Better Business Development Services Can Help Sri Lanka’s Women Entrepreneurs Prosper

A new study by IPS and Oxfam focuses on the need to unleash potential of female entrepreneurship in Sri Lanka, and reveals that better business development services (BDS) can go a long way in helping women-operated businesses overcome obstacles and grow their businesses.

 

Women should not restrict themselves to household chores. We have plenty of time to do much more, and this is a time when women have to contribute more to their family’s income”, says Kumari, a 53 year old entrepreneur, wife and mother of two, living in Matale. Kumari once worked as a typist at the Ceylon Cement Corporation, but, quit her job due to family commitments. Kumari’s story, which is captured in a new study by the IPS and Oxfam on female entrepreneurship in Sri Lanka, is just one of many across the country. Although Sri Lanka has achieved most of the MDG’s related human development goals, the active female participation in the economy is relatively low. Females account for as much as 70% of the population that is classified as ‘economically inactive’. Even of those who are ‘economically active’, the number of women in the workforce (33%) remains far below that of men (67%). Kumari, however, wanted to buck this trend. She felt that she could do more than being ‘a stay at home mother’. She started manufacturing detergent products at a very small scale, and despite facing many difficulties and resistance, today she proclaims her success as an entrepreneur with great pride.

 

Inoka, a successful traditional food producer from Kurunegala, faced similar struggles, but like Kumari, she took up the entrepreneurship challenge. “Being a woman I have several roles to play. I have to be a good mother to my kids, a wife to my husband, a daughter-in-law to my in-laws, and now especially, a good business woman to the society. I’m happy with where I am today. I gained all this recognition because I started this business and I am carrying it out successfully”.

 

Like Kumari and Inoka, there are many micro-level women entrepreneurs in Sri Lanka who yearn for a successful career, and help their families, and the country, prosper. Women entrepreneurship can contribute to a country’s development process in number of ways. At an individual level, it creates employment opportunities for women. Women seek entrepreneurship for many reasons. While some women start a business based on an idea or innovation, or due to an unsatisfactory experience as an employee, others are compelled to start their own business due to ‘forced unemployment’ – either from a layoff or due to lack of marketable skills. Regardless of the reason for women to start up a new business, ‘entrepreneurship’ not only empowers women economically, but also builds up their dignity and earns social recognition for them as well.

 

The impact of women’s economic empowerment goes beyond the individual level. Research has shown that women are more likely than men to invest a large proportion of their household income in education, nutrition and well-being of their children. It has been estimated that in emerging markets, women reinvest 90% of their earnings in their families and communities.

 

“Research has shown that women are more likely than men to invest a large proportion of their household income in education, nutrition and well-being of their children”

 

With the accumulated assets and enhanced economic security, women improve industrial capacity and spur economic growth by creating new jobs, as well as by expanding the pool of human resources and talents available in a country. It’s also acknowledged that, female-operated Small and Medium Enterprises (SMEs) could well cater to the demands of the rising middle class – important to Sri Lanka now given the country’s move towards an upper middle-income economy. Given the low female labour force participation in the country, fostering women entrepreneurs can be an effective way of capturing the potential of women in the development process of Sri Lanka.

 

Despite these obvious gains, gender biases against women are common. As the National Policy on Human Resource and Employment observes “…there is a gender bias in small-and-medium enterprises (SME) employment. Workers employed in SMEs are predominantly men. Good equal employment practices are needed to correct the above bias”. According to the World Bank Enterprise Surveys for Sri Lanka, regardless of the sizes of the business, fewer women are employed in top managerial positions and less women participate in ownership compared with men.

 

Business Development Services

 

A good way of helping women entrepreneurs start up and grow is through Business Development Services (BDS). According to a recent IPS-Oxfam study, there is enough evidence to argue that BDS providers have to play a much more dynamic role in assisting women entrepreneurs to grow from micro level to the SME level. BDS are non-financial services that provide a variety of services including training, counseling, advice, information provision, facilitating access to markets, etc. These services assist SMEs overcome various internal and external obstacles to their businesses. Financial services alone will not result in business growth in the SME sector.

 

“Financial services alone will not result in business growth in the SME sector”

 

In fact, in some cases, women’s businesses grow slower than that of men even within the same financial support programmes, indicating that women entrepreneurs in particular require more non-financial support. The role of effective and well planned BDS becomes increasingly important in such instances.

 

There are a number of BDS available in the market catering to the needs of SME strategic level development, such as business development training, technology transfer, creating markets and market linkages, sharing of business information, facilitating access to credit for the business, etc. Generally, three major actors in the BDS sector can be identified – BDS providers, BDS facilitators and aid donors supporting BDS. In Sri Lanka, BDS are provided through a range of programmes initiated by both government and non-government institutions. These include training by the Ministry of Traditional Industries and Small Enterprise Development, training and technology services by Industrial Development Board (IDB), Small and Medium Enterprise Developers (SMED) project, business incubator services by United Nations Industrial Development Organization (UNIDO), services offered by the Sri Lanka Business Development Centre, and assistance with marketing by Laksala and the Sri Lanka Handicraft Board.

 

Recommedations for Reaping the Benefits

 

Both the public sector and the private sector will have to make a significant effort to increase awareness – who the providers are, what services they provide, where the providers are located at, etc., on BDS among the small and medium entrepreneurs. BDS providers can learn from financial institutions that often visit villages and meet with entrepreneurs personally to sell loan schemes to them. A similar technique can be adopted by BDS providers, where they personally visit entrepreneurs and inform them about the services available. Government institutions and Chambers of Commerce also need to fulfill their role as BDS facilitators, especially in disseminating information related to available BDS.

 

There is an unmet demand for BDS such as marketing services, direct marketing methodologies, new technologies, information on banking services, efficient machineries and market opportunities, taxation, and market information. These are areas for BDS providers and facilitators to focus on, in order to improve existing enterprises and to make them more profitable. However, to do so, there should be better information channels regarding these services and how they can be accessed, all of which should be readily available to the entrepreneur.

 

Aside from improving information on BDS, the issue of appropriateness of available BDS also needs to be addressed. The study revealed that, rather than offering generic BDS that tend to be available everywhere, BDS providers should offer more focused services catering to the needs of entrepreneurs. For instance, they can use mobile phones as effective mediums of communicating with women entrepreneurs in remote areas, as opposed to traditional methods like posters and banners.

 

“A key observation in the study is that BDS providers need to expand their services and to look for more innovative approaches in providing their services”

 

An important aspect for consideration is to encourage ‘micro credit-plus’ BDS. In this, the credit provider organizes and/or provides BDS suitable for entrepreneurs as a way to ensure credit recovery. The entrepreneur herself benefits tremendously through this system as it focuses on individual needs. Such a method would include technological support, input linkages, business counseling, market links, and individual mentoring, that will build up a successful enterprise.

 

A key observation in the study is that BDS providers need to expand their services and to look for more innovative approaches in providing their services. Overall, the study asserted that fostering ‘female entrepreneurship’ and encouraging women to act as ‘employers’ is an important way of unlocking women’s potential in contributing to Sri Lanka’s economy. In the course of the study, the research team met many women entrepreneurs who grew their small enterprises in difficult circumstances. As Karunawathi, an entrepreneur from Anuradhapura asserted that: “When it comes to business, it does not matter whether you are a man or a woman; but all you need is talent, determination and dedication”. In the interviews with them, entrepreneurs like Kumari and Inoka acknowledged that the BDS help they received from various institutions benefitted them greatly. A good system of support for entrepreneurs like them, which eases the obstacles they face, and helps build on their determination and inherent potential, will surely help women play a stronger role in the SME sector and in the Sri Lankan economy as a whole.

 

 

(This article is based on a recently publication ‘Female Entrepreneurship and the Role of Business Development Services in Promoting Small and Medium Women Entrepreneurship in Sri Lanka’ by IPS and Oxfam GB Sri Lanka. The research team included IPS Research Team: Kaushalya Attygalle, Dilani Hirimuthugodage, Sunimalee Madurawala, Athula Senaratne, Anushka Wijesinha, and Chopadithya Edirisinghe. For more details on the study click here and to download a free copy click here) 

Image courtesy Rose Charities Sri Lanka