one magreth Koyi started out with her husband and create a business association. And theywomen gain by working together andsmall souvenir shop selling traditional craft in shinyanga selling office supplies anddid just that, says Karen egerer, president finding out that they share similar problems.items in mwanza. Now she owns three expanded into fixing and selling used emeritus of Heartland international. OneWe have seen our members gain economicshops selling beaded necklaces and scarves, computers. in 2006, they started a privateyear later, they were registered as a non- independence and improve the lives of theirtraditional woven purses, clothes and secondary school with 200 students andprofit organization in Tanzania. TAWe isfamilies and communities. it proves thateight teachers. Today, just two years later,one of a very small number of organizationsTAWe has a strong role to play as a leaderthey have almost doubled enrollment and in Tanzania dedicated to representing indi-in giving women an effective voice in thehave 15 teachers on a small campus with vidual women entrepreneurs in any type ofbusiness community.two dormitories for each sex to house business.boarding students, several classroom build-As the worlds nations continue their shift toings, a cafeteria, a library and a scienceTAWe has continued to grow as an organi- a global economy, Heartland internationalbuilding with labs for chemistry andzation.Headquarteredinmwanza,also believes it is important to support thebiology.Tanzania, they now have seven chapters efforts of hardworking, intelligent womenand over 200 members. With assistancelike the members of TAWe to promote theWhat do these women have in common? provided by Heartland international, TAWedevelopment of their economy through theThey are all small businesswomen in has provided training to members on asmall businesses that make their own lives,Tanzania and all are members of the Tanza-variety ofbusiness topics,includingthe lives of their family members, and thenian Association of Women entrepreneurs accounting, marketing, proposal writing, lives of their community better.(TAWe). All three women say that the moralbusiness plan development, selling skills, TAWE Day Meeting in Dodoma in September 200 support, networking and business knowl- using computer technology and mentoring. TAWE Chicago Program December 200 7. Women entrepreneurs: Accessing market opportunities .............................................................................................. Women entrepreneurs: Accessing market opportunities Theres a lot of training available for sme owners out there, says iFcs ms.We do need to continue searching for ways for our Youssoufou.What weve found mFis to design loan products that are female- lacking is something that addresses the actual issues women have told usfriendly, to increase business awareness courses and they have, e.g. how do you go aboutto eventually reach a point in the sector where we developing a relationship with a bank? can assist female clients with market linkages locally Weve developed modules to deal withand internationally. Katrin Fakiri, director misFA just this idea of how to develop confi- dence in dealing with banks. exam- ples include training in organizingidentifying potential economic activi-donors or government officials they financials, articulating the business, ties, strengthening the backward anddont just talk about problems dFis and selling oneself as a borrower. The forward linkages, and turning themface in the policy and regulatory envi- program partners with NGOs, busi-into viable enterprises owned and ronment. iFcs Gem program recog- ness schools, and enterprise develop-managed by women themselves,nizes this issue, addressing regulatory ment centers to develop the training says seWAs ms. Nanavaty. Weobstacles in addition to access to and ensure it is self-perpetuating and have several business organizations finance.december 2008december 2008 sustainable. and over 31,000 producer groups orcollectives, so the production base isThe right hand path: and other capacityvery scattered.Theproductiontargeted marketing12 building issueshappens in thousands of villages andbusiness development services repre-13 The provision of finance is only one hundreds of thousands of homessent an added cost to dFis, discour-UpsidesUpsides element in business growth; there arewhere women are working, whetheraging many from delivering them. its environmental barriers as well. Whiletheyre artisans, weavers, farmers, etc.unrealistic to ask dFis wedded to the dFis may not be able to address theseTo be successful, its necessary to workfinance only approach to provide factors, they should recognize them, on the backwards linkages, sourcing bds to help their microborrowers as should donors and local govern- of products, and capacity buildingtransform to sme owners. For those Katrin Fakiri ments. im a true believer in sub-thats needed, then work out a form ofdFi managers who want to reach into sector development, says dr. chen.organization that balances betweenthe sme market and retain a focus on if youre producing honey and theres decentralized production and yetwomen, there is, however, an alterna- no one to help you turn it into a good centralized qualitycontrol andtive: targeted marketing to existing grade of honey and process and label marketing. seWAs livelihood finance female sme owners. it and get the export licensing these also provides socialservices toseWAs director for economic and producers and the quality of the This sort of integration between are huge barriers. in addition tomembers, such as social protection or dr. chen says that a better under-rural Organizing. Our experience is product and building the market read-finance and bds is also being used tofinance theres really a need to think insurance or day-care for children, standing of the markets womenthat microfinance alone does not iness. Were constantly working on promote lending to female smethrough which groups are going to be addressing other barriers to womensoperate in is a critical first step. sheaddress the issue of poverty.pricing, costing, and how to use marketowners. iFc provides financing for on- out there to help build all the back-work.also argues that dFis should do more intelligence as well as strengtheninglending to female entrepreneurs andward and forward linkages. Where market segmentation work. i thinkin microfinance you just identify the the supply chain and determining the uses best practices from the Globalare these groups concentrated?The legal environment also has an one of the mindsets dFis have to shift iscredit needs and provide the creditfinancial services needed. seWAs banking Alliance for Women theimpact on business growth. dFisaway from looking at borrowers all asinput. but at seWA, along with credit, capacity building assists its clients to secretariat of which is housed at iFc. seWA takes just this market chainworry a lot about how the regulatoryindividual clients, when theyre groupswe use organizing to increase oursystematically develop their enter-Taking a two-pronged approach, the approach, and now has five different environment affectsthem,says doing the same thing and facingclients collective bargaining power.prises, for example in terms ofprogram trains clients employees andfor-profit companies and two nationaldr. chen, but the policy environment similar bottlenecks. dFis can at leastAlongside that we provide capacity accounting, inventory tracking or legalfemale borrowers after havingbrands, one for textiles and the secondaffects their clients too. dFis should be figure out who the clients are and whatbuilding both technical and mana-compliance withmunicipaltaxanalyzed the local womens market. for agricultural commodities. Weconscious of the constraints faced by theyre doing.gerial upgrading the skills ofcodes. have three decades of experience their clients so when they meet with 8. Women entrepreneurs: Accessing market opportunities .............................................................................................. Women entrepreneurs: Accessing market opportunitiesThis also includes developing better proposition for the bank that is profit-approaches in marketing, such as able and promotes a social good.productdevelopment, sales,andiFcs advisory services and investmentresearch of the female market. For will only be sustainable if the womensexample, female mystery shoppers banking program is grounded in howmay visit the banks as clients and the bank operates, otherwise it wontthen relate their experiences - often an work.eye opening exercise as to how womenare treated by loan officers and other Another lesson: dont assume. Whenstaff. banks need to have genderasked about the female clientelessensitive loan officers and staff, ms.needs and barriers to growth, surveyYoussoufou continues, who are not respondents for this article cited widelypatronizing and who ensure that theirvarying regional issues. What femalemarketing material speaks to women,entrepreneurs need in mexico maywith products that address whatnot be the same in monrovia. TheSEWA womens lending groupwomen care about. When working womens market differs across culturewith the banks, we examine what is and is frequently distinct from mens.december 2008december 2008being required from their borrowersFor this reason, the standardized dFis are making great strides in Over and over, as loan sizes get largerand whether the bank is able toapproach to financial products mayproviding women with access to ive heard the argument that therebecome more flexible when it comes not be appropriate across gender or finance. but in order to truly fire up the simply arent enough women in theto collateral requirements an area cultural lines. entrepreneurial capacity of the female sme sector to bother with. At the same11that is a typical stumbling block forhalf of the worlds population, we needtime, i witnessed focus on lending toUpsidesUpsides Why women? Rabia Helaliwomen entrepreneurs. For example,to go beyond being satisfied with thetraders, a market sector women arewomen may not be able to produce According to ms. Youssoufou, statistics statistic: number of women served. barred from in many developing coun-property titles or document land argue for womens role in economicWe need to keep questioning thetries. i wondered if perhaps this wasownership,but cash-flowbased development. We know that womenhowsandwhysof womenslazy marketing on the part of dFis.lending, leasing, or other innovativeare typically better than men at repaying lending. Two trails have been blazed Were dFis looking at the wrongcollateralrequirements, suchas their loans. And research shows that ain the quest to expand womens busi- sectors? Using the wrong loan offi-According to misFAs Katrin Fakiri, afemales clients with market linkages jewelry, may be an option for the bank dollar in a womans hand has a higher nesses: targeted marketing by dFis cers?recent study found that most oflocally and internationally.to better reach out to the womens impact on the familys welfare than anand the provision of capacity buildingAfghanistansfemaleborrowersmarket. extra dollar in a mans hand. Whenservices. Are there more direct pathsboth the left hand path of bds and theoperate in womens industries, suchiFcs Gem program also works with focusing on the womens marketstill waiting to be discovered?right hand path of targeted marketingas sewing, handicrafts, and small busi-banks on the 4 ps of marketing: However, a key lesson learned when segment, the one-size-fits-all approachaddress these and other questions.nesses run from home. To reach these price, product, place and promotion. marketing to female entrepreneursseldom applies. it requires women-Kirsten Weiss, senior consultant for One thing however is clear: Femalebusinesses, ms. Fakiri says, some ofWe partner with our colleagues in falls on the dFis organizational side.tailored approaches and sometimes shorebank international, has workedbusiness owners represent too big athe methods employed by mFis, such financial markets who put in place banks need to have support for this ateven different products for women. in msme development for many years.market to ignore!as employing female loan officers andlines of credit with commercial banksthe highest level, says ms. Youssoufoushe states: Admittedly, my personalpromotersandofferingbusiness in developing countries with the objec-of iFc. The ceO needs to be is the womens market worth it? if bias is to look at gender through adevelopment trainings at a smaller tive of getting the money into the committed and understand the busi- youre interested in having a signifi-marketing lens, Kirsten writes.scale have helped increase outreachhands of women entrepreneurs, saysness case and financial opportunitiescant development impact, continues Women represent a large demo-to women. We do need to continue ms. Youssoufou. We supplant thisfor the bank. That is the top thing. iFcs ms. Youssoufou, which most graphic of business owners, and theysearching for ways for our mFis to with training to the banks - helping Thus, lending to women becomes partdFis are, you have to take women into frequently have distinct wants anddesign loan products that are female- them to reach out to the womens of the banks strategic plan itself and is consideration. You cant be successfulneeds. it only makes sense for dFis tofriendly, to increase business aware- market and to provide training toaccepted by staff throughout the insti-without including women. And if you research how best to serve them, andness trainings and to eventually reach women entrepreneurs that would helptution. Leveraging the womens marketdont make a specific effort, it wontrefine their products and deliverya point in the sector that we can assist make them more bankable.is not philanthropy it is a business happen by itself.systems accordingly. 9. ............................................................A glimpse into access to finance for Muslim women in South Asia ...........Behindthe veilA glimpse into access to finance formuslim women in south Asiadecember 2008december 2008Az Zahra Bank, Malaysiawomen whichincludesprivateWomen are increasingly at the banking in luxurious surroundings -forefront of our civilization. All overladies lounges equipped with bloom-11the world and at every stage, womenberg terminals, internet and mediaUpsidesUpsidesare at the helm of every crucial role. displays.She is the nurturer, the administrator,the leader. She is the decision maker, The remarkable thing about thisthe contributor; she adds strengths, campaign is that it is offering servicescolor and creativity to the world. which didnt exist a decade ago. muslimwomen,albeit affluentTo celebrate and acknowledge thisindividuals, are able to utilize bankingfact, we are proud to present Az Zahra services in comfort; enjoying servicesPrivilege Ladies Banking the first and which are tailored to their beliefs andonly Privilege Ladies Banking in day to day considerations respect,Malaysia. Our Az Zahra customers privacy and standards of decorum.have the privilege of performing their regardless of whether the customer is country, and even from bank to bank. that regulate islamic finance and of caring for the less fortunate with part of Hsbc, announced the launchfinancial transactions in an environment muslim, let alone a woman, the prin-in malaysia, where much of the finan-capital markets.However, even inmicrofinances power to provide of a pilot project for islamic microfi-that is both private and comfortable.ciples which guide this approach arecial sector is shariah-compliant and malaysia, a precedent has not beenfinancial access to the poor. Unlocking nance in rawalpindi, pakistan inOur dedicated Ladies Relationshipuniversally relevant. sukuk (financial certificates) account set for womenheading islamicthis potential could be the key tocooperation with islamic relief.Managers are always on hand to for an estimated 48 per cent ofbanks.providing financial access to millionsHsbc will provide the shariah advi-serve your every need.While Az Zahra bank and other government bonds, the central bank of muslim poor who currently reject soryandproduct structuring banks in the Gulf states are offering governor is a woman. The first Islamic Microfinancemicro-finance products that do notservices and islamic relief will truly islamic financial services, micro-shariah-compliant fund for women islamic microfinance represents the comply with islamic law.screen beneficiaries and administerThe preceding are excerpts from afinance has also made inroads intowas launched in 1998. in manyconfluence of two rapidly growing the program.marketing campaign for Az Zahraproviding access to finance for muslimrespects, malaysian women have set industries: microfinance and islamicislamic microfinance is still in itsbank in malaysia, which offers a women. Thus the state of affairs with the pace for islamic finance in thefinance. it has the potential not onlyinfancy, and business models areislamic microfinance is very concen-customized set of shariah-basedregard to financial services for muslim eastern part of the region. Forto respond to unmet demand but also just emerging. earlier this year, trated in a few countries, with the topproducts and services for muslim women varies greatly from country toexample, women head the authoritiesto combine the islamic social principle Hsbc Amanah, the islamic financethree countries (indonesia, bangla- 10. Behind the veilA glimpse into access to finance for muslim women in south Asia.................................................................................A glimpse into access to finance for Muslim women in South Asiadesh, and Afghanistan) accounting muslim-majority countries do not uselaw. in recent years, some microfi- Islamic Microfinance and mFi clients are women (59 percent ontional microfinance products (65.7for 80 percent of global outreach.formal financial services. even whennance institutions (mFis) have steppedWomenaverage, but up to 90 percent inpercent globally, and 65.4 percent inNevertheless, demand for islamicfinancial services are available, in to service low-income muslim Like conventionalmicrofinance, bangladesh). Overall, the percentagethe Arab world).microfinanceproducts is strong. somepeople view conventionalclients who are demanding productsislamic microfinance tends to focus on of female clients using islamic microfi-A 2008 cGAp publication estimated products as incompatible with the consistent with islamic financial prin- female clients according to thenanceproducts (59 percent)isthat 72 percent of people living in financial principles set forth in islamic ciples. cGAp survey, a majority of islamic comparable to those using conven- Islamic Finance islamic finance has and continues to experi-a product as shariah-compliant, the institu- This resembles some of the rent-to-own deals bank and the borrower receive the proceeds sive interest in microfinance is consistent ence rapid global growth. According totion offering the product takes fatawa, or in the American market. in this way, the from an auction based on the current equity. with the islamic prohibition of usury (riba). Forbes, at least Usd 500 billion in assetsreligious rulings, from its shariah supervi- lender does not receive a profit, per se. in This method allows for floating rates around the world are managed in accor-sory board that often consists of three or the same vein, the lender is not allowed toaccording to current market rates such asmicrofinance is a key concern for muslim dance with shariah, or islamic law, and the more religious scholars. Although shariahseek additional profit through fees, such as the bLr (base lending rate), especially in a states and recently islamic banks too. islamic sector is growing at more than 10% perrulings may vary somewhat across firms for late payments. in order to protect itselfdual-banking system such as that inmicrofinance tools can enhance security ofdecember 2008 december 2008 year. and countries, institutions such as the islamicagainst default, the bank asks for strictmalaysia.tenure and contribute to the transformation Fiqh Academy and the Accounting andcollateral which is registered to the name of of lives of the poor.As islamic finance islamic finance, based on the principlesAuditing board for islamic Financial institu-the buyer from the start of the transaction. There are several other approaches used in continues to undergo rapid growth and outlined within the Quran, the holy book of tions (AAOiFi) are helping to bring consis-This arrangement is called murabaha. business deals. islamic banks lend their innovation, it faces a number of challenges1 1 islam, seeks to further the Qurans message tency to these rulings.Another approach is eIjara wa eIqtina, money to companies by issuing floating rateas a result. These include achieving consis-Upsides Upsides of social justice. it does so by eliminating which is similar to real-estate leasing. islamic interest loans. The floating rate of interest is tency in recognized shariah authenticity what the Quran refers to as exploitativeislamic finance complies with the principles banks handle loans for vehicles in a similar pegged to the companys individual rate of across firms and countries, fulfilling the practices, mainly usury. These transactions outlined in shariah law. These include prohi-way selling the vehicle at a higher-than-return. This means that the banks profit on needs met by conventional products and might further be referred to as hilal, as bitions on riba (interest on monetary loans),market price to the debtor and then retainingthe loan is equal to a certain percentage of services without blurring the lines between funds cannot be used directly or indirectly gharrar (preventable ambiguity in contract ownership of the vehicle until the loan is the companys profits. Once the principalislamic and conventional finance and for pornography, gambling or pork.essentials such as price), maysir (gamblingpaid.amount of the loan is repaid, the profit-without compromising competitiveness, and and pure games of chance), alcohol, pig sharing arrangement is concluded. This securing an adequate supply of scholars The roots of modern islamic financial institu-products, and pornography. in contrast toAn innovative approach applied by some practice is called musharaka.and practitioners well-versed in islamic tions are often traced back to the 1970sconventional financing, which can rely banks for home loans is called musyarakafinance. when the first islamic commercial bank andheavily on monetary loans, islamic finance al-mutanaqisa that allows for a floating rateMicrofinance, not true Islamic later the islamic development bank were promotes the trading of real assets and risk-in the form of rent. The bank and borrower banking? formed. Today, islamic financial services are reward sharing, encourages entrepreneur- form a partnership, both providing capital islamic banks have grown recently in the being offered by islamic as well as conven- ship, discourages speculative behavior, andat an agreed-upon percentage to purchase muslim world but signify a very small shareJama Masjid mosque in Delhi, India tional financial institutions.emphasizes the sanctity of contracts.the property. The partnership then rents out of the global banking system. microfinancethe property to the borrower and charges institutions founded by muslims, notably Shariah and prohibitionsShariah-compliant mortgagesrent. The bank and the borrower will thenGrameen bank, use conventional lending Shariah consists of ibadah, relating to and home loans share proceeds from this rent based on the practices and are popular in some muslim worship, and muamlat, relating to day toin an islamic mortgage transaction, insteadcurrent equity share of the partnership. Atnations, especially bangladesh, but are not day practical matters. commerce, banking, of lending the buyer money to purchase the the same time, the borrower in the partner-considered to offer islamic financing. and finance are addressed by muamlat. item, a bank might buy the item itself fromship entity also buys the banks share of theHowever, muhammad Yunus, the founder of the seller, and re-sell it to the buyer at a property in agreed installments until the full Grameen bank and microfinance banking, What determines whether a product ishigher agreed-upon price, while allowing equity is transferred to the borrower and theand other supporters of microfinance, argue shariah-compliant? by and large, to certify the buyer to pay the bank in installments. partnership ends. if default occurs, both thethat the lack of collateral and lack of exces- 11. Behind the veilA glimpse into access to finance for muslim women in south Asia.................................................................................A glimpse into access to finance for Muslim women in South Asiain launching programs aimed atin saudi Arabia took off in 2005 whenservices, but only to a small niche families prohibit. pakistans Firstwomen, microfinance and develop-banque saudi Fransi launched a high- market. banque saudi Fransis initiativeWomens bank Limited, set up in 1989,ment banks in many countries areprofile ad campaign to market itsopened up the market, allowing womenoffers credit to companies only if theyfollowing in the footsteps of retailwomens banking services. Other banksto use banks without mixing with men, have a woman as managing director, ifbanks. For example, Ladies bankinghad already begun to provide similar which some religious authorities andthey are more than 50 per cent owned by women or if more than 50 per cent of their staff are female. These programs The Muslim world of South Asiadont present such a radical change as ladies-only banking, which has enabled in an effort to provide context to ourgroups, have the lowest levels of educa- discount the fact that within the otherstrictly religiously-observant women to regional spotlight on muslim women in tion, and have above average fertility countries there are very influential use banking services for the first time. south Asia, the following is a snapshot rates. pockets of majority muslim popula- rather, theyre essentially a marketing of the regions muslim world.tions. moreover, these groups have initiative, forming part of a wider trend south Asia, which includes Afghani-greatly defined the direction of the of market segmentation in the retail The muslim world or the worldwide stan,india, pakistan, bangladesh,region. With the exception of Afghani- banking sector, particularly for credit community of muslims, adherents ofburma, Nepal, bhutan and sri Lanka,stan, and now increasingly pakistan, cards. in the UAe, for instance, AbN islam, numbers about 1.3-1.5 billionby percentage, claims some of theislam in south Asia has existed more AmrO launched a credit card aimeddecember 2008december 2008 people, roughly one-fifth of the worldslargest muslim populations in the world. on a micro level, coming into play inat women back in 2004, and First Gulf population. This community is spreadNot only does the regions practice of ceremonies, religious practice and inbank launched a ladies-only Visa card across many different nations and islam vary greatly from that of othersocialization, yet there has alwayslast year. ethnic groups connected only by reli- regions, but within the region, there arebeen a large influence from muslim2021 gion. wide variations. minority groups within the political and The 2008 cGAp publication islamicUpsidesUpsideseconomic contexts. microfinance: An emerging market For the past several decades, islam has in large part, south Asia has come to Niche, Focus Note 49 describes the been the worlds fastest growing reli-be defined by its religious diversity andWith the muslim population and influ-increasingly women-centric marketing gion. currently, the growth rates ofthe differences in beliefs about how the ence increasing, and as the practice ofservices provided by many islamic islamic countries exceed 1.9%, whilestate and religion should interact and islam in south Asian countries isretail banks. The ability of microfi- that of the general population is onlythe extent to which a religion needs toincreasingly influenced by its middlenance institutions to deliver financial 1.2%. be intertwined with daily life.eastern counterparts, there is sure to beservices to rural women is of partic-a shift in the regions dynamic, withular relevance in gender-segregated The map to the right shows the concen-despite the fact that only Afghanistan,islam permeating more and more societies. At the same time, working trations of the worlds muslim popula-pakistan and bangladesh have majorityaspects of life. with muslim women is a sensitive Targeting the female entrepreneur market: An advertisement for Az Zahra tion by country.muslim populations, this should not issue, sometimes raising accusationsBanks exclusive womens services of meddling with social codes. most of muslim majority countries are located in North Africa, Asia and the Bangladeshout to muslim women in bangladesh.India middle east, yet within these regions,Grameen ceO mohammad Yunusmembership of the bank leads to anAlthough the majority of indias citi- islam is very dynamic with varyinghas been a huge proponent ofexpansion of assets for many women, zens are Hindu, the country has one of sects, practices and guidelines all being womens liberation, empowerment including home improvements, thethe largest muslim populations in the shaped by cultural contexts. Givenand education, and not just in bangla-provision of services and the purchaseworld, representing about 15% of the these differences, it is almost impossibledesh, as the ever-increasing expan- of land for building houses or agricul- countrys billion-plus population. sKs to make widespread claims about sion of his formula to all corners of ture. Although it is not consciouslymicrofinance is an indian non-govern- muslims around the world; however,the world attests.organized on islamic financial princi-mental organization specializing in most statistics prove that around the ples, the beneficiaries who are muslimmicrofinance, founded in 1998 by world, muslims are among the poorestThe Grameen bank is largely a success have no qualms about the authenticity Vikram Akula in Hyderabad, toWorld Muslim Population (population by percentage (%)) story, particularly in terms of reachingof its products.provide small loans to poor women in 12. Behind the veilA glimpse into access to finance for muslim women in south Asia.................................................................................A glimpse into access to finance for Muslim women in South Asiarural areas. At some of its branches, The Abodana mandali is one of the members to open a savings accountmarket. Today some of these womenWomen are at the forefront women are finding financial servicesof which there are over 1200 in 15many mandalis set up by seWA in and purchase insurance policies. are producing trendy and marketablein South Asiain south Asia. While there may be astates across india, one can witnessindia see cover story - and began Vocational training and skill upgra- clothes for up-market stores. TheFrom mandalis at seWA to plush disparity in the economic status ofHindu and muslim women borrowingislamic lending several years ago dation workshops were organized to shantipath centers are still active andladies lounges equippedwith customers, a growing number ofin the same microfinance circles andwith 200 muslim women as itshelp the women develop skills in many illiterate muslim women bloomberg terminals, internet andwomen previously underserved areco-guaranteeing one anothers loans.members. seWA helps mandali accordance with the demands of the continue to benefit from them. media displays at Az Zahra, muslim accessing financial services in envi- ronments where their culture, reli- gion, and day to day practices are respected. FINCAs experience: Murabaha practice is better for business islamic microfinance is succeedingin Afghanistan. it is comprised of ten women award for its microfinance project targetingan Afghan, i would never have had anFinca client Afghanistan where non-profits like FiNcA who own shops that sell everything from women, ethnic minorities, and returning opportunity like this, she says. offer shariah-compliant microfinance. Twobaked goods and eggs to clothing andrefugees. The program plans to reach years after it began operations FiNcAhome wares. These women are among the 90,000 clients by 2009. sharif is one of thousands of Afghans who switched its products to the Murabaha prac-over 50,000 clients in Afghanistan who arerefuse to takeinterest-bearing loans. tice see islamic Finance on page 18 , not only improving their own standard ofShooperi Sharif seeking to cater to potential clients such as under which clients can receive access toliving, but also helping their government shooperi sharif is one of the women who sharif, in 2006, FiNcA became the firstdecember 2008 december 2008 credit while complying with shariah, orrebuild Afghanistans damaged financial benefits from the program. After spending microfinance institution (mFi) in Afghanistan islamic, law.infrastructure. several years in iran as a refugee struggling to offer non-interest bearing Murabahato make a living working in a beauty parlor,islamic loans. Following the guidelines of because FiNcA Afghanistan has tailored its FiNcA began operations in war-tornshooperi sharif never imagined that one Murabaha lending, she went along with her22 23 products specifically for muslim clients, theAfghanistan in 2004. despite the continuing day she would have a business of her very loan officer to buy items such as tables,Upsides Upsides women of the Aadil Village bank are able tochallenges of regional instabilities and secu-own. sharif and her family fled Afghanistan mirrors and chairs for the parlor. The goods access financial services for the first time.rity issues, it is one of FiNcAs fastest during the Taliban regime in 1996. in 2002, were sold to sharif at a two per cent mark The Aadil Village bank meets in Khairgrowing programs, and recently won ashortly after their downfall, the familyup which she is paying back in monthly Khana, one of the major bazaars in Kabul,prestigious pro-poor innovation challenge returned to Kabul.With war-shatteredinstallments.Afghanistan lacking basic infrastructure andinstitutions, including schools, sharif began Better for business Women in Kabul, Afghanistanteaching school-aged children in her home.paul robinson, FiNcAs country director inwas one of FiNcAs first clients in 2004,Last year, the 34-year old mother of threeAfghanistan, says not only are the products using the money to open a bakery in Kabul. remember, Women are increasinglytook a microfinance loan from the FiNcA tobetter received than conventional forms ofNow that all the money i am borrowing at the forefront of our civilization. Allexpand her school.lending, the Murabaha practice is alsogoes into business supplies, i earn more.over the world and at every stage,better for business. The advantage ofbefore, when i would receive cash directly,women are at the helm of everyAfter successfully paying off her loan, shar- Murabaha loans is that 100 per cent of thethere was always some of the money that icrucial role. she is the nurturer, theifs loan officer encouraged her to use the money goes into the business. When you do would use to purchase other things not administrator, the leader. she is theskills she learned in iran to open a beauty small business lending at bank of America relating to my business, she explains.decision maker, the contributor; sheparlor in her neighborhood, something for instance and you are a small business, adds strengths, color and creativity towhich would have been inconceivable under as a banker, i would give you a cheque with There is little doubt that as the financialthe world.the Taliban. sharif immediately saw it as a the name of the store, rather than giving the sector expands in Afghanistan, bothgood opportunity. While many schools have borrower cash to make sure all the moneycommercial banks and mFis will have toreopened in her neighborhood, there weregoes into the business, robinson says. follow the lead of FiNcA and provide morenot so many beauty parlors. i had nevershariah-compliant lending products. As thetaken a loan before; it gave me a lot ofOne borrower, Gul Khana, has felt the pioneer organization in providing suchconfidence to see that i could borrow money benefits of a Murabaha loan first hand. A services, FiNcA has proved that such a taskin my own name and pay it back. in iran, as widowed mother of four, the 37-year old is not so daunting. 13. case 1 ............................................................................Invest in modern energy so women can breathe easily ............Invest in modernenergy so womencan breathe easilyAccess to modern energy has a strongcombines its investments with businessto public health globally. Womenimpact on womens quality of life, both development services. often carry a great part of the burdenin terms of health and business oppor-associated with this lack of moderntunities. e+co, www.eandco.net, is an Why is access to modern energy so energy. in most developing countries,investment company aimed at empow-important especially for women? it is women who collect fuel and carrydecember 2008 december 2008ering local small and medium enter- Worldwide, more than three billionout household tasks. Women areprises that supply clean, modern andpeople depend on solid fuels, including therefore particularly affected byaffordable energy to households, busi-biomass and coal, for cooking and indoor smoke and the time lost due tonesses and communities in developingheating. cooking and heating with simple fuel use.2 2countries. by investing in modern biomass fuels and coal produces highSobre La RocaUpsides Upsidesenergy, e+co improves the lives oflevels of indoor air pollution. exposureAccess to modern energy thus hasmillions of women in Africa, Asia and to indoor air pollution has been linked disproportionate effects in terms ofLatin America. e+cos over 200 invest-to many different diseases. According improving womens lives. The reality isments since 1998 have included more to the World Health Organization, that poor households often do notthan 100 businesses owned or co-reliance on solid fuels has emerged ashave the resources to obtain cleaner,owned by women. The company one of the ten most important threats more efficient fuels and appliances.bolivia is one of the countries where in basic bookkeeping and accounting. ture and creating a five year business agreement with mOp, which givesmany women spend their days chop- e+co also invested Usd 20,000 in plan. subsequently, it made a Usdthese people a guaranteed income.ping, collecting and cooking with fire- sobre La roca to increase the scale of 100,000 investment in the business tomOp also subcontracts the fruit drying Solar cookerwood. The introduction of solar its operations and to fund micro loans increase its processing capabilities to farmers.cookers by a company named sobreto the prospective buyers of solar and provide working capital.la roca is making a change. sobre Lacookers.The solar dryer is low cost technologyroca manufactures and sells solarThe use of solar energy reduces thethat empowers the local rural economy.cookers and efficient stoves in the investing in modern energy not onlyneed to utilize non-renewable forms of This equipment enables farmers toremote mountain villages of bolivia. To has an impact on womens health, itenergy, or those with a negative envi- supplement their own food consump-date, the company has sold 1,225 solaralso creates business opportunities forronmental impact, to dry fruits, vege- tion with a healthy alternative andcookers and educated more thanthem.tables and other products. mOp alsogives them an opportunity to start2,400 women on the benefits of solar trains farmers in organic farmer tech- micro enterprises, creating economicenergy. masaka Organic producers (mOp) isniques and every year, around 25 benefits at the lower end of the socio-a woman-owned business in Uganda farms convert to organic farming. As economic scale. The farmers sell somesobre La roca is one of the women-producing organically grown, solar an incentive, mOp covers the cost of of the dried fruits to mOp, but they canowned businesses supported by e+co. dried fruits for local and international certification. currently, mOp worksalso sell their products themselves,e+co assisted the company in its busi-consumption. e+co assisted mOp inwith 85 farms that are certified which boosts the local micro industry.ness registration and provided training reorganizing its management struc- organic. The farmers have a purchase 14. case 2 .................................................................................. MyC: The explosive power of entrepreneurship ..........MyC4: empowerment of women. On August 26, 2008, the danish minister for development coopera-The explosive power tion, Ulla Trns, handed over an mdG3 Torch to myc4. in accepting the Torch for myc4, mads Kjrof entrepreneurshipmade a deep commitment to expand mYc4s marketplace with more African partners with amyc4 joins platforms like Kiva andfrom something or someone you acceptable rate online from myc4 specific focus on women to ensuremicroplace that match investors tocare for to a plastic explosive investors, funds are transferred that women have access to capitalentrepreneurs. The model is simple. called c4. mads Kjr from from investors accounts to a locallyand competences on fair and trans-An African entrepreneur needs denmark, ceO and co-founder ofregistered partner financial institu-parent terms. Kjr plans to do thisyour investment to help develop his myc4, explains: Like money, ation that disburses the funds to the in two ways: by introducing myc4or her business. Your investmentplastic explosive will not create any entrepreneurs in accordance with as an investment vehicle to largecould be funds, advice, knowledge value if there is no detonator and if the terms agreed online. From that potential institutional investors like Catherine Akwir, who sells vehicle parts at Ugandas biggest market for sparepartsor inspiration. it uses a bidding no one activates it. The myc4 deto- moment on, all cash flows aredevelopment banks, foundationsdecember 2008december 2008process that is based on a dutch nator is the internet and stake-handled by this financial institution, and pension funds so that they can advice and provide acute financialAfrica and my firm belief in theauction which basically means theholders can engage and activate while overall entrepreneur follow- pave the way globally for othersupport. This is a women-only power of entrepreneurship, i imme-more people who are interested in the money for business purposes inup is maintained by the provider.smaller investors like private indi- group that calls itself Womendiately agreed, says Lantinga. she2investing, the more favorable the Africa. it is time for private businessviduals and by introducing moredevelopment. catherine is settingcontinues: in sub saharan Africa 2terms (e.g. interest rate) become for to step up and take opportunities inMads Kjr, Co-founder andproviders to those myc4 investorsan example to other women bymen have been calling the shots forUpsidesUpsidesthe African business. Africa seriously.CEO of MyCwho have a specific focus on being open-minded about investing ages. What you see now is thatin september 2008, more thanLoans are identified and screened The vast majority of those receiving investing in women-owned busi- and engaging in businesses domi-women in Africa are making major7000 investors from 72 countriesby local partner organizations, microcredit worldwide are women.*nesses.nated by men. progress in defining their ownhad invested in excess of eUr called providers, who also submit myc4 sees the support of genderAn example of one of the manyfuture, because of internet and4.5 million in 2,700 African busi-a profile of each loan request andequality and womens economicfemale entrepreneurs who has myc4 is currently mobilizing advi-mobile phones. The only thing isnesses through myc4.entrepreneur online to www.myc4.empowerment as crucial elementsreceived loans through myc4 is sory boards in iceland, sweden, that there are still too few women inThe name myc4 refers to different com. Once the entrepreneur hasin the ongoing development initia- catherine Akwir, who sells vehicle The Netherlands, Uganda and high ranking positions, which makesaspects of the platform, rangingsecured the desired capital at an tive in Africa. One of myc4s goalsparts at Ugandas biggest market Kenya as part of the companysit difficult to really make that shift tois to provide the best possiblefor spare parts. in 2007 she ongoingdevelopment. These independence. What is so greatmeans for African women to liftreceived her first loan of eUr 250,boards are to advise myc4 on theabout myc4 is that those who wantthemselves out of poverty andenabling her to improve the qualityroll-out in the above-mentioned to invest and those who wish tocreate healthy economic growth of the spare parts and increase hercountries and to set up contacts. All expand their businesses find eachthrough micro and small businesses.stock to meet customers demands.of these advisory boards are to beother through this platform.it is therefore no surprise that after by doing so, she increased her chaired by women. mads Kjaer: Whereas other initiatives are oftenmyc4s first year of operation, 67%monthly income by 30% making itWhy? Well, just because we havesupply-driven, this one truly helpsof its portfolio is women-ownedpossible to support her householddesigned the Advisory boards this to build equal relationships. Africabusinesses.and send her children to school. inway and because there are somedeserves that.in march 2008, the Global mdG3 spring 2008, catherine receivedfantastic leading women out therechampion Torch campaign washer second loan of eUr 700 towho we can learn from. The dutchlaunched in copenhagen, denmark: expand and develop her business. board will be headed by Anne-more than 100 mdG3 Torches willAn important part of catherines marie e. Th. Lantinga-Hammes, atravel around the world to promote business is her membership of aproject finance consultant who wasthe third millennium development group of six women who help each asked to chair this board in June * Source: State of the MicrocreditGoal for gender equality and other do business, give each other 2008. because of my love forSummit Campaign Report 2007Mads Kjr, CEO and co-founder of MyC 15. case 3 .....................................................................................Realizing dreams through access to finance.........Realizing dreams throughaccess to financewomen represent 52% of loans recipi-Nicaragua is a country where moreFiNde(Nicaraguandevelopmentobjectives to serve micro, small andents and women account for 52% ofthan 50% of its population is consid-institute Fund) began operations inmedium-sized entrepreneurs. savings accounts as well.ered poor.small and micro enter- 1993 as an organization specializedprises have become the hope of its in financial services. in April of 2002, bANeX, the largest microfinance insti-bANeX has developed a specialpopulation to improve their living it became a financial institution, regu- tution in Nicaragua, has long main- product, mi Tarjeta pinolera empre-conditions. in spite of this, the possi- lated by the bank superintendence, tained that women can be successful sarial (my pinolera business card)bilities of access to credit by this with a new legal name, FiNdesA.entrepreneurs. bANeX invests in specifically for small business ownersportion of the population are scarce in women who want to realize their which is a revolving credit line in aNicaragua. private banks tend to the in 2008 FiNdesA received its banking dreams and supports women who smart card a combination of aneeds of clients who have economic licence under the new name bANeX want to set up or expand successful conventional credit line a combi-december 2008 december 2008resources, while there is no govern- (banco del xito or The bank of businesses with finance and businessnation of a conventional credit line income. Angeles recognizes the years ago. That was when only themental banking system. in this context,success) which will maintain the same development services. At bANeX, and a credit card. Notably, this tension between business and familygovernmental bank operated atproduct is mainly used by women. responsibilities: many women make a Ometepe island and the answer wasAbout 2,366 women use this busi- big and common mistake: they acquire negative. Norma says they denied the2 2ness credit card, as opposed to only a Usd 10,000 loan for a business for loan alleging she didnt have a recordUpsides Upsides669 men. example but only spend Usd 2,000 as a business owner. but Norma didnt on the business; the majority of the let that negative answer put her off.Angeles rodriguez is one of themoney goes to buy things for the she persisted. The opportunity camewomen who expanded her businessfamily. Thats when the problems start for Norma when she got her first loanwith support from bANeX. she is an when you dont use the money for from banex that supported her busi-entrepreneur in masaya, Nicaragua. the business. ness plans. Norma has now receivedshe owns five drug stores and a loans for Usd 5,000 from banex tomedical center. Her life as a business Another woman who succeeded in improve her business. its not easy towoman started ten years ago, whentransforming her small business into a have a successful business in one ofshe bought a small pharmacy with her medium-sized business is Norma cruz. the poorest towns of Nicaragua, sayssavings and some support from hershe started her business 15 years agoNorma. but i achieved it by graspinghusband. she started her businesswhen she used to sell fritanga (aopportunities, hard work and usingwith Usd 14,000. Later, she askedvariety of fried Nicaraguan food) at the money efficiently.bANeX for a bank loan to buy another an improvised 4-square-meter spot inpharmacy at masaya market. Today,front of her house. Now Norma owns Angeles and Norma are two of overthis drug store is one of the biggest at a small cluster of businesses that 87,000 non-traditional clients thatmasaya market it has a secondinclude a restaurant, a hostel and a receive business loans from bANeX.floor. services have expanded to transportation service for tourists. The For most of these people it is difficultinclude physician care and tests suchroad Norma had to take to become and sometimes impossible to accessas ultrasound. When Angeles ownedone of the small number of successfultraditional means of credit. As the twoonly one pharmacy, her husband and woman-owned small businesses ofwomen explain, running a successfulanother employee worked in the busi- Ometepe island was full of obstacles.business is about hard work and goodness. Today, she has 18 employees, Norma remembers the first time she management; however, in the end itwhose families benefit from a steady applied for a loan from a bank twelveall comes down to access to finance.Angeles Rodriguez in one of her five drugstores 16. ................................................................... Winning strategies for small business lending at INECO Bank........Winningstrategiesfor small business lendingat iNecO bank .............................december 2008 december 2008Building a profitable small magazine listed inecobank as one of30business portfoliothe top 20 fastest-growing banks in 31earlier this year, a report entitled, central europe and inecobank ranksUpsides UpsidesWinning strategies for small businessnumber one among Armenian bankslending was released by shorecap participating in the analysis. The bankexchange, www.sce.org. The report is characterized by a dynamic growthstudied seven financial institutions andrate, flexible management, creativitykey strategies adopted by a group ofand skilled personnel.successful small business lenders thathave enabled them to build a profit-inecobank was established in 1996 asable and sizeable small business port-a private bank and maintains strongfolio.ranking in the Armenian bankingmarket. 10% of its capital belongs toInecobankThe successful small business institu-iFc, with another 13.5% owned bytions reviewed have all attained signif-deG, a member of KfW bankingicant market coverage, continuous group. inecobank has developedvolume growth, low default ratios, andgood experience in sme lendingadequate operating margins. under credit lines provided by suchinstitutions as the World bank, eurasia period. experiences of the financial sound credit judgment. The financial have a strong marketing orientation, volumes are more often a function ofOne of the institutions, inecobank in foundation, UsAid financed programs,institutions reviewed reveal some char-institutionsinterviewed for theunderstand basic business nuancesthe number of accounts than the sizethe republic of Armenia, was listed KfW (Germany), ebrd and Adb.acteristics and trends common to shorecap exchange report demon-and be adequately equipped toof loans, simplifying product offeringsthis year in the Forbes 50 Top Micro- successful small business lending insti- strate that it is feasible to actively solicit perform credit risk analyses.and operating processes and proce-finance Institutions. inecobank is also inecobank and the other six financial tutions. accounts to build a sizable volume of dures without neglecting essentialranked as one of the ten largest banksinstitutions were chosen because ofloans while simultaneously upholding Efficiency control mechanisms will allow an insti-in Armenia by return on assets andtheir success in building sizeable port-Sustainability basic credit principles to maintainimproving efficiency levels in all tution to substantially increase its loancapital and is the leader in credit sales folios of small business loans with rela- sustainable portfolio growth depends acceptable portfolio quality. smallaspects of the loan underwriting volume.financing. in addition, The Bankertively low default ratios within a shorton both proactive marketing andbusiness loan officers should thereforeprocess is critical. because rising loan 17. Winning strategies ............................................................................................................for small business lending at iNecO bank Winning strategies for small business lending at INECO BankTechnology larly in remote areas resulted fromother spheres of the countrys economy,inecobank has its own system designed an installment basis. We were not parameters for different groups ofThe use of technological improvementseffectively harnessing technological says Garnik Tadevosyan, iT executive by inecobank iT specialists.satisfied with the programs in the localloans.particularly in the area of transactionadvances in communications.of inecobank.However, if one market that existed in 1998. Utilizingprocessing involving repetitive steps iscompares banking automation in Our bank is the biggest consumer our own automation system has given The five major componentsa characteristic of a winning strategy.Armenias banking system applies iTArmenia and abroad, the country is creditor in Armenia. We work with a us flexibility and speed in respondingof a winning strategystreamlining service delivery particu- products much more actively than the lagging far behind.large number of physical entities onto local iT developments.in the World banks World business environment survey (Wbes) of more According to Tadevosyan, commercial than 10,000 firms in 80 countries, banks are duty-bound to supply infor- small and medium-sized businessesSuccesses at Inecobank mation to the credit register of theworldwide, on average, named central bank of Armenia to insure financing constraints as the secondPandukth Manukyan peasants was seen as a privilege. each Hovhannes ChuljyanKhachatryan had a bakery located beside against risky deals. Our data is sentmost severe obstacle to their growth,in 2006, pandukht manukyan, the directorpeasant was able to purchase between 20Hovhannes chuljyan has been a customerhis house where he baked mainly Armenianautomatically. And as far as i know,while large firms, on average, placedof the Vayoc dzor Frukt Ltd. cheese factory and 60 goats.of inecobank since 2004. prior to applyingLavash bread. in October 2004, Khacha-there are only two other banks in finance only fourth. The demand forin Yeghegnadzor, Armenia asked ineco-for a loan, chuljyan was renting a six square tryan applied to inecobank for an initial Armenia with this capacity, says financing the various needs of smallbank to provide several peasants with a The peasants began paying off the loansmeter area at Gyumrys central trade houseloan in order to extend his business. Khach-Tadevosyan. businesses is considerable and isloan for raising goats in the village.after the sixth month to accommodate the for cloth trading.atryan believed that the credit would enableexpected to continue to expanddecember 2008december 2008manukyan needed goats milk for a certain time necessary for the goats to mature and him to obtain and reserve large amounts ofTechnology is a priority at inecobank;further, particularly in growing econ-type of cheese production, but due to the begin producing milk. After that the peas- chuljyan wanted to invest in the growth offlour at cheaper wholesale prices and at theone which they choose to improve andomies. However, certain inherentsmall number of goats in the village, mr. ants were able sell to milk to manukyan andcurrent assets, which would help him to same time reduce the cost of flour transpor-expand. recently, inecobank and characteristics make this sector verymanukyan had problems collecting an have enough money to pay off their loans.extend the variety of goods for sale to attract tation. The bank reviewed Khachatryans United payment system Arca have different from both the traditional3233adequate amount of milk. And so manukyan more customers and increase his profit. request for credit and granted him a loan.installed a virtual accounts system microfinance and corporate sectors,UpsidesUpsidesasked inecobank to provide eight peasants The loans were highly successful. Not only chuljyan applied for and received creditwhich allows for the payment of and prevent loan officers from seri-with loans in order to raise goats to provide did the peasants pay off their loans, but they with inecobank. since his first loan four years ago, Khacha-consumer credit debts via internet ously investingresources andmilk for his factory. accumulated enough savings to renovate tryan has now had five loans from ineco-installments can be paid on ineco-expanding in this sector to be able toand furnish their houses and send their chil-in four years chuljyan has had five loans bank for the total amount of Usd 6,400banks website.in November 2006, inecobank provided thedren to college. Additionally, the savings from ineco of a total amount of Usd 20,500. primarily for increasing current and fixedeight peasants with loans varying from Usdaugmented their daily living expenses andbefore receiving the first loan chuljyansassets. before receiving the first loan his Credit ScoringIneco client1,000 to Usd 3,000 each for purchasingprovided for investments to further developinvestments in assets was Usd 6,800, butinvestments in current assets were Usd 700, Another characteristic of good strategyand raising goats. The credit provided to the their business.today they amount to Usd 28,000. Theand these have now increased to Usd is to utilize credit scoring to deliver growth in the current assets is associated11,000. The increase can be attributed to a faster results. some banks are using with the precise use of the loans. Noticeable precise use of the credit. The loans helped modified credit scoring systems as a improvements have appeared in chuljyansKhachatryan to diversify his business. He means of addressing the shortcomings familys living conditions over the last four now rents another property where he sells of conventional risk analysis methods. years. Additionally, chuljyan has enlargedshoes. Khachatryans sales volume increased A successful credit scoring model does his trading area by four times its original and he hired more employees. As a result of need an extensive database of past size. This helped chuljyan to better displayincreased profits Khachatryan started a loans including significant data on his products for sale.new business (the shoe shop), augmented each loan. Financial institutions that his daily living expenses, and bought homeare new to the small business lending Armen Khachatryan appliances. Further savings helped him to market may not initially have the data Armen Khachatryan has been a customer renovate his house, purchase a new car andneeded to develop a sound creditIneco client of the inecobank Gyumry branch sincefinally finance his wedding ceremony. scoring system. more often, financial 2002. institutions tend to use modified scoring systems where they use the experience gained on the ground to develop a quick and dirty set of loan assessment 18. Winning strategies ............................................................................................................for small business lending at iNecO bank Winning strategies for small business lending at INECO Banktake advantage of these opportuni- address market and other constraints. tage of the profit opportunities in defaulting loans. several financialgeneral terms, the key elements of the2) creating a suitable organization inties. As we saw in this publication, As the financing gap in the sectorfinancing small businesses can learninstitutions in our study achieved thiswinningstrategiesemployed byterms of structure and adequatelysome institutions in various countries becomes more obvious and develop- from these and adapt them to theirthrough a judicious combination of successful small business loan officers trained manpower to effectively deliverhave managed to overcome these ment finance focuses on the impor-own situation.marketing and operational strategies include:the product to the market;impediments and become successful. tance of small businesses in gener- premised fundamentally ontheir 3) Formulating the appropriate accom-Their experiences provide valuable ating livelihoods and alleviating successful small business lending comprehensive understanding of the 1) designing the appropriate lendingpanying marketing and credit strate-insights into the specific strategiespoverty, other prospective small busi-means having a growing portfolio of needs,wants, characteristics and product, taking specific market needs gies and action plans to ensure marketthey formulated and implemented to ness lenders that wish to take advan- loans with a manageable level ofnuances of their target market. in and characteristics into consideration; acceptance;Understanding SME financein 1971, a young banker, Jesus p. Tambun- poverty alleviation mechanism and anlopment assistance. However, in the last few ability to navigate the continuum of inclusiveting, ventured into rural philippines with ainstrument for graduation to sme. micro years improved information and communi-finance and its understanding of the require-plan to build a profitable commercial bank. enterprises are a nursery for the incubationcations technology have made the process ments of sme.This plan soon changed and now, planters- of future smes, said Ambassador Tambun-easier and cheaper. As technology anddecember 2008december 2008bank is the largest privately-owned and ting, expressing confidence in microfinance information sharing continue to improve, the in the end, size matters. The Ambassadormanaged development bank in the country as a part of the strategy for poverty allevia-approach could become significantly more remarks, Historically, we have repeatedlygeared towards smes.tion. cost-effective.gone down-market. Of course, it is easier to go with larger smes, but if we go in that33its a challenging segment to lend toin the shadow of microfinance there is soAmong its bds services, plantersbank offersdirection, we will no longer lend to smes.UpsidesUpsidesbecause youre handling so many accountsmuch about smes that goes unsaid. sme a membership program through its internetWe focus on the s rather than the mborrowing small amounts you have to finance is a phenomenon! i would like toaffiliate, sme.com.ph, created to establishand reach out to rural areas. That size fitsspend a lot of time with each borrower, anti- think that smes makes the greatest impact.an e-community for smes in the philippines.us best.cipating their needs, getting to know poten-A winner of the 2001 Asian banking Awardstial problems, but getting through theseWhen we say that we at plantersbank offer for ecommerce service, sme.com.ph also it has never been a better time for smes,obstacles on a day-to-day basis is what sme lending, it is important to know that weoffers bds to design and manage websites said the Ambassador. At present, smesmakes it so fulfilling, remarked Tambunting, are ultimately talking more about capacityfor sme clients, sets up accounting andcomprise 90 percent of all registered busi