Bangladesh: Male Microcredit Recipients More Likely to Be Entrepreneurs Than Fem...

Dec 2016
Bangladesh, December, 07 2016 - The study shows that only 15 per cent of women who have access to microcredit are entrepreneurs, while 39 per cent of their male counterparts who have access to microcredit are entrepreneurs, though male loan recipients are less than 10 per cent.

Males with access to microcredit have more potential to be entrepreneurs than women having the same facility, a study shows.

The study shows that only 15 per cent of women who have access to microcredit are entrepreneurs, while 39 per cent of their male counterparts who have access to microcredit are entrepreneurs, though male loan recipients are less than 10 per cent.

The findings of the study were revealed on Wednesday at a conference titled 'National Policy Conference on Access to Credit and Women's Entrepreneurship in Bangladesh" organised by the Center for Microfinance and Development of University of Dhaka and Faculty of Business Studies at the faculty.  

There are currently about 20 million borrowers in the country, of which around 91 per cent are women.

The study also said only 1.3 per cent of women are entrepreneurs who do not have access to microcredit, while 20 per cent of men are entrepreneurs without having access to microcredit.  

A three-member team led by Dhaka University Professor of Finance Department M Jahangir Alam Chowdhury conducted the study titled 'Women's entrepreneurship and access to microcredit: Evidence from Bangladesh. Other two members are Associate professor of the department Shabnaz Amin and Lecturer Tazrina Farah.

This policy brief is based on the partnership for economic policy (PEP) project, carried out with scientific support from PEP and financial support from UK Aid and Canada's IDRC.

The analysis is restricted to the people aged 18 and over, which gives a working sample of 33,265 individuals with 17,227 women and 15,973 men.

The findings also show that the likelihood of women becoming entrepreneur increases by four percentage points when the women are members of microcredit programs run by Micro Finance Institutions (MFIs).

In contrast, microcredit membership amongst men increases their probability of becoming entrepreneurs by 28 percentage points.

The study says the total amount of microcredit received from MFIs is a significant and positive factor for female entrepreneurship in Bangladesh.

In fact, a one percent increase in the total amount of microcredit received by a woman increases the probability of her being an entrepreneur by around three percentage points.

"The same increase in microcredit for a male borrower increases the probability of becoming an entrepreneur by 14 percentage points." notes the study.

Furthermore, the participation in microcredit programmes by female members of the household significantly increases the probability that the men in the households will be entrepreneurs.

The research team believes that this is because female beneficiaries allow the male members of their households to use their microcredit loans.

They have found the reason for this is that the "cost of allocating time to running a business instead of taking care of household responsibilities is too great for most women and that allowing male members of the household to use the loans helps maximise the household income."

"Household dynamics are likely to be more important for women than for men in terms of becoming entrepreneurs. Married women are less likely to become entrepreneurs than unmarried women; however, the opposite is true for men," says the study.

The findings, in particular the cross-gender analysis, show that men's access to microcredit is not significantly beneficial for female entrepreneurship, whereas women's access to microcredit significantly increases the probability of a male household member becoming an entrepreneur.

The research team states that these findings raise policy concerns as, to be a tool in the reduction of poverty; microcredit should be used to start microenterprises.

"With the results indicating that MFIs are not achieving their objectives because the programs are not used as intended, it is important for policy makers to redesign the current microfinance programmes so that female beneficiaries use the microcredit to start microenterprises that they will own and manage," concludes the study.

State Minister for Finance and Planning M Abdul Mannan inaugurated the conference, while Dean at Faculty of Business Studies Shibli Rubayat Ul Islam chaired the event.

Speaking at the inaugural session, Secretary of the Bank and Financial Institutions Division of Finance Ministry Md Eunusur Rahman said that the government is planning to bring 'unbanked' people under the banking system through agent banking, mobile financial service and microfinance.

He said the government was considering on how it could help the people graduate from microenterprises.

Bangladesh Bank Deputy Governor Abu Hena Md Razee Hassan said women could not utilise many schemes and opportunities provided by the government due to lack of awareness and the shortage of collateral, skills.

He said that financial inclusion is the only way to develop and empower women, and the government has been relentlessly doing that.

Responding to the allegation of high interest rate charged by MFIs, Microcredit Regulatory Authority (MRA) Executive Vice Chairman Amalendu Mukherjee said their cost of doing business was much higher than that of the formal banking.

He expressed the hope that Dhaka University will open a new department on microcredit to conduct further study and research.

Palli Karma-Sahayak Foundation Managing Director Md Abdul Karim said poverty has multi-dimensional aspects. The government has been doing a lot to alleviate poverty.

Speaking at the first technical session of the conference, Deputy Managing Director (Operations) of PKSF Md Fazlul Kader said that entrepreneurship cannot be made; only a congenial environment can be made where entrepreneurship would flourish.

If women do not have direct control over cash income, they cannot be empowered, he said, calling for policy intervention in this area.

DU Finance Department Professor Mahmood Osman Imam and Bangladesh Institute of Development Studies (BIDS) Research Fellow Wajid Hasan Shah also spoke at the session.

Another FE report: Women entrepreneurs' access to credit is limited due to the 'negative' attitude toward females, though many specialised loan schemes have been launched to attract them, discussants have said.

They also said the women entrepreneurs have to face various challenges for receiving credits including family restriction, dependence on the male counterparts and lack of adequate knowledge for starting up new business.

The observations were made at a panel discussion at the conference, chaired by Bangladesh Foreign Trade Institute Director Amitava Chakroborty.

Chief Executive Officer (CEO) and Managing Director (MD) of Modhumoti Bank Md Shafiul Azam, CEO and MD of the Farmers Bank Limited A K M Shameem, General Manager of the Small and Medium Enterprises Foundation Shaheen Anwar and Executive Director of Thengamara Mohila Sabuj Sangha (TMSS) Professor Hosne Ara Begum spoke on the occasion, among others.

In his speech, Shaheen Anwar said women's inclusion in the national economy would have grown at much higher level, if the lenders' attitude towards the women entrepreneurs had changed.

"A few women become defaulters compared to the number of male entrepreneurs, still many lenders prefer lending to men than women," he said.

He also said earlier many women used to apply for the loan just to give the money to their husbands or other male family members.

Hosne Ara Begum said a good number of financial institutions provide many schemes for lending women entrepreneurs in theory, but in reality females encounter more complexities than their male counterparts while getting finances.

A K M Shameem said the financial inclusion of women in the economy is better than that of other countries. So far 145,664 women received credit of Tk 330,480,000,000 (330.48 billion) from banking channels, he said.

However, he identified social constraints, women entrepreneurs' knowledge and their responsibility toward family as major challenges for the efficient use of loans women get.

Explaining the entrepreneurs' inadequate knowledge for starting up a business, he said, "Around 41 per cent of woman entrepreneurs come to the banks without a trade licence."

The Financial Express, RTV and The Daily Bonik Barta supported the conference as the media partners.


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