Financial literacy, change in mindset towards women SMEs, entrepreneurs crucial
ISLAMABAD : The speakers at a report launch on financial inclusion for women entrepreneurs underscored the critical need to enhance financial literacy and awareness towards projecting women small and medium enterprises (SMEs) and entrepreneurs as positive players of the market and end biases and unconducive environment hampering their growth in trade. The Sustainable Development Policy Institute with the Friedrich Naumann Foundation (FNF) organised the Launch of the Report titled “Advancing Financial Inclusion for Women Entrepreneurs in Pakistan” here. Joint Executive Director SDPI, Dr Vaqar Ahmed said the report is the third research conducted in collaboration with the FNF that sheds light on financial inclusion in the context of women entrepreneurs. However, there would be other women stakeholders apart from the female entrepreneurs who needed deeper research so that their inclusion could be prioritized, he added. “SDPI’s past research evidence show that women’s financial inclusion is directly corelated to the household level financial literacy. In this regard, this research becomes very important,” he added.Dr Vaqar noted that the issues around credit, taxation, regulatory hurdles were all well known, whereas all these constraints needed to be looked into a political economy context to carve a way forward whole hat owning these limitations.He added that the discourse should focus on outcomes offering a roadmap approach on the report’s recommendations and prioritise the action matrix while moving forward and offer it to the government, private entities, business associations, chambers of commerce, the banking associations, and others. He underlined that everything under financial inclusion could not be done by the government and regulatory bodies, whereas private sector would need to come forward and offer ideas which are more innovative than the conventional approaches. Birgit Lamm, FNF Country Head in her keynote address said the report document would provide policy umbrella on the work done by FNF on promoting entrepreneurship among marginalised groups particularly women forming fifty percent of the country’s total population. She added that FNF has supported individuals on the microlevel of entrepreneurship to support their businesses, whereas the financial challenges like capital management during first five years of establishing businesses across the globe were the biggest risks faced by women. “Lack of CNIC and certain registrations and formalities and societal biases makes it harder for female founders to get support for her startup as compared to the male founders. We need to not only focus policy but also education at different levels from schools to media to promote women as equally reliable business partners as men,” Lamm said. Faeyza Khan, Adjunct Faculty, SDPI and Head of Inclusive Finance, TANGENT in her presentation on Advancing Financial Inclusion for Women Entrepreneurs in Pakistan explained the study methodology that included interactions with Central Bank, SECP, Regulatory bodies, Women chambers of commerce, SAARC chamber of commerce, HBL the pioneer of women banking products, and microfinance banks starting from high level to middle level banks.“Globally there is a USD 28 trillion opportunity to tap through women inclusion into trade and economy. However, around 231 million women run formal businesses in middle and low income countries. Globally, women are 38% of the labour force which is 22% in Pakistan,” she added. Khan said there were 13.5 million women workers in the country out of which 7 million were agriculture workers categorised as family workers and remain unrecognised and unpaid. Women in 2018-19, she said had earned just 18% of their men counterpart under unpaid care work and spent 10 times the hours as men in unpaid care work.The study had found that it was difficult for female SMEs and entrepreneurs to get a loan and if available it was expensive for them as women lack access to same kind of networks, information pools and mentorship in business and trade, she said. “There are 5.3 mln SMEs in Pakistan and women owned are one percent as per World Bank data. India has 14% women SMEs and Bangladesh has 7.4%,” she said.Faeyza Khan said the study recommended to increase awareness on positive impacts of women entrepreneurship, leverage connectivity, and introduce robust result measurement frameworks for promoting women in trade. Gulalai Khan, Revenue Moblisation, Investment and Trade (ReMIT) Programme said ReMIT has been extensively working with the women entrepreneurs in various projects. She added that this issue was international and not limited to Pakistan as in 2022 women exiting businesses were more than men and 24% of them were those who started it keenly but left due to lack of profitability, family and personal reasons. The policy or regulatory environment was very important in supporting women to start and scale up their businesses which was unfavourable in Pakistan, she said, adding, “Women lack information on taxation policies and mechanisms as these are women running businesses but are unable to file their taxes and information manipulation is done by the systematic environment.” Murium Hadi Financial Inclusion Specialist, Asian Development Bank said the status quo would prevail as patriarchal mindset would stick to the system but it demanded plans and strategies to work within for betterment. The women entrepreneurs, she said promotion needs to looked into the options extended to a woman through various policies while starting her business or startup as entrepreneurship was a round the clock task that would require time, capital and commitment. “The exit ratio of women entrepreneurs is higher, and reentry is low. The little educated women in the strata of entrepreneurs are preferred in the system,” she said. Hadi recommended that documentation, and track and trace system needs to be adopted, whereas the Indian model was brilliant that gave the system to pool ones savings and leverage it and multiply it which was completely missing in Pakistan. “Change in perception of institutions is important as 78% SMEs spend their most of the time in nonfinancial related tasks,” she said. Fareeha Armughan, Head SDPI Center of Evidence for Action and Research said women entrepreneurship has more focus on SMEs and startup ecosystem. Its high time to move needle on the business as usual on social protection and embed a system of household enterprises and entrepreneurship through a full circle of financial inclusion that starts from basic literacy and four pillars of saving, credit, digital transactions and insurance, she added. Salman Shahzad, Project Director, National Institute of Banking and Finance (NIBAF) said the Institute had trained 3.5 million so far and 80% of them have opened their bank accounts including 57% females. He shared the experience of training women in remote areas on financial literacy inclusion in Balcohistan that led to the training of 8,553 against the set target of 9,000 females female students of ages from 13-28 year who never stepped out of their homes in the remote districts of Balochsitan. Shahzad informed that the training took 1.5 years to train those students on Urdu and English language and financial literacy but their parents did not allow them for biometrics to get a CNIC to secure seed money of Rs25,000. However, the Institition with Meta previously Facebook trained 6500 micro women entrepreneurs whereas out of them only 4-5 borrowed loan from the banks. He suggested that there needed to be a thinktank on financial literacy, financial inclusion.
