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Microloans Foster Entrepreneurship in Poor Countries

18 July 2008
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In many developing countries, micro-financing has created possibilities for burgeoning entrepreneurs who would not have found funding before.  VOA's Barry Wood reports that special attention is now being paid to female entrepreneurs, who have had to overcome cultural barriers to get financing.  (Part 3 of 5)

The Grameen Bank in Bangladesh is a ground breaker. It lends almost exclusively to women.  And its small business loans are almost always paid back. 

Nobel Prize-winning Standard

Mohammed Yunus
Muhammad Yunus
Muhammad Yunus is the bank's founder and a hero in his country.  Grameen was the first to lend on a grand scale to poor, aspiring entrepreneurs in the developing world. The venture into microcredit won Yunus and his bank the Nobel Peace Prize in 2006.  
"It's fantastic news.  We are all very excited about the good news.  It excites everybody in Bangladesh and also the people who are involved in micro-credit around the world," Yunus said.

Melissa Carrier, at the University of Maryland, says Grameen's micro-financing has expanded the concept of entrepreneurship.

"Certainly Grameen Bank has given legitimacy to those kinds of micro-loans to local villagers," she noted. "And so the idea of entrepreneurship now is about doing for yourself. It's about raising chickens, and having cows, and knitting scarves and being able to feed your family." 

Microlending in Kenya
Margaret Okoth
Margaret Okoth
Margaret Okoth runs a market stall in Nairobi, Kenya.  She is benefiting from low-interest micro-loans from her village cooperative.

"(The cooperative) has recently increased its limit so that you can borrow 80,000 (shillings)," she said.  "And if you take out that big a loan you'll really see your business grow."

In Kenya's post election violence, Okoth's stall was destroyed.  But coop loans allowed her to rebuild - and also balance her business with her other job, as a wife and mother of 12.

Now, the Grameen model is being promoted by big lenders like the World Bank, in its discussions with developing countries.  

African Issues

Micro-credit can help women like this one, at a market in Sao Tome
Micro-credit can help women like this one, at a market in Sao Tome
Dahlia Khalifa is a business specialist at the World Bank's International Finance Corporation.  She says women in African countries face special issues.

"Often times we've seen, and there has been some research done especially in African countries, that women are not given the same consideration as men when they apply for a loan," she said.

That was the case in Egypt. Hoda Galal Yassa is one of Cairo's leading female entrepreneurs. She says women in the Arab world face a formidable barrier.

"Everybody looks at a woman...as a good secretary, a good assistant, maybe she can cook very well and make something from that," she said. "But to be a business woman, particularly in the industrial field, it wasn't easy or accepted easily by men."

Yassa started her detergent and other factories with funds from family members.   

Women Face Challenges

Elaine Allen
Elaine Allen
Elaine Allen, a professor at Boston's Babson College, says access to capital remains the biggest obstacle female entrepreneurs must overcome, especially in Africa and the Middle East.

"Culturally, they (women) are not able to go into banks and deal with men," she noted. "That is a cultural barrier. And what we're seeing is that micro-finance is one way to get around this. And also we have recommended that banks there (in Africa) hire women."

Discrimination against women goes even further, says Dahlia Khalifa of the World Bank.  

"In many jurisdictions, we're sometimes finding that women are treated as legal minors, or they're not able to be a full signatory to a contract, or to represent themselves in court,"  she said.

Overall, the situation is  improving. Men and women entrepreneurs are finding ways to obtain capital. And some governments are beginning to take action to make it easier to do business.


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