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Women-led SMEs still struggle with financing

Released at: 15:54, 17/11/2017

Women-led SMEs still struggle with financing

Photo: Ngoc Lan

IFC workshop hears that most banks in Vietnam continue to deny financing for SMEs owned or led by women.

by Ngoc Lan

Vietnam’s women entrepreneurs are one of the significant forces within the small and medium-sized enterprise (SME) sector but banks fail to meet their capital needs, according to a study by the International Finance Corporation (IFC).

A workshop held by the IFC entitled “Women-Owned Enterprises in Vietnam: Perceptions and Potential” held on November 16 revealed that investing in women and promoting gender equality helps businesses reach new markets and also enables them to attract and retain skilled employees.

In Vietnam, for instance, the financing gap is estimated at $1.19 billion for women-owned SMEs. Running nearly 45,000 SMEs across sectors, women entrepreneurs bring in similar average annual revenue as men and are growing at a pace of over 20 per cent.

Australian Ambassador to Vietnam, H.E. Craig Chittick, told the workshop that Vietnamese women are great at doing business. “They are more aware of risk than their male counterparts, which allows them to better run their businesses,” he said.

While the common perception is that there are no differences between the challenges facing female and male heads of SMEs, the study reveals biases - conscious or unconscious - that directly impact upon women’s abilities to access formal financing and other desired services necessary to develop and grow their enterprise.

Only 37 per cent of women-owned SMEs have accessed bank loans in the last two years, compared to 47 per cent of those owned by men. Though the country’s investment climate is positive for women, most banks feel no need for a different approach to women entrepreneurs or perceive the segment as less profitable, of higher risk, and lacking in financial management skills.

The IFC report identifies women entrepreneurs as one of the significant forces within the Vietnam’s SME sector and reframes the perceived challenges of serving women entrepreneurs in Vietnam as an opportunity for banks and other service providers, enabling them to capture a growing market of savvy businesswomen and unlock the under-tapped potential of this segment in Vietnam.

Mr. Rubin Japhta, Senior Operations Officer at the IFC’s Banking on Women/SME Banking, said that one of the key difficulties that women-owned businesses find is limited capital access at banks. “They feel they are not taken seriously as a customer segment,” he said. “Banks need to change their services and see women-owned SMEs as a distinct market segment.”

Mr. Kyle Kelhofer, IFC Country Manager, Vietnam, Cambodia, and Laos, said it is an opportune time for banks to recognize women-owned SMEs as a separate and strategic customer segment, with uniquely tailored products and services.

In its commitment to advancing gender equality, the IFC has invested more than $1 billion in private-sector banks via its Banking on Women program and has provided advisory services to banks that want to better serve this market segment. The IFC also works with client firms to identify opportunities and strategies to improve the workplace so that both women and men can perform their jobs well, which makes good sense for business performance and employee morale.

Mr. Dao Gia Hung, Deputy Head of SME Banking at the Vietnam Prosperity JSC Bank (VPB), said the bank initiated a pilot women strategy a year ago and the percentage of businesswomen in its SME portfolio increased from 15 per cent to 25 per cent this year.

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