Challenges to women entrepreneurs

Pakistan will also have to improve the system to achieve high female engagement in economic activities

Durdana Najam January 16, 2020

The proportion of women entrepreneurs in Pakistan is dismally poor — barely a percentage of the country’s entrepreneurial community. Unless more women embrace business ventures, their economic participation and emancipation will remain meagre and a challenge. One of the major reasons for women to remain behind entrepreneurially is the lack of access to finances. The gender-wise distribution of gross loan portfolio of the State Bank of Pakistan (SBP) shows that only 3% of small-medium business loans go to women as compared to the 97% given to men. Similarly, only 19% of the microfinance loan is lent to women while 87% of the loan goes to men. Similarly, an inspiring female entrepreneur in Pakistan cannot open a bank account without mentioning her father or husband’s name in the presence of a witness. These impediments are not due to discrimination in the banks’ regulations. In fact, according to a study conducted by the Asian Development Bank (ADB), this gap is the result of the banks’ preconceived notions that female clients lack creditworthiness, are dependent on men and that obtaining information about their reliability is difficult. In addition to these structural barriers, women, both in rural and urban centres, have been found unaware about the financial services available to them.

The employment rate for women in Pakistan is also not very encouraging, which is around 4.3%. It is even lower in industries. The work environment discourages women to engage in economic activities because of the failure of the organisations and industries to provide for special arrangements, such as daycare centres for childbearing women, enforcement of the Workplace Harassment Act, which has been duly passed by the federal and a few provincial governments. Women in the rural setting suffer even more in the hands of profit seekers who take advantage of these women being illiterate, poor and unaware about their rights enshrined in the statutes.

Just as the environment throws challenges in the way of women, restricting their abilities to enter into entrepreneurship, so are there challenges within women that put obstacles in their paths to becoming economically independent. In their research on “Entrepreneurial Perceptions and Intentions: The Role of Gender and Culture”, Rachel S Shinnar, Olivier Giacomin and Frank Janssen argue that there are three perception barriers to female entrepreneurship: lack of support, fear of failure and lack of competency.

These restrains notwithstanding, women in Pakistan like in many South Asian countries have been the victim of patriarchy entrenched in social and cultural norms.

Two trends — male dependency and the unequal distribution of resources and opportunities between men and women — have always impeded women’s chance to become financially independent. Other auxiliary factors such as poverty, illiteracy and resistance from the family have further compounded the issue. A woman’s sense of entitlement towards her life is never allowed to strengthen on the assumption that her existence and honour depends on the men in her life. Women are killed in Pakistan in the name of honour by none other than her own father, brothers or husband. On the other hand, the government has been unable to provide an environment that supports women empowerment and gender parity. Though things have improved manifold over the years and today more women are participating in economic activities, financial independence is still a forbidden fruit for many women because they are not free to make choices about their lives.

According to a survey conducted by the International Monetary Fund (IMF) in 2018, Pakistan’s GDP can rise up to 30% with increased women empowerment and their enhanced role in the labour force. As of another analysis by the global investment bank, Goldman Sachs, closing the employment gender gap in the BRIC Countries (Brazil, the Russian Federation, India and China) and the “next-11” or N-11 countries (Egypt, Bangladesh, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Korea, Turkey and Vietnam) could increase the per capita income by 14% by 2020 and 20% by 2030. As Goldman Sachs Chief Executive Lloyd Blankfein stated, “We are disciplined in our investment, and when you get to the topic of trying to invest and create GDP, there is no better or more efficient investment — no lower hanging fruit in the world to pick — than the investment you make in women.” Additionally, as compared to men, economically active women have been found to spend more resources on the education and health of their children.

In its latest report titled, “Pakistan @100: Shaping the Future”, the World Bank argues that Pakistan has only used 40% of its human resource potential which translates into poor economic growth. To reverse this situation, Annette Dixon, the World Bank’s President, suggests Pakistan “to unlock women’s potentials.”

In the early 80s when researchers started studying the reasons for the failure of women as entrepreneurs, the analysis was based on comparing attributes, such as age, attitude and education to explain why men had been naturally inclined to succeed as entrepreneurs. These studies were later rejected on grounds that an individual is a combination of both personal characteristics and environmental factors, and missing out on the latter had induced “individualistic fallacy”. More recent research has adopted the concept of an “entrepreneurial ecosystem”, which holds that both, the social and economic environment, determine failure or success of the entrepreneurial activity. With this new pivot in perception, women’s entrepreneurship is being viewed as a factor of legal rights, access to education, national family-leave policies, and cultural and religious norms. The world has moved from “what is wrong with the women”, to “what is wrong with the system”.

Pakistan will also have to improve the system to achieve high female engagement in economic activities. The Bangladesh model of women empowerment can be emulated albeit adjusted for domestic challenges. Banks are bound by the government in Bangladesh to lend 15% of their funds to women entrepreneurs and report on their progress towards the target. The idea of tying the appraisal of institutions with gender-sensitive indicators of success can prove to be a game changer. To accelerate the trend of entrepreneurship in women and to capture its full impact on women’s lives, the government will have to invest in policies and initiatives. Only through the provision of enabling a holistic environment in which women can translate their ideas into successful business ventures, can Pakistan unlock the 60% hidden potential of its human development. 

Published in The Express Tribune, January 16th, 2020.

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