Barcelona October 28, 2005

Closing the Lending Gap: Are Special Programmes Needed for Western Europe’s Female

Entrepreneurs?

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Banco Mundial de la Mujer, Spain

Inger Berggren is a graduate of the University of Stockholm with a Degree in Techniques of Translation and Interpretation. She has a wide experience as a Consultant for Trade Unions in Sweden. Since 1998, Inger is Member of the Third Round Table on Banking and SME's; DGXXIII of the E.U. In 1988, Inger Berggren was appointed President of Women’s World Banking (WWB) Spain.

WWB began its activities in Spain in 1989. It is part of the Women’s World Banking network comprising 41 members in 35 countries and as such can offer Spanish women access to information and exchange worldwide.

In Spain, WWB offers four types of support: information on creation of microenterprises, training, financing and business services. It links its financial activities with three saving banks: La Caixa, Caja Madrid and Banco Popular. In microcredit it offers loans through Fundacio Un Sol Mon up to a maximum of €15,000.

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WEETU, UK

Jo Ludbrook is Full Credit Manager with WEETU. Having completed WEETU’s Full Circle training and run her own business in the UK since 2003, Jo now handles Full Credit client care. Jo came to the UK in 2003 from Australia where she ran her own textile business ‘Exotic Cushions’ for 10 years. She has a degree in fine arts.

WEETU, Women’s Employment Enterprise and Training Unit, is an independent not-for-profit organisation lauched in 1987 and based in Norfolk, UK. WEETU assists women to develop their economic prospects and to improve their access to the local labour market by providing employment and enterprise support services.

Enterprise support comprises the Full Circle Programme which provides information, training and support and offers access to Lending Circles for women who are managing microenterprises and may have received microloans from WEETU. WEETU is a leader in the UK in the development of microcredit and women’s enterprise.

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Finnvera, Finland

Anneli Soppi is Development Manager for Finnvera. She has worked in special finance business since 1990, performing a number of roles including corporate analyst, expert in cloth, textile, foot wear, and leather industries and product manager of microcredit schemes for women micro-entrepreneurs. Anneli has been a EMN board member since 2003.

Finnvera is a state-owned specialised financing company. It presently has 26,300 clients with 2 billion euros in credits and domestic guarantees. Its microloan portfolio is at 154 million euros and its current loan portfolio exceeds 12,735 loans. The clientele of Finnvera is approximately 26,000, of  which over 80% are microenterprises. Loans are provided by 16 regional offices.

Annually about 3,000 microloans are made of which 40-50% are made to women. The value of loans to women is between 18 and 25 million euros, 3% of the total value of loans and guarantees made each year.

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Workshop Objectives

To share the preliminary results of EMN’s survey on female participation in microloan programmes in Western Europe

To discuss the nature and causes of Western Europe’s lower female microlending rates when compared to the rest of the world

To discuss whether specific women-focused actions are needed to address this lending gap

To discuss efforts to target female entrepreneurs

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Session Outline

Presentation of Preliminary EMN Survey Results

Do we need special microloan programmes for women entrepreneurs in Western Europe?

Banco Mundial de la Mujer, Spain

WEETU, UK

Finnvera, Finland

Audience Questions and Discussion

Recommendations and Conclusion

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Who is She?

The Typical Female Entrepreneur in the EU:

Runs a microenterprise (87%) Has secondary (39%) or tertiary education (43%) Has a husband/partner and children Has no help with household tasks Creates her enterprise before the age of 35 Starts her business as part-time employment

however, she typically works over 48 hours a week running her business

Female Participation in Microloan Programmes in

Western Europe

Preliminary Results of an EMN Survey of 22 Microlenders

Tamara UnderwoodOctober, 2005

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Survey Background:The Lending Gap

In Western Europe, data available in March 2005 suggested that 35%-38% of microloan clients are women

In Eastern and Central Europe and the Newly Independent States, 62% of clients are women

In Canada and the US, 60% of microloan clients are women

In developing countries, rates are 69%

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Survey Objectives

To collect data on lending rates to women and men in Western Europe

To gather practitioner opinions on barriers faced by women entrepreneurs seeking microloans

To gather information on microlender policy and practice with respect to female entrepreneurs

To gather organisational information on the number of women working for microlenders in Western Europe

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Number of Respondents by Country

Germany, 5

Finland, 1

Norway, 1

Spain, 4

Switzerland, 1

France, 1

UK, 6

Italy, 1

Belgium, 2

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Number of Microloans to Women in 2004

Finland

Germany

Italy

Norway

Spain

Switzerland

France

UK

Belgium

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Profile of Microlender Female Workforce in 2004

0

10

20

30

40

50

60

70

80

Senior Management Middle Management Support Staff

Per

cen

tag

e o

f W

om

en E

mp

loye

es

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Number of Microloans to Women

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2002 2003 2004

women men

42%

40%

60%

58%

39%

61%

42%

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Percentage of Microloans to Women by Country

0 10 20 30 40 50 60 70 80

Belgium

Finland

France

Germany

Italy

Norway

Spain

Switzerland

UK

16

Average Value of Microloans to Women and Men

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2002 2003 2004

Eu

ros Women

Men

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0 2 4 6 8 10 12

a. Women are less interested in starting businesses

b. Lack of the right education

c. Lack of experience required to start and run abusiness

d. Cumbersome business registration process

e. Lack of self-confidence

f. Lack of entrepreneurial spirit

g. Family constraints

h. Lack of time

Other

Factors Affecting Female Demand for Microloans

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Barriers to Accessing Loans from Microlenders

0 1 2 3 4 5 6

a. Lack of education

b. Lack of businesstraining

c. Lack of businessexperience

d. Lack of access toinformation

e. Lack of self-confidence

f. Low income

g. Lack of guarantees orcollateral

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Measures to Increase Women’s Access to Microloans

0 2 4 6 8 10 12

a. Special loan products for women.

b. Special loan guarantee and collateralarrangements.

c. Pre-loan assistance with business planning.

d. Financial literacy training.

e. Having female loan officers technical assistanceproviders and business coaches

Other

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Microlender Policy & Practice

65% of respondents felt that special measures to increase women’s access to loans were needed. However, the majority of microlenders are not currently undertaking such measures.

25% of microlenders have a specific policy to guide their work with female entrepreneurs.

35% percent of respondents have specific loan products designed for female entrepreneurs.

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Microlender Policy & Practice

45% of microlenders undertake special training or technical assistance activities aimed at female entrepreneurs.

45% of organisations surveyed have staff who specialise in working with women entrepreneurs.

3% of the female workforce is in senior management, 36% of board members are female.

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Points for Reflection

There is indeed a lending gap between Western Europe and the rest of the world. Why?

Most respondents said there were external barriers affecting female demand for microloans.

Are these barriers vastly different from those faced by women elsewhere, particularly in other industrialised regions? Can these alone explain the difference in lending rates?

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There is an awareness amongst 65% of Western European lenders that women entrepreneurs face particular disadvantages when compared to men. However, programme design, policy and staffing profiles do not yet reflect this awareness.

Is this gap between awareness and programme design contributing to the lower rate of female lending we have observed in Western Europe?

Points for Reflection

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THANK YOU!

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Audience Questions and Discussion

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Recommendations and Conclusion