Author(s): Marc Schleifer; Maiko Nakagaki, CIPE, October 30, 2014
Since the 1980s, a remarkable transformation has been underway in Bangladesh. Once the scene of chronic famine, the country is now food self-sufficient, and its economy has averaged around 6 percent growth in recent years. In the process, a booming, export-oriented garment sector has generated employment opportunities for urban women, and microfinance has emerged as a way to channel loans to rural women entrepreneurs.
Women-owned businesses have become drivers of women’s economic empowerment. They have been leaders in a vibrant service sector, which caters to new groups of consumers. Women graduates of Bangladesh’s universities have put their skills and knowledge to practice in the business world. Further, a large handicraft sector has emerged, with small women-owned firms selling high-quality goods and integrating into supply chains of international brands.
As entrepreneurs grow from micro- to small and medium-sized enterprises (SMEs), their financing needs are no longer met by microcredit, and they seek larger, commercial bank loans. This transition can be difficult for women, due to low financial literacy, as well as traditional norms that constrain borrowing and lending behavior. Further, in order to expand production, rent new facilities, employ workers, and enter export contracts, small firms often must move from the informal sector to the formal economy. In that process, women in particular face not only regulatory and governance hurdles, but other social barriers and discrimination as well.
Building an Organization for Business Women
Worldwide, business associations and chambers of commerce exist both to nurture businesses and advocate for a conducive policy environment. But in Bangladesh, the barriers for women entrepreneurs extended to the system of chambers and associations. The Trade Organization Ordinance – the law regulating business organizations – did not allow for the possibility of an association with only women members, which could support women in business. Women joined major chambers, but their voices were often marginalized and their unique needs often unmet. This changed when one successful and visionary woman entrepreneur, Selima Ahmad, challenged the system by founding a new entity, the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI).
Despite resistance from established, male-dominated chambers, Ahmad finally received a license to register the new chamber in 2001. By 2006, when the Center for International Private Enterprise (CIPE) first encountered BWCCI, the organization’s membership had grown from 24 at its founding to over 300 members. Like many South Asian private sector organizations, BWCCI started largely as a training organization. BWCCI viewed its role as building business skills, enabling women to compete on an equal footing. The group also discovered that its unique constituency attracted the attention of international donors ready to fund projects, bringing much-needed revenue. However, donor-funded projects also brought the risk of diverting BWCCI from its primary mission of enhancing women’s entrepreneurship.
Thus, CIPE and BWCCI began a partnership with two primary goals. First, CIPE would provide training and technical assistance to the board and staff to ensure that the chamber focused on the needs of its members and built financial sustainability by growing its dues-paying membership. Second, CIPE encouraged BWCCI to shift from simply training individual entrepreneurs to engaging in policy advocacy that could lower regulatory barriers and expand opportunities for all current and potential women entrepreneurs. CIPE worked with BWCCI to understand that advocacy can be a cost-effective way to maximize impact.
As a result of this cooperation, BWCCI has instituted a range of leading organizational practices related to governance, management, and services. BWCCI developed a strategic five-year plan, an operations manual, and a membership development team. The organization’s services now include business development, administrative support, and trade promotion. The chamber has a tiered dues system to maximize revenue, and has boosted total fees for services. BWCCI stays in touch with its members through personal contact, phone calls, letters, newsletters, emails, and a robust website. An annual award, issued to the member with the most progressive business, promotes both the member and the organization.
BWCCI now boasts over 3,500 members in several national branches, and recently held its first-ever board elections. The Annual General Meeting gives members a chance to provide feedback to the board about the organization’s work. Ahmad – the organization’s visionary founder – took on a changed role working on international contacts, and BWCCI has its second president.
Investing in Advocacy
BWCCI built a policy advocacy coalition for women entrepreneurs through the development of Bangladesh’s first Women’s National Business Agenda (WNBA). First, BWCCI conducted a baseline assessment on women entrepreneurs in Bangladesh to serve as a starting point for policy recommendations. Next, BWCCI held 32 advocacy meetings at the local and national levels, including meetings with national government bodies such as the Ministries of Industry, Commerce, and Finance; the Board of Investment; and the SME Foundation. High level meetings included the Advisor on Housing and Communication to the caretaker government in July 2008, the Executive Chairman of the Board of Investment, and the National Consultant for the Department of Women Affairs. In the process, BWCCI engaged chambers of commerce, deputy commissioner offices, the media, think tanks, and NGOs.
Then in March 2009, BWCCI launched the inaugural Women’s National Business Agenda. The agenda divided policy recommendations into three categories, which covered 5 social barriers, 13 capacity building and training needs, and 12 financial barriers, for a total of 30 reform recommendations. This allowed BWCCI to organize its advocacy campaign more effectively by setting its top priorities. More than 180 organizations representing all six geographic divisions in Bangladesh endorsed the final agenda submitted to the government. BWCCI printed 4,000 copies of the document, and also printed the policy reform section in full page ads in two newspapers.
The advocacy produced a number of reforms, and the Central Bank issued instructions to commercial banks to increase lending to women-owned businesses, including through collateral-free loans at a reduced interest rate. However enforcement proved to be a challenge, as many banks had a poor understanding of these new clients, or were unwilling to follow the regulations. Alarmed with this implementation gap – a situation that occurs when laws on the books are not practiced in real life – BWCCI led a six month follow-up advocacy campaign to close the gap for women entrepreneurs in Bangladesh.
Closing the Implementation Gap
BWCCI worked with local government institutions, women entrepreneurs, and financial institutions to improve the implementation of national policies concerning access to finance and barriers to market entry for women entrepreneurs in all six regions of Bangladesh outside of the capital Dhaka. BWCCI conducted advocacy meetings in each of the regions, legal literacy sessions, and three regional key stakeholder meetings. These meetings helped women entrepreneurs from each region to voice the challenges they face to public officials in a formal setting.
With this extended commitment, by 2014, the WNBA was showing results. According to the Central Bank, $93 million in SME loans has been provided to almost 10,000 women, helping create tens of thousands of new jobs. Three BWCCI board members have been nominated by the government to the boards of state-run banks, where they can further increase attention to women borrowers. Under a government refinancing scheme for SMEs, the Central Bank instructed all commercial banks and non-bank financial institutions to disburse to women entrepreneurs at least 3 percent of targeted lending (representing 15 percent of SME refinancing loans). Overall, the proportion of women entrepreneurs in the country receiving commercial bank loans has increased from 19 percent in 2007 to over 50 percent. More than 65 percent of the country’s banks now have “dedicated desks” for women borrowers, staffed with specially-trained personnel who can cater to the specific needs of women entrepreneurs.
BWCCI also helped improve business processes for women. Favorable tax regimes were introduced for women entrepreneurs, and women can apply for a tax identification number at no cost. To reduce harassment and corruption when women entrepreneurs register or renew firms, City Corporation offices agreed to place citizen charters in their offices. These charters publicize information such as licensing fees, time limits, and required procedures. The mayors of several cities allocated dedicated space at municipal markets for women entrepreneurs, and in several cities women can quickly be issued trade licenses, which had once been a major source of demands for bribes. BWCCI successfully pressed the government to allocate $12 million from the national budget for women entrepreneurs, some of which BWCCI has received to train over 16,000 women, build a new training institute, and open seven regional resource centers for women entrepreneurs. Meanwhile, BWCCI has launched an ambitious plan to follow up on the WNBA, called “Empower 5000,” to develop 5,000 women in Bangladesh as new leaders and entrepreneurs by 2020.
BWCCI’s evolution and cooperation with CIPE offer several key points for reflection. CIPE identified a visionary leader who founded an organization dedicated to championing the cause of women entrepreneurs, but stressed the organization’s growth and professionalization. The BWCCI story shows how the impact of limited development dollars can be maximized by investing in institutional and policy reform. Of course, policy advocacy is a slow and difficult process, and required dedicated and repeated effort to yield results. Recently, BWCCI has become a strategic partner, helping CIPE to build capacity and advocacy skills in other women’s chambers and associations across South Asia, sharing best practices and the lessons it has learned.