Lack of financial literacy, a drawback for women in SME sector

Chairperson of the Sanasa Development Bank, Samadanie Kiriwandeniya said that policy makers and service providers promoting women's participation in the SME sector should not only be gender sensitive but also gender intelligent.

She was speaking at a workshop hosted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), to identify issues which affect women-owned SMEs.

Ms. Kiriwandeniya said, "To be gender intelligent, we should look at the invisible structures and not only at the visible structures, which prevent women from becoming successful entrepreneurs."

"These invisible structures come into play with the cultural expectations of a woman to be a home maker. This can prevent women from becoming successful entrepreneurs if they feel that the compromise their role in the family, especially with regard to children," she said.

"About 80 percent of the economy is driven by SMEs, of which women-led SMEs are only around 10 percent. Over the past eight years, the Sanasa Bank has trained and given credit facilities to 150,000 women but only around 13 percent have started business. It is pertinent for us to ask why the others haven't entered the economy".

Research indicates that the low visibility of women in the SME sector can be attributed to several factors, mainly lack of relevant knowledge, communication, legal and cultural constraints. Additionally there are invisible structural barriers in the form of traditional customs, domestic and social expectations that restrict the mobility of women and prevent them from taking on the role of entrepreneur.

"When we talk about 'women in the SME sector', we need to break it down to the core element, which is the individual woman. They are individuals who make individual decisions. Finally these individuals have to face these constraints individually and not as a group. They have to meet the expectations imposed on them by their family, their culture, probably also through their education," Ms. Kiriwandeniya said.

According to her, one of the main limitations for women to move from the micro enterprise sector to the SME sector is the lack of adequate financial literacy. "I have been working with a large number of women in the micro finance sector who are engaged in income generation activities but they stagnate."

"Lack of correct information to bargain and negotiate with financial institutions is a major setback for a woman entrepreneur who wants to move to the SME level. There is also limited support for women from financial institutions. Many women don't have anyone to go to when they run into a financial crisis in their businesses," she said.

Director of National Planning Department, Ministry of Finance and Planning, E.A. Rathnaseela said that the Mahinda Chinthana emphasises strengthening and developing women and specifically mentions developing entrepreneurship among women.

"Government has invested in promoting women entrepreneurship through direct investment in entrepreneurship development. In skills development, we have focused on educating women and on the transfer of technology to women entrepreneurs."

Over 50 participants representing Government and private institutions, discussed some of the major constraints in the business environment for women led SMEs, the support schemes available and also discussed proposed measures to improve the business environment for women entrepreneurs and to meet some of the socio-cultural barriers.

International consultant Thomas Finkel spoke on the measures taken by other countries to address these issues.

Vice Chairperson of the Women's Chamber of Industry and Commerce, Ms. Rifa Mustapha also spoke.

Given the relatively low participation of women in Sri Lanka's economy, the theme of the workshop was intended to convey the idea that it is 'Smart Economics' to encourage greater participation of women in the economy, through employment and through entrepreneurship. The workshop was held in the context of the SME policy development process, bringing stakeholders together to gather recommendations and suggestions to be included in a future action plan.

Senior Advisor, GIZ - SME Development,Geman Muller and Deputy Senior Advisor, GIZ - SME Development, Roshini Fernando were present.

Through the Sri Lankan-German SME Development Program, implemented in cooperation with the Ministry of Finance and Planning, GIZ supports a cohesive policy framework that enables SMEs to grow in an inclusive and eco-friendly manner, enhance competitiveness of SME through technology transfer and innovation, improve access to finance for SMEs, and enable SMEs to take advantage of green technologies and maintain nature's capital for sustainable growth.