Microfinance and sustained economic improvement: Women small‐scale entrepreneurs in Ethiopia

Abstract

Women entrepreneurs account for a sizable majority of small-scale entrepreneurs in Africa. A minor change in their capitalization could assure their participation in diverse productive activities and has a large impact on their lives and families, as well as on the economy. While their access to credit is impeded profoundly because of the regulatory constraints imposed by formal financial institutions, on one hand, the informal sector interest rates as high as 300 per cent are literally untenable, on the other. The paper investigates the contribution of microfinance to the economic improvement of women small-scale entrepreneurs in Addis Ababa. The research assesses the impact of credit and saving services on the economic improvement of women smallscale entrepreneurs by using secondary data and a quantitative analysis based on questionnaires and interviews. The study probes financial facets such as income, savings, credit, financial services, family obligations and access to education. It concludes that women entrepreneurs who obtain microfinance face a number of problems. The study exposes the overall environment constraining women entrepreneurs on financial fronts and suggests some measures of relief to ameliorate the situation.

Gendered Lending Practices: Enabling South African Women Entrepreneurs to Access Start-Up Capital

“…Although marketing activities have focused on creating awareness of these financial products, literature suggests that women are perceived as high risk borrowers (Rouse and Jayawarna, 2006). As a result, they struggle to prove their financial credibility to private financiers due to lack of track records, as well as lack of collateral security for the loans (Belwal et al, 2012;Mordi et al, 2010;Singh and Belwal, 2008). In fact, Jins and Radhakrishnan's (2012:65) study of the marketing of financial products in India is an example of the gender differences that exist within the marketing of financial products in emerging economies, as they suggest that "men are the topmost primary source of business".…”

An Overview of Microfinance

“…Indeed a number of studies argue that microcredit has had little or no effect on female empowerment (see for example, Goetz & Gupta, 1996;Hunt & Kasynathan, 2001;Banerjee et al, 2009). Furthermore, though Belwal, Tamiru & Singh (2012) find that microcredit can increase income and savings of female entrepreneurs, this did not have any salutary impact on their lives after accounting for loan repayment and interest.…”

Redefining success beyond economic growth and wealth generation: the case of Ethiopia

“…More than half of all women entrepreneurs in Ethiopia often face gender-related challenges in establishing new businesses as well as in operating or expanding existing businesses (Amha and Ademassie, 2004). Their businesses are particularly disadvantaged with regards to access to finance, skills, government support, and the conversion of profit back into investment (Bekele and Worku, 2008;Belwal et al, 2012;Singh and Belwal, 2008). In particular, challenges that disadvantage women entrepreneurs are found in the culture, religion, and tradition (Bekele and Worku, 2008).…”

“…In particular, challenges that disadvantage women entrepreneurs are found in the culture, religion, and tradition (Bekele and Worku, 2008). Family responsibility, household obligations and lack of support constrain them in confronting these challenges (Belwal et al, 2012). Moreover, in a country like Ethiopia, with no social care system, women play a central role in the extended family.…”