October 18, 2010 — After months of pressing their local bank to make credit more available to women, the District Women’s Business Forum (DWBF) in Sylhet, Bangladesh, has something to celebrate: 12 members recently received bank loans to expand their businesses.
It’s a small number that represents a big breakthrough for Bangladesh. Research shows when women control the money they earn, they are far more likely than men to invest it in the health, education, and nutrition of their families, creating a positive cycle that promotes development. Yet women across Asia face persistent barriers to economic participation, and according to a U.N. report for the Asia-Pacific, women’s lagging participation in the economy costs the region $89 billion every year. Additionally, because women lack access to important information about the business environment, they don’t effectively advocate for change.
The DWBF helped the women of Sylhet overcome their information deficit. Participants quickly discovered they had a common problem – limited access to credit. In Bangladesh, property is traditionally registered to a male of the household – including all women’s businesses – depriving women of that central element of a business loan, collateral.
Through dialogues organized by The Asia Foundation’s Local Economic Governance Program, the bank and the DWBF found an alternative: “social collateral,” built on the trust and credibility that comes with belonging to a group. The DWBF would provide this social collateral by guaranteeing its members’ loans.
Women’s Business Forums in three other districts, Barisal, Bogra, and Rajshahi, have now repeated the success in Sylhet, and the idea of social collateral has received the endorsement of the Central Bank.
“Once you create these networks – a culture of exchange and dialogue – all types of information can circulate,” says Véronique Salze-Lozac’h, The Asia Foundation’s regional director for Economic Programs. That information – shared and acted upon – is toppling traditional barriers facing women in Asia.