Notes from the Field

Is Access to Information One Solution to Growing Women’s Economic Opportunity in Asia?

July 7, 2010

This article is the first in a three-part blog series exploring the barriers to women’s advancement in Asia and how The Asia Foundation is working to address them.

After months of advocating for access to credit from their local bank, the members of the District Women’s Business Forum (DWBF) in Sylhet, Bangladesh, have something to celebrate: 12 of them recently received bank loans to grow their businesses. One has already opened a new outlet for her business and hired 10 women to work there. Another has recruited five women for the planned expansion of her handicraft and garment enterprise. All of them are already in a position to repay the bank. Fifteen more loan applications are in the pipeline.

Women in Bangladesh

In many Asian countries, including Bangladesh, cultural tradition dictates that property and assets are almost always registered in the name of a male member of the household, denying Bangladeshi women the chance to gain collateral, needed to get bank loans to start businesses. Photo by Jon Jamieson.

These may be small numbers, but they represent a breakthrough that could add up for Bangladesh in the long run. Currently, women have extremely limited access to the capital that exists in their own country, which is a major impediment to expanding their businesses and creating jobs. This has far-reaching implications because it is now well-established that when women control the money they earn, they are much more likely than men to invest it in improving the health, education, and nutrition of their families, setting off a self-reinforcing cycle that can strike a blow against poverty.

The UN’s latest Human Development Report for the Asia-Pacific showed that countries in the region scored near the bottom on measures of women’s education, employment, and property rights. These countries are leaving money on the table: the report estimates that lagging rates of women’s participation in the labor market cost the region $89 billion every year.

Women across Asia face a wide variety of barriers to economic participation. Some are overt, such as discriminatory laws, or even the absence of laws banning gender discrimination. But in many cases, the barriers are by-products of entrenched cultural mores that exclude women from mainstream business and networking associations and prohibit them from owning property. As a result, women’s ability to access important information about the business environment, or to advocate for policy changes, is significantly hindered.

By coming together to form the DWBF, the women of Sylhet addressed a number of information problems. First, the forum allowed them to discern that they faced a common challenge in accessing credit and gave them a platform for discussions with the local bank. Next, they worked together to come up with possible solutions. Finally, more empowered and prepared to move forward, they learned to advocate for themselves through Asia Foundation-led workshops, which helped them negotiate a solution with the bank.

“The biggest challenge we face is to make the District Women’s Business Forum acceptable to the commercial banks,” says Suparna Hasan, who works for The Asia Foundation in Bangladesh.

Although the Central Bank of Bangladesh had already written guidelines urging commercial banks to ease access for women who run small and medium enterprises, the banks faced the reality of gauging the creditworthiness of women who had no property or assets. Cultural tradition dictates that property and assets – including the businesses that women run – are almost always registered in the name of a male member of the household, denying Bangladeshi women ownership of that all-important component of a business loan application:  collateral. Through District Public-Private Dialogues organized by The Asia Foundation’s Local Economic Governance Program, the bank and DWBF decided that a different type of collateral would fit the bill: “social collateral,” built on the trust and credibility that comes with belonging to a group. The DWBF agreed to provide “social collateral” by acting as the guarantor for its members’ loan applications.

“When you are in a group or association you create some trust and confidence, and I think that was important in the relationship with the bank,” says Véronique Salze-Lozac’h, The Asia Foundation’s Cambodia-based regional director for Economic Programs. “The fact that they [the DWBF] were organized, that they knew each other, makes it actually less risky for the bank than just looking at one isolated person and looking at their capacity to reimburse.”

By convincing bank managers to modify loan requirements for women, the DWBF has begun chipping away at an underlying structural problem – lack of collateral resulting from lack of ownership – that constrains the Bangladeshi economy. Women’s Business Forums in three other districts, Barisal, Bogra, and Rajshahi, have repeated the success in Sylhet. The idea of social collateral is slowly starting to catch on, too; it received the Central Bank’s imprimatur in the most recent guidelines for loaning to small and medium enterprises.

Indonesia is another country where, although not a single law bars women from owning a business, the barriers spring from cultural norms. The challenge then becomes one of helping perceptions catch up to the law. For 10 years, The Asia Foundation has run a program that sets up “One-Stop-Shops” for business licensing. Without a license, businesses often cannot export, sell to large buyers, or access capital to grow. Aimed at streamlining a complex and inefficient process that can discourage entrepreneurs from registering their businesses – a problem affecting men and women alike – these shops have produced the side effect of reinforcing the message that a woman has the right to own a business in her own name.

“One of the impacts of the program is to change the perception that it’s difficult for women to put the business in their name,” says Hana Satriyo, who works for the Foundation in Indonesia. She explained that many women decide to register their businesses in the name of their husband, believing that this will make it easier for them to get a license. Later on, they realize that without a business in their own name, they have no assets. Without assets, credit is nearly impossible to come by. In effect, addressing the information problem – the acceptability, necessity, and process of registering a business – paves the way for easier access to credit, growth, and exporting.

Slowly but surely, women in Asia are beginning to integrate into mainstream business associations. But one of the best sources of information for women entrepreneurs continues to be their peers. In Cambodia, The Asia Foundation organized cross-provincial business-exchanges, bringing women from rural areas to Phnom Penh to meet with women running larger businesses in the capital city and share information on everything from management techniques to obtaining a business license.

In Aceh, Indonesia, The Asia Foundation and a local partner are assisting more than 1,500 women in building 42 community-based microcredit groups. The Achenese women’s involvement in creating their own local microcredit institutions from the ground up is strengthening their capacity to advocate for themselves and form social networks.

“Once you create these networks, a culture of exchange and dialogue, all types of information can circulate,” says Salze-Lozac’h. “It’s not an end in itself, but the beginning of providing capacity for women to have access to information.”

Information – shared and acted upon – is an important driver of economic opportunity for women in Asia, and can at least put a dent in some of the barriers they face.

Jill Kosch O’Donnell, a former Junior Associate of The Asia Foundation, is a writer in Washington, D.C. She can be reached at jillkosch@hotmail.com.

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