The credit requirement for women entrepreneurs at present stands at $106 million, according to a study released by International Finance Corporation (IFC), a member of the World Bank Group.
Currently, women own about 14,300 small and medium enterprises in the country, accounting for two per cent of gross domestic product (GDP), and employing over 200,000 workers, said the study that also suggested meeting women entrepreneurs' current credit requirements of $106 million to increase their contribution to the economy.
Women entrepreneurs could play a significant role in economic growth, if financial institutions address their financing needs with suitable offerings, it said. The study added that women are more entrepreneurial than men, generating six per cent higher profits on annual sales even though they operate smaller businesses, according to small and medium enterprise gender baseline estimation for IFC’s financial market portfolio in Nepal.
Access to financing remains their biggest hindrance because banks prefer fixed assets as collateral that few women entrepreneurs possess. Other operational needs include improved access to markets and training for skill development.
"The study is a much-needed initiative that provides banks and financial institutions with valid data to help design banking products and services, easing access to finance for women entrepreneurs," said general manager of Clean Energy Development Bank Barsha Shrestha. "We are working to strengthen our product portfolio to support their businesses."
The study also suggested credit rating and collateral registry should guide financial institutions, helping them tap into the $2.5 billion lending opportunity for small businesses.
"It is important that banks consider the requirements of women entrepreneurs an intrinsic part of their small and medium enterprise strategy," said IFC programme manager for Access to Finance Thelma Tajirian. "One solution is that banks allow use of movable assets as collateral when assessing their clients’ financial risks."
The SouthAsia Enterprise Development Facility, managed by IFC, in partnership with the British government and the Norwegian Agency for Development Cooperation, carried out the study.
IFC’s Access to Finance programme facilitates growth of small and medium enterprises in Nepal, helping enhance their financing options through a supportive financial infrastructure, including institutions, financial product development, and improved payment regulations.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, mobilising capital in international financial markets and providing advisory services to businesses and governments.In fiscal year 2011-12, its investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges.