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Women for SMEs


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The Asian Development Bank (ADB) has provided a $12 million grant to the Government to expand its Women Entrepreneurs Finance Initiative (We-Fi) as yet another effort to improve female entrepreneurship in Sri Lanka. Yet, there are several additional steps that need to be implemented to support women to have a stronger presence in the economy, including better financial literacy and access to finance.   

In Sri Lanka, female participation in the labour force at 40% is significantly lower than for men (75%). Unemployment rates are also significantly higher for women. There is also a large gender gap in the share of women who are unpaid family workers, who account for 20.4% of women compared to 3% of men.

SMEs contribute about 45% of Sri Lanka’s gross domestic product and provide about half of the country’s jobs. Yet, among SMEs, only 25% of entrepreneurs are women. Their lower capacity contributes to a $350 million gender credit gap, according to the ADB. Capitalising on entrepreneurship to economically empower women and generate inclusive growth in Sri Lanka will require reducing various bottlenecks, especially access to finance.

ADB’s Board of Directors approved a $100 million loan in 2016 for the SME Line of Credit Project, followed by additional loan financing of $75 million in January 2018 to further encourage local partner banks to grow their SME portfolios—particularly to enterprises that are outside Colombo or women-led.

Women face additional hurdles—gender-related and costly—outside the investment environment. So far much has been spent on advocating women’s access to finance (with emphasis on microfinance), building capacity for entrepreneurship, and organising and strengthening women’s business associations. These activities are necessary and useful. But reducing the barriers for all investors to open, operate and close firms and addressing social norms and gender-based differential treatment under the law is also essential.

Levelling the playing field requires building an environment for these skilled women to create their own opportunities. This means addressing social norms about working women and promoting an environment where women can balance work and family. 

Progress on both fronts is an urgent need. The degree of job segregation remains high: most jobs are still in male-dominated sectors that may be seen as inappropriate for women. It also means addressing gender-based differential treatment under the law, which the Government has pledged to tackle but is likely to find a hard and long road. 

Mentoring is another aspect that needs desperate attention. Indebtedness created in some parts of Sri Lanka, particularly in the north, is largely due to female entrepreneurs being lured into making bad financial decisions in limited ventures. For example, handing out sewing machines and chickens would provide little assistance unless they have market access, capital, skills and a way to understand how to run their businesses and expand. In fact, in studies done on successful female entrepreneurs, mentorship has been ranked above capital in importance, and often makes the difference between a sustainable model and a pipe dream. 

The campaign for women’s empowerment should not be looked at in silos, but understood as an issue that spans the entire economic sphere: only then will positive policies be utilised for true change.


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