Microfinance access and the Pakistani Female Entrepreneur

A small statured woman, Naseem Bibi can be found travelling along the potholed streets of Attock’s more affluent residential areas each morning, delivering households with their usual orders of Desi Anday that she collects each morning from the dozen or so of her hen coops.
What started as a small arrangement nearly a decade ago has over the years transformed into a thriving small scale business, helping Naseem Bibi marry off her eldest daughters, replace her corrugated iron roof with a concrete one and send her youngest to school.
But now her knees are finally giving way. Paying the price of years of travel along broken dirt paths, she is often ill these days. Many of her regular customers have taken to complain of missed deliveries, threatening to stop buying from her altogether.
Additionally, the brutal winters have finally arrived and she needs to re-thatch the roofs of her hen coops. Her long-term plans also include hiring a man to help her with the day-to-day business activities and buying a motorcycle on installments for her nephew who she plans to employ to deliver the eggs in the future. But like so many other rural women entrepreneurs, the prospect of taking up a loan to sort out her immediate financial needs strikes up a fear in Naseem Bibi’s heart.
Lack of information in this regard convinces her that a missed payment is very likely to mean that she will be jailed- or worse, the precious few of her belongings will be usurped.
Naseem Bibi’s story is nothing new.
Traditionally, women have lagged behind men in access to financial services the world over, however in Pakistan, even within the microfinance sector- which is considered to be synonymous with lending to women- serious access gaps exist.
According to data collected by Pakistan Microfinance Network, as of December 2011, while the share of women borrowers amongst total borrowers has increased from 45 percent in 2006 to 59 percent in 2011, the numbers still remain significantly lower than regional peers.
However, a World Bank research report on Microfinance availability to women in Pakistan finds that the level of outreach to women entrepreneurs - currently boasting of lending to 1.2 million women amongst the total 2.1 million active borrowers - is much more limited than what the current published data suggests.
The report notes that among the total loans taken out by women through various MFI’s, women are not the final beneficiaries of a staggering 50 to 70 percent loans. The credit lent is generally passed off and used by another household member; usually the nominal female borrower’s husband, father, brothers or sons.
Moreover, focus group discussions held by the World Bank with women who have availed credit through MFIs found that majority of women were discouraged by the lengthy documentation requirements, the need to repeatedly visit the bank branches, and the lags in disbursement of credit. Additionally, the loans given out by a majority of institutions require the women borrowers to obtain permission and signatures from their husbands to obtain a loan as well as the provision of two guarantors. Not only this, female borrowers also reported that they had trouble meeting collateral requirements.
Overall, not only do these conditions limit access; they make sure that even among those entrepreneurs that do borrow to finance a start-up or their working capital requirements; dissatisfaction remains high. Although Pakistan remains one of the most suitable environments for microfinance in the world, with strong financial institutions that can back policy changes, pushes at that level have not been focused towards really increasing outreach to women, essentially limiting female entrepreneurship in the country.
In this regard, a shove by policymakers for improved monitoring of credit disbursals, better dissemination of information and more responsible lending practices can do wonders for the cause.