PEP researchers hold national policy conference to discuss how microfinance loans are not supporting women’s entrepreneurship in Bangladesh

December 7, 2016 | Dhaka, Bangladesh

A team of local PEP researchers held a policy conference to discuss how women face multiple constraints in trying to start microenterprises in Bangladesh.

December 7, 2016 – A team of local PEP researchers held a national policy conference in Dhaka, Bangladesh, to discuss their findings on women’s access to credit and entrepreneurship. Organized in collaboration with the Center for Microfinance and Development and the Faculty of Business Studies of the University of Dhaka, the conference attracted more than 160 attendees, including top-level government and banking sector policymakers.

Key participants included the State Minister of Finance and other high-level Ministry of Finance officials for the Government of Bangladesh, the Deputy Governor of Bangladesh Bank, the Executive Vice Chairman of the Microcredit Regulatory Authority, and the Managing Director of the largest wholesale microfinance institution in Bangladesh.

By bringing together so many key stakeholders, the PEP team ensured a lively and productive discussion of the findings and recommendations from their study: Access to credit and women’s entrepreneurship: Evidence from Bangladesh, selected for support under the PAGE initiative in 2013. In this study, the team analyzed data from the 2010 Household Income and Expenditure Survey to assess the impact of microcredit on female entrepreneurship in Bangladesh.

The team’s analysis indicates that access to microcredit encourages entrepreneurship among both men and women, however, men with access to microcredit are significantly more entrepreneurial than women with access. Furthermore, participation in microcredit programs by female family members significantly increases the probability that male members of the household will be entrepreneurs, as the female beneficiaries allow their male family members to use the microcredit loans. These findings suggest that microcredit programs are not being used as intended, most likely due to household and social dynamics that mean women’s household responsibilities are too great for them to take on running a business. Based on these findings, the research team urges policymakers to redesign microfinance programs so that female beneficiaries will start their own microenterprises with the credit they receive. The research team also recommends that further in-depth research be undertaken to understand how to re-design microfinance programs to promote female entrepreneurship. Find out more about the research methods, findings, and policy recommendations in PEP Policy Brief 139.

As well as sharing their findings and recommendations with top-level policymakers in the national government, commercial banking sector, microfinance sector, and regulatory bodies, the research team organized the conference to initiate a dialogue among key stakeholders on how to address the issues raised in the study.


Main outcomes

Prior to the conference, many key policymakers and stakeholders in the government and related sectors were unaware that women are discriminated against in the commercial banking sector and that the current systems for microcredit delivery are not helping women start their own microenterprises.

Mr. Mannan, Honorable State Minister for Finance, encouraged microcredit sector policymakers to investigate the reasons why microcredit programs do not particularly help women to become entrepreneurs. He also urged the commercial banking sector to make more credit available to female entrepreneurs. Mr. Rahman, Secretary of the Bank and Financial Institution Division of the Ministry of Finance, explained that providing credit to women and encouraging female entrepreneurship and economic empowerment is vital to achieving Bangladesh’s Sustainable Development Goals targets and alleviating poverty in the country.

Mr. Mukherjee, Executive Vice Chairman of the national government’s Microcredit Regulatory Authority, stated that he would look into the reasons why women hand their loans to male household members and take the necessary policy actions to make microcredit programs more beneficial to women.

A director of the Banglandesh Foreign Trade Institute, Mr. Chakraborty, explained that commercial banking procedures make it difficult for women to access credit. For example, low literacy rates among the poor and especially among women means that providing the numerous documents required for a loan is often difficult, if not nearly impossible. The Deputy Governor of Bangladesh Bank, Mr. Razee Hassan stated that the bank would try to remove some of the bottlenecks in the commercial banking sector that restrict women’s access to credit. Similarly, the CEO and Managing Director of Modhumoti Bank Limited, Mr. Azam, expressed his intention to remove the obstacles women face in accessing credit as his bank.

Meanwhile, Professor Begum, CEO of one of the largest Microfinance Institutions (MFIs) in Bangladesh stated that her MFI would implement training programs for women borrowers to help them develop the necessary skills to launch a microenterprise.

Key stakeholders from several other MFIs and commercial banks also pledged to take steps to make microcredit more accessible and effective for female borrowers.

A number of participants suggested that the conference discussions should continue in the future. As such, the research team is organizing an international conference on “Gender, entrepreneurship and development” as a follow-up event to be held in Bangladesh at the end of 2017. Additionally, the General Manager of the SME Foundation, an NGO working with female entrepreneurs, requested the team’s participation in a joint exploratory study of the constraints facing female entrepreneurs in Bangladesh. 

Three leading Bangladeshi newspapers, the Financial Express, the Daily Sun, and Bonik Barta, reported from the event. Furthermore, RTV, the number one cable television channel in Bangladesh covered the conference and PEP findings during the hourly news on December 7.

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